The city of Athens has been shocked by a violent outbreak of Greek riots in which three are left dead as protesters and police clash. The Greek riots are believed to be caused by recent economic measures meant by the Greek government to curb spending and gain a better grip on the country’s spending ahead of a pending bailout. However, Greece is likely to have pressure to get things in order before the country can get any quick cash in a bailout.
Greek riots touched off by austerity measures
Sunday, Prime Minister George Papandreoun proposed a spending bill that would tighten the nation’s belt, and it led to agitated protests and the later Greek riots. The credit rating of Greece has been downgraded in the wake of the collapse of financial markets and spending deficits. The spending budget measures would conserve 30 billion Euros over the next few years. According to MarketWatch, the cuts would amount to about 11 percent of Greece’s gross domestic product.
What gets cut?
Pensions and public employees account for about 75% of public spending in Greece. Greece employs a lot more people publicly than most other European nations. Additional taxes would be placed on consumer goods and wages and pensions would either be frozen or reduced.
The Pending Bailout
To keep Greece solvent as a nation, a bailout package of over 110 billion Euro is being put together by the International Monetary Fund and various European Union nations. One of the biggest contributors is Germany, and Angela Merkel, the Chancellor, has put up over 22 billion Euro. She hesitated, and has made it clear reform has to begin before a bailout would make a difference. Despite the unpopularity of the bailout among the German public, the President of the Bundesbank (Germany’s Federal Reserve), Axel Weber, assured the bailout would halt further damage.
Strikes preceded Greek riots
The Wall Street Journal reports that the proposed spending budget revisions are likely to pass, as the Prime Minister’s party (Socialist) holds a majority, and that after the cuts were announced, a general strike broke out nationwide. People took to the streets in protest all over the nation as a nationwide general strike began. Hospitals were barely able to operate, and no flights went in or out of the country before the Greek riots started. Further protests are due to take place.
Wall Street Journal