Greeks OK austerity budget

ATHENS, Greece - Greece's lawmakers early Wednesday overwhelmingly approved next year's austerity budget, extending tough spending cuts that have already left Greeks struggling as the country tries to slash its vast debts and tame a severe recession.

With three parties, including the majority socialists and their rival conservatives, participating in Greece's new coalition government, the budget was passed with a 258-41 majority in the 300-seat Parliament.

"This is a difficult budget . . . with ambitious targets," Prime Minister Lucas Papademos told lawmakers just before the vote past midnight. "But we must achieve our targets and implement the measures that are foreseen."

"The financial crisis in our country is not a passing storm," he warned. "It will take many years, and will require the efforts and insistence of several governments."

Greece's acute debt woes have helped trigger a Europe-wide crisis, and the country is surviving on international rescue loans, released on condition it implements deeply resented cutbacks.

The crisis has even prompted talk of the country being forced out of the eurozone - or even the European Union - both of which Papademos insisted were out of the question.

"Our position in Europe is not negotiable," he said. "The Greek people will defend it by all means. But participation in the euro involves rules and obligations, which we must consistently meet."

The 2012 budget foresees a fourth year of recession with the economy contracting by 2.8 percent, a target which Finance Minister Evangelos Venizelos said was "ambitious but achievable."

It also projects a primary surplus - excluding interest payments on debt - of 1.1 percent of gross domestic product.

Greece's debt troubles have roiled the euro, with Europe's single currency facing its largest crisis since it went into circulation in 2002.

Standard & Poor's ratings agency placed 15 of the 17 eurozone countries on notice for possible downgrades. The only two it left out were Cyprus, whose bonds have near-junk status, and Greece, whose low ratings suggest it is likely to default on its debts soon anyway.

On Monday, German Chancellor Angela Merkel and French President Nicolas Sarkozy urged changes to the EU treaty that would centralize decision-making on spending and borrowing for the eurozone.

Tighter political and economic coordination among euro countries is seen as a precursor to further financial aid from the European Central Bank, the International Monetary Fund, or some combination.