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EU, IMF Prepare Rescue Package for Greece

May 4, 2010 at 12:00 AM EST
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The European Union and the International Monetary Fund have made progress in securing a rescue package to keep Greece from defaulting on its debt, as citizens protested the stark austerity measures the government is considering. Margaret Warner reports.
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JUDY WOODRUFF: Finally tonight: the financial crisis in Greece.

This week, progress has been made on a major rescue package, but any sense of confidence about a possible deal gave way today to new worries here and abroad.

Margaret Warner has our update.

MARGARET WARNER: The proposed bailout for Greece sparked angry protest in Athens today against the austerity measures it will demand.

WOMAN (through translator): “We can’t live off of 500, 600 euros, and now they come and take more away? How can we help ourselves?”

MARGARET WARNER: The financial markets in the U.S. and Europe didn’t seem much happier. Both saw a wave of sell-offs, down 3 percent in Europe and more than 2 percent in the U.S., over concerns that the rescue plan won’t work and the debt crisis may spread to other European states.

And the euro hit a one-year low against the dollar. It wasn’t the reaction European finance ministers and the International Monetary Fund had hoped for Sunday, when they approved a three-year Greece rescue package of $145 billion.

Germany’s share is $30 billion. Chancellor Angela Merkel’s Cabinet approved the unpopular move yesterday, after weeks of delay.

ANGELA MERKEL, German chancellor (through translator): This reaction with a law doesn’t only mean that we assist Greece, but it will also help the stabilization of the euro as a whole, and, therefore, help the people of Germany, because a stable European currency is extraordinarily important.

MARGARET WARNER: Nearly $400 billion in the red, and less than three weeks from default, the Greek government felt it had no choice. But the price is stiff: tax hikes and $40 billion in budget cuts through 2012 that will hit pensions and public salaries hard.

MAN (through translator): The International Monetary Fund came to control us like a new dictator who, every three months, will be seeking to suck our blood.

MARGARET WARNER: Four thousand teachers and students marched past parliament today. Some threw stones at riot police, who fired back with pepper spray.

State employees at airports, schools and hospitals didn’t show up for work and a general strike was called for Wednesday. Still, the Greek parliament took up the austerity measures with a vote expected later in the week.