The city of Athens has been shocked by a violent outbreak of Greek riots in which three have been 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
The Greek riots began after a Sunday announcement by Prime Minister George Papandreoun which outlined a spending bill aimed at tightening the nation’s belt. The budget deficits and financial turmoil have led to the downgrade of the credit rating of Greece. The proposed spending agenda would cut 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’s getting cut?
About 75 percent of total public spending in Greece goes to pensions and public sector wages. More people are employed in the public sector in Greece than by most other European governments. As well as cuts to wages and pensions, an increased value added tax on consumer goods such as alcohol and cigarettes is also included.
In order to keep Greece from becoming insolvent as a nation, a 110 billion Euro Greece bailout is being put together by various European Union nations and the International Monetary Fund. Germany is one of the chief contributors, and Chancellor Angela Merkel has pledged 22 billion euros. However, she has been hesitant, saying that immediate aid would have gone to waste before reforms were made. The bailout is unpopular with the German public, though the President of the Bundesbank (central bank of Germany, similar to the Federal Reserve) Axel Weber has supported the bailout, as not doing so could contaminate other European markets.
Greek riots preceded by strikes
After the Prime Minister announced his proposed budget revisions, which are expected to easily pass as his party (Socialist) holds a 160-seat majority, a nationwide general strike began in protest of the cuts, according to the Wall Street Journal. No ferries ran, schools closed, shopkeepers locked their doors, lawyers and doctors all took to the streets in protest. Hospitals were barely able to operate, and no flights went in or out of the country before the Greek riots began. Further protests are due to take place.