Protests subside after Greece passes austerity plan

ABC News (Australian Broadcasting Corporation)

By Europe correspondent Emma Alberici

Updated 1 hour 18 minutes ago

Economic battle far from over... protesters during a rally against austerity in Syntagma Square, Athens. (Reuters: Yiorgos Karahalis)

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Calm has returned to the streets of Athens after the Greek parliament gave the final and critical nod to a raft of severe budget cuts.

Now that the vote for more austerity has been won, Greece is expected to receive $18 billion to help it pay this month's public sector salaries.

But even though the vote is over, the battle for the economic future of Greece is far from finished.

Gaining support from MPs was vital in unlocking the next tranche of funding from the European Union and the International Monetary Fund.

"We have fought and won a difficult battle," Greek prime minister George Papandreou said after two days of voting to pass the fiscal plan despite fierce clashes around parliament.

The public has largely lost patience with Mr Papandreou's government, which swept to power almost two years ago promising to bring radical change to Greece's corrupt and bloated public sector.

Instead, critics say, it is business as usual for the rich and powerful in Greece.

Most economists still believe Greece will not be able to pay back its debts.

The country will now receive $18 billion in emergency loans by mid-July, which means that this month at least Greece will be able to pay its bills.

Pandelis Economou is the deputy finance minister and the architect of the latest austerity measures, that involve stripping $40 billion from the Greek economy over five years.

He is positive Greece can tackle its financial problems.

"We have huge debts, not the biggest in the world, but we need to tackle this problem," he said.

Panagiotis Gennimatas, the honorary vice-chairman of the European Investment Bank, says debate about whether Greece will default on its $485 billion loans misses the point because the government has not been capable of making repayments on the debt for some time.

"Greece is already bankrupt but we have to avoid the declaration of default," he said.

Meanwhile, German banks have followed the lead of their French counterparts in offering Greece longer terms over which they can pay back their loans.

Protests subside after Greece passes austerity plan - ABC News (Australian Broadcasting Corporation)