Eurozone nations to finalize Greece rescue plan

BRUSSELS — The 16 leaders of the euro zone meet in Brussels yesterday to finalize the Greek rescue plan and assess how such financial crises can be avoided in the future. In Berlin, Germany’s parliament will vote on its contribution to the loan package.

Greek lawmakers approved drastic austerity cuts Thursday needed to secure international rescue loans worth euro110 billion ($140 billion). Clashes briefly erupted in Athens in the streets outside parliament, forcing police to use tear gas.

In New York, the Dow Jones industrials plunged 1,000 points in less than half an hour on fears that Greece’s debt problems could halt the global economic recovery. The Dow managed to recover two-thirds of its losses and close down 347 at 10,520.

The euro-zone nations have pledged to contribute euro80 billion ($100 billion) to the bailout plan for Greece over the next three years with the rest coming from the International Monetary Fund.

The 16 nations have pledged to make haste with the national approval of the funds and rescue package, hoping to have it finished for Friday’s emergency summit. Major nations like Germany, France, Italy are likely to have concluded the process by then.

Germany, long Greece’s toughest critic, was debating legislation that would provide the go-ahead to euro22.4 billion ($28.6 billion) in credit that Berlin wants to grant Athens.

It already passed the lower house’s budget committee — a day before Friday’s vote by the full house.

The coalition led by Chancellor Angela Merkel has a comfortable majority in parliament and could pass the law without opposition help. Nonetheless, Finance Minister Wolfgang Schaeuble has asked the opposition for support.

Thursday’s clashes in Athens came a day after violent protests left three people dead after a bank was firebombed in Athens.

Greek lawmakers voted 172-121 to approve the austerity measures — worth about euro30 billion ($38.18 billion) through 2012 — that will slash pensions and civil servants’ pay and further hike consumer taxes.

The rescue loans are aimed at containing the debt crisis and keeping Greece’s troubles from spreading to other countries with vulnerable state finances such as Portugal and Spain. The money will come from the IMF and the 15 other governments — in addition to Greece — whose countries use the euro.

Fears of Greek default have undermined the euro, and while the current package should keep Greece from immediate bankruptcy, its long-term prospects are unclear. The country’s growth prospects are weak, and the population’s willingness to accept cutbacks may wane, leading some economists to predict an eventual debt restructuring somewhere down the road.

There were reports that the Dow’s sudden drop Thursday was caused by a trader who mistyped an order to sell a large block of stock. The drop in that stock’s price was enough to trigger “sell” orders across the market.

Still, the Dow was already down more than 200 points as traders watched protests in the streets of Athens on TV.

Opposition parties lambasted the government for imposing measures that are too harsh for the population to bear.

“The dose of the medicine you are administering is in danger of killing the patient,” conservative opposition leader Antonis Samaras said.