Key hurdle for prime minister George Papandreou as he prepares to push through austerity measures that will unlock EU and IMF funds
Greece faces a key vote tonight in its struggle to resolve its debt crisis. A vote of confidence in Socialist prime minister George Papandreou's reshuffled government is expected to take place at 10pm BST.
If Papandreou does not clear this hurdle he will not be able to put in place the austerity measures necessary to get the EU and the IMF to release ?12bn in new funds to Greece. Without these funds Athens will probably be unable to repay debts that mature in July and August, and will probably default on them, potentially triggering another panic in financial markets similar to the one that followed the collapse of US investment bank Lehman Brothers in 2008.
"Indications over the last 24 hours or so have certainly been that the government will survive, if only because the alternative would be so dire," said Beat Siegenthaler, an analyst at UBS.
However, EU finance ministers' plans to deal with the Greek debt were dealt a blow earlier today when ratings agency Fitch declared it would declare Athens to be in default if commercial banks agree to roll their loans over, as the EU ministers are planning. You can read Graeme Wearden's full story on that here, and you can read all our coverage of the Greek crisis here.
We'll have live coverage of the Greek vote and its aftermath here throughout the evening.
Jo Adetunji here. I'll be following the situation in Greece in the lead up to the confidence vote in George Papandreou and his government - happening at 10pm.
The Greek prime minister is stuck between a rock and a hard place, between trying to secure a further loan from the EU and IMF by imposing more cuts and austerity, or facing the wrath of people who don't want another bailout.
As Janis Varafarkis, a Greek economist using another metaphor to explain how tough Papandreou's plans are for the Greek population to swallow, told the BBC:
[The first bailout] was put to them 18 months ago and they said ok we'll take the bitter pill. The bitter pill nearly killed them. And now they're being asked to hope for better results from a larger dose of the same pill and they're simply not prepared to do this
Papandreou is not the only one who faces pressure from the IMF. Earlier it warned European leaders that a hesitant response to the debt crisis could trigger the world's second global financial meltdown in three years.
While the IMF criticises a hesitant response, the German media have relayed public anger that the country may have to give yet more money to Greece to keep it afloat.
The Guardian's correspondent in Berlin, Helen Pidd, says the popular press has been stoking the fire:
Adding to the insult in some German eyes is a perceived ungratefulness in Athens. On Tuesday the tabloid Bild ran a picture of a Greek banner calling Angela Merkel and Nicolas Sarkozy "Nazis", with the yellow stars of the EU flag rearranged into a swastika. "We pay ? still we are abused!" said the headline.
The BBC's Tim Willcox tweeted earlier that protesters were ready to react after the vote tonight, and were gathering outside the parliament offices.
Hundreds demonstrators have green laser pens pointed at parliament offices and riot police. And tv crews. Swarm of green dots #Greece
The Guardian's economics leader writer, Aditya Chakrabortty, has just returned from Athens and says he expects the Greek prime minister, George Papandreou, to win the vote of confidence.
I would expect Papandreou to pass the vote. Turkeys don't vote for Christmas and MPs don't relinquish power. And it's cod-psychology, but the last time the Greek socialist party voted against their leader, he was also called Papandreou and his fall led to the military dictatorship.
Still, that is a small obstacle besides the mammoth task of getting his own party to sign up to the austerity package, or what's more formally known as the medium-term fiscal strategy. That is all important to getting the next slug of cash from the EU/IMF, and then negotiating another loan agreement.
I'm told that members of the cabinet are letting it be known that if the parliamentary Pasok party play the game and accept the cuts for now, they can be renegotiated and ameliorated in Brussels later.
But it is doubtful if Barroso/Merkel/Sarkozy/ Juncker/Trichet would all accept that. More to the point, I can't see the Greeks accepting it so easily either. And what we've all had confirmed to us over the past month is that the Greeks have had enough of savage austerity ? how will they adjust to more?
Despite pressure from Europe to back austerity measures, Greece's Conservative party opposition leader, Antonis Samaras, has said he "will not give consensus to a mistake".
"The austerity program," he says, "simply will not work."
Despite many of the Greek public being against a new bailout. Stathis Sideris, a Greek software developer who has lived in London for the past decade, says he has been left confused about what outcome would eventually be best for Greece.
I'm confused about what I hope happens. I've been away for so long, but my immediate family has been affected by the economic situation to the point of me having to partly support them right now.
In some ways, a default might be preferable at this point, a lot of people in Greece think that the politicians are no longer working for the benefit of Greece, but for the big banks.
Yes, there is corruption and inefficiency, but what's happening now is probably way beyond the consequences of those two factors.
I'm worried that soon Greece will become socially unstable. If it does, maybe something good will come out of it eventually, but the transition period could be violent. I'm seriously worried.
Over 40% of people in Greece are unemployed and Sideris says that friends in Greece in their early 30s can still find themselves living at home.
I have a few friends my age [32] who can't afford to move out because of low or no pay so they still live with their parents. This sort of thing is pretty widespread, and the important thing to note is that it's not new (economy going slowly downhill for the past five to six years.
You might have heard about the "generation 700", young people being paid ?700 per month ? that's people my age.
So why are people so suspicious of the IMF and against another bailout?
People in Greece see a conspiracy, so I'd say suspicion started on day one [of the first bailout]. People were also very aware that once the IMF is involved, the shit has hit the fan.
A picture earlier of the Greek protesters outside parliament.
A little more about the vote ahead of the results that are due in ten minutes.
The vote of confidence is crucial to George Papandreou, who called the vote to face down an internal party rebellion. Confidence in him will mean he will be able to push through the additional austerity measures that will prevent Greece from defaulting on its loans which are due to be recalled in July. Without it the country goes into the red...
One of the big complaints by protesters is in what is being called the "fire sale" of state owned assets that the government wants to use raise money. Many are finding this move unthinkable, especially as it comes from a Socialist government.
If Greece gets its second bailout it will face ?28bn worth of budget cuts and savings.
Evangelos Venizelos, Greece's new finance minister is promising that parliament will pass this austerity package by the end of June.
Not the easiest of jobs to step into.
Papandreou is currently addressing the Greek parliament and making an appeal for a cross-party concensus:
My dear colleagues our government has tried a wider concensus and would like to congratulate all these other parties that might have different views but still actually vote with use and we ask of every single MP to get over party divisions and actually face facts. Not just vote mongering but the common good that rules and that we all sign on to.
What we do as a government we do as a duty - the first thing though that we have to do is spend less than our income is and we all have to agree and lets all agree why not? And we try to get out balance from next year, 2012. We all have to make the decision that we have to shrink the state and do some privatisations so that we can develop those that are state owned ...
I'm open to all options as long we are not thrown out of our target which is to get out of this crisis...
We can achieve having a surplus by 2012 especially in an economy like ours ... also wasting money doesn't help our development
He is now turning his attention to opposition leader Antonis Samaras, who he accuses of creating divisions and coming up with no alternative plans for dealing with the crisis.
Papandreou raises a couple of rounds of applause from parliament during his speech.
He says Samaras will lead straight to bankruptcy and great debts.
They don't listen to you because your ideas won't work ... You're just coming here to look for new elections, the last thing this country needs right now ...
You're making a political mistake with your refusal to co-operate ... this is not good for democracy or Greece.
He says he plans to fight tax evasion, which is better than higher taxes.
He appeals to parliament to "fight for Greece". He is asking the Greek people to deal with the debt to create "something positive".
We're all in some kind of shock when we saw the situation which jeopardises this country and the peace. It's a great, great shock.
Helena Smith, Guardian correspondent in Athens, says:
Everyone is waiting with baited breath for the roll-call vote on whether his newly revamped government gets renewed vote of confidence - including the thousands gathered outside parliament in Syntagma Square
Papandreou has said his piece and it now falls to his fellow parliamentarians. Voting is now underway but could take up to an hour.
It would be a shock if Papandreou doesn't take it many commentators are saying but some protesters believe the biggest battle is yet to come - when a vote is taken next week on the austerity measures.
As one protester says "That's the time we'll fight, that's the time we'll resist"
The vote is being conducted by roll call after a heated debate which saw sections of the opposition briefly walk out. Papandreou needs 151 votes in the 300-member parliament to win.
More info on what the impact on the UK would be if Greece did default. While British prime minister David Cameron has insisted that the the UK won't be part of the solution, the impact on the banks could draw in the taxpayer.
Robert Peston on the BBC has this:
The painful truth for Britain is that a Greek default that precipitated big losses on loans to Ireland, Portugal and Spain would be immensely unpleasant for the UK's supersized banks - and, by implication, for British taxpayers too.
A interesting aside: "Zeitgeist" Google trend shows highest hits from Greece
Back to those laser pens used by Greek protesters that made an appearance earlier.
One post by @MarquardtA on Twitter says:
Someone rigged a red laser to read "thieves," shining it on parliament building. #Greece
Still waiting for the result of the vote... Reuters is reporting that Papandreou has won but this has not been officially confirmed.
The AP agency is now reporting the same but how close it has been is not yet clear. A win was expected but Papandreou will still face an uphill struggle to pass his austerity bill to the tune of ?28bn.
Numbers now out. Papandreou wins the confidence of the government. 155 MPs voted yes, four more than the 151 the prime minister needed - a majority in the 300-seat parliament.
As the Greek parliament rolls out, around 7,000 protesters continue to roam the streets - a good live feed of Syntagma Square here.
There is much talk about the next step for the Greek government. The next step will be to push through its ?28bn austerity bill by the end of June - which will prove hard.
If the government fails to pass those measures and thus gain a new bailout from the IMF, choices left may include leaving the Eurozone. More worrying still for citizens is the fear that the country will not be able to keep paying its public servants.
Read Jill Treanor's article here on some of the risks of an exit.
Some of your views on the night's events:
Premodernist says any meltdown caused by the Greek crisis is systemic of a wider problem:
Another global financial storm does appear to be on the cards but it would be a travesty if it was successfully blamed on Greek woes. How the worlds financial system has become so fragile, that the potential default of a country with only 11 million citizens could possibly trigger a catastrophic collapse has very little to do with Greek railway workers paying themselves an average of 65,000 Euros a year or the general Greek reluctance to pay taxes
mswinkle believes the Greek government is going against what the public wants:
so what we have here is once again a govt determined to go against the wishes of the people
adding that a bailout
is a backdoor bailout for european banks and it is to be paid for on the backs of the Greeks
NewJFusion simply says:
Ouch 5 votes. He [Papandreou] will struggle to push that bill through now
So Papandreou lives to fight another day. A closing note then from Aditya Chakrabortty before I sign off:
After coming through last week's crisis, it would have been a big surprise if Papandreou had lost the confidence vote. But that leaves the vote on the austerity package before the end of the month, which will be a lot harder.
I'm assuming that the intra-party negotiations of Papandreou's Pasok party for tonight's vote were largely over the austerity package, with the government trying to convince wavering MPs over what will get cut or privatised ? and, crucially, what won't.
But the real surprise tonight was hearing the leader of the main Conservative opposition party, Antonis Samaras, say in parliament that austerity "will not work".
By my reckoning (and leap in to correct me if I'm wrong), that's the most openly hostile position he's taken on the cuts.
The obvious question is what is he playing at? Bear in mind that the high policy-makers of Europe have been leaning hard on Samaras and New Democracy to play ball and support what's formally called the medium-term fiscal strategy.
He might be trying to move into that gaping yet largely unoccupied part of the Greek electoral market called the Anti-Cuts Vote. Or he might be putting pressure on the obviously agonised and split Pasok party.
What do other people think?
I should also add that it does strike me as utterly absurd that the next tranche of EU/IMF money is tied up with passing a bill of plans for future austerity. Not on auditing how far
those plans are followed through.OK, so getting parliamentary approval for these cuts will be hard enough for Papandreou to do ? but you wait until the government, whichever government, actually tries to
enact them
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