Greek government carries confidence vote for crisis reforms

The Socialist party of George Papandreou successfully mobilised its five-seat majority in the chamber to prevail by 155 votes in favour to 143 against, according to a count released by the head of parliament.

In a closing speech after three days of debate, Papandreou called for support "to avoid bankruptcy and keep Greece in the euro core."

"Today\'s vote is a contract with the Greek people," the prime minister told parliament, speaking of a "national struggle for salvation and change."

"It is a difficult task, but it can give birth to a new Greece," he said.

Athens now effectively has two weeks to convince its European peers that it will carry out long-delayed structural reforms and privatisations in order to secure badly needed bailout money before its funds run out in July.

Despite an unprecedented rescue by the EU and the IMF last year, Greece has been unable to restore its battered image on financial markets -- a position hardly helped by a debt that has exploded to more than 350 billion euros -- and will urgently need additional cash soon.

Speaking earlier in the debate, the Greek finance minister pledged to exceed austerity reform goals set by the EU and the IMF.

Finance Minister Evangelos Venizelos, newly appointed to the post on Friday, said Athens would aim at "broader and faster" state cuts than those agreed with its creditors as he appealed for a "patriotic" vote to save the nation.

"We have the will and the obligation... (to formulate) a parallel programme that allows us to have better results," he said in reference to a midterm plan of more than 28 billion euros ($40 billion) in savings demanded by the EU and IMF.

Prime Minister Papandreou reshuffled the government on Friday as protests mounted towards his government\'s economic policies, which critics say made a crushing recession even worse.

Around 4,000 people gathered outside parliament on Tuesday, part of a movement that has drawn tens of thousands of angry Greeks to the square opposite the legislature since May 25.

Analysts say victory in the confidence vote would almost certainly mean that Papandreou, who has staked his career on Greece\'s economic recovery, would then get backing for other votes on the austerity cuts, and a special law applying them, by the end of the month.

The government suffered an unexpected casualty on Tuesday when a lawmaker tasked with sponsoring the reform package in next week\'s debate bowed out for "personal reasons."

He later backed the government in the confidence vote.

Two opinion polls released earlier on Tuesday showed the ruling Pasok party trailing the opposition New Democracy conservatives.

One of the polls, broadcast by prominent private television channel Mega, showed that 58.8 percent of respondents took a dim view of the reshuffle and 63.2 percent doubt that it will improve the government\'s efficiency.

The eurozone issued an ultimatum to Greece on Monday, when it held back the latest slice of a 110-billion-euro ($160-billion) rescue loan package agreed last year.

It told Greek lawmakers, in effect, to support the government and approve swingeing new budget cuts, saying further delay and uncertainty could increase pressure throughout the eurozone.

But the European Union has tempered the warning with promises of additional funds if Athens gets its fiscal house in order.

European Commission president Jose Manuel Barroso on Tuesday suggested the EU agree "emergency" measures to pump up the Greek economy by swiftly unlocking up to one billion euros from the bloc\'s budget.

"I\'d like to ask the European Council to discuss what we can do to assist Greece beyond its consolidation efforts to enhance competitiveness and address the urgent problem of unemployment," Barroso said at a news conference held ahead of an EU summit Thursday and Friday.

Over 43 percent of Greeks queried in the Mega channel survey by pollsters GPO expressed hope that the EU, the IMF and the European Central Bank could be persuaded to renegotiate the terms of the economic rescue.

Greece needs the 12-billion-euro ($17-billion-dollar) loan instalment to pay bills next month.

A much bigger issue for the whole eurozone is a second loan package, expected to be around 100 billion euros, needed by Athens to avoid default on its debt in the months and years ahead.

Germany insists this second emergency package must include losses for private lenders such as banks and insurance companies, as well as more pain for taxpayers.

But rating agencies have warned that this could spell default even if supposedly voluntary, and the European Central Bank has said that in that event it might be forced to cut lifeline financing to Greek banks.

A Greek default would hit European banks hard, but would also likely damage investor sentiment towards Ireland and Portugal, already being rescued, and Spain and even Italy and Belgium which have high debt loads.

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