- Associated Press - Thursday, June 30, 2011

ATHENS (AP) — Greece bought itself time to deal with its crippling debt crisis Thursday after lawmakers passed the second and final austerity bill essential for the release of crucial bailout funds and prevent the country from defaulting next month.

The European Union and International Monetary Fund demanded that Parliament pass two bills — an austerity law and a second bill detailing how it will be implemented — before they approve a 12 billion euro ($17.3 billion) installment from the country’s 110 billion euro ($159 billion) package of rescue loans.

Without the funds, Greece would run out of money in mid-July.

Fears of a Greek default have weighed heavy on global markets in recent weeks. Investors have been fretting that a default could trigger a major banking crisis and potential turmoil in global markets, similar to what happened when the Lehman Brothers investment house collapsed in 2008 in the United States.

Concerns of a near-term default have been eased as the money will see Greece through September, when it will have to prove it has implemented all it has promised in order to receive any further funds from last year’s 110 billion euro bailout package.

Longer term, there are still real worries that the country will end up having to restructure its debts — negotiating them down with creditors — in some shape or form.

Meanwhile, the Greek government has conceded that it’s going to need more money from its creditors and is talks for a second bailout. Last year’s package was predicated on Greece’s being able to tap bond market investors for cash next year, but with the country’s interest rates at exorbitant levels, that looks highly unlikely.

As well as rubber-stamping the release of the next batch of bailout funds, finance ministers from the eurozone are expected to discuss the terms of a second bailout for Greece at their meeting Sunday in Brussels. The IMF also is expected to clear the immediate funds next week.

Parliament passed the second law on a 155-136 vote Thursday, a day after passing the main austerity bill as rioters clashed with police outside Parliament in a second day of violence.

More than 300 people were injured in two days of mayhem in central Athens, which saw rioters pelting police with anything they could find, and police responding with a barrage of stun grenades and tear gas that still lingered in the city’s central Syntagma Square on Thursday morning.

Unions have called for more protests Thursday night, although they are expected to be smaller in size.

The austerity measures, which slap taxes even on the lowest paid, have sparked repeated strikes and demonstrations. The riots on Tuesday and Wednesday came during a 48-hour general strike that disrupted services across the country, forcing airlines to cancel or reschedule flights, halting nearly all public transport and leaving ferries tied up in port.

The EU welcomed Thursday’s vote, with the heads of the European Commission and European Council, Jose Manuel Barroso and Herman Van Rompuy, respectively, saying it was a “decisive step Greece needed to take in order to return to a sustainable path. In very difficult circumstances, it was another act of national responsibility.”

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