Parliament members voted in favour to pass a bill which would include large tax rises with corresponding cuts in public sector bonuses and pensions.
Deep and strong fiscal changes have been implemented as a condition from both the International Monetary Fund and the 15 European countries that will bail Greece out. The BBC reports that President Papandreou feels “the future of Greece is at stake [and] the economy, democracy and social cohesion are being put to the test”.
The bill means that public sector pay is frozen until 2014, VAT would increase to 23% from 19% and the retirement age will increase from 61 to 63.
Despite this, The Financial Times reports that the general “public opinion was likely to back the government”. This is contrary to the events of Wednesday where three people were killed in the Athens bank by an anti-government mob.
The demonstration was said to be largely peaceful, states The Times, but “small groups of left-wing extremists or self-styled anarchists…fought with riot police”.
This is not to say the worst is behind Greece. This new found fiscal austerity needs to be fully implemented but the degree to which is concerning some commentators. “The dose of medicine you are administering is in danger of killing the patient” Mr Samaras was quoted as saying by AFP news agency.
Also the EU-IMF program may well hit upon administrative issues causing further delays and rocking financial markets. The Financial Times indicates how the government is in a delicate position whereby a delay may be beneficial socially and politically by introducing measures gradually whilst balancing this with the need of the financial markets to be reassures.
Overall Greece has a huge task on its hands. The need to reassure the financial markets while tempering civil unrest is a difficult line to toe. This may well not only be an issue for Greece, either, but rather a problem for the eurozone as a whole.