Business, Finance & Economics

Greece erupts as ruling party passes fresh austerity measures (UPDATE II)


Demonstrators run for shelter during a protest against new austerity measures, in Athens Greece. The largest labor unions have called for a 48-hour strike, while the Socialist government is beginning to push through legislation for cost cutting reforms.


Milos Bicanski

Athens — Greece's ruling party on Thursday passed new austerity measures intended to avert a financial collapse, despite a second day of massive protests outside Parliament.

The measures allow the government to increase taxes, lay off 30,000 public sector workers, and suspend collective bargaining rights in some professions. Passage was vital to Greece obtaining an $11 billion loan from international lenders to avoid bankruptcy.

A day after clashes with police, fights broke out between rival protesters Thursday when youth anarchists reportedly attacked unionists backed by Greece's communist party. The state health ministry said 74 civilians were treated for minor injuries.

A 53-year-old protester died of an apparent heart attack after arriving to the hospital with no pulse and no obvious signs of trauma, the health ministry said in a statement.

Prime Minister George Papandreou, who said this week that Greece was "being held hostage by strikes and protests," hopes passage will build momentum as Greece enters this weekend's euro zone summit, at which European Union leaders will be under pressure to hammer out a long-term solution to the Greek debt crisis.

Papandreou's plan encountered a hurdle Thursday, however, when ruling party lawmaker and former labor minister Louka Katseli voted against a provision that suspends collective bargaining rights. Still, the prime minister was left with 153 votes in the 300-member parliament.

Debt-ridden Greece is desperately trying to stave off bankruptcy with the help of fellow European countries and the International Monetary Fund. But the international lenders have pushed Greece to make drastic reforms in exchange for the bailout loans.

The 48-hour general strike ending Thursday kept most of Greece at a standstill. Schools were closed and hospitals were open for emergencies only. The metro was open, as were airports. There was no immediate police estimate of the crowd size Thursday, but it appeared to be smaller than the 100,000 of Wednesday.

"What I hope for is that this movement will grow and at some point topple the government," university professor Lefteris Kirousis said Thursday in Syntagma Square.

Kirousis doesn't advocate violence but wants drastic change. He said Prime Minister George Papandreou's party (PASOK) has complied without a fight to demands of international lenders including the European Union and the International Monetary Fund.

"Elections would be okay but I would rather see the government fall down in shame, like in Argentina," the 60-year-old said, referring to the South American country's bankruptcy of a decade ago. Kirousis wore a dust mask and spread liquid Maalox on his face to protect against tear gas. He had neither Wednesday and "almost fainted" after inhaling gas.

Photos: Greek protests turn violent

The remnants of the tear gas hung in the air Thursday in and around Syntagma Square, evidenced by protesters of all ages squinting, sneezing, and covering their mouths and noses with anything they could find.

On Wednesday, masked protesters threw rocks, garbage and Molotov cocktails at riot police, who responded by launching the tear gas and charging forward with their batons. Scuffles also took place in side streets. Windows at high-end retailers such as Brooks Brothers and Cartier were protected by security screens, but protesters smashed windows at ATMs, hotels, and tore up marble from steps and walls to use as ammunition.

“Greek society is going up like a volcano,” Costas Karategos, a private-sector computer programmer, said as he watched protesters fill the streets mid-morning Wednesday.

More: Does Greece have a future?

“The main problem is the insecurity of the Greek people,” Karategos said. “We make sacrifices but there’s no light at the end of the tunnel. This can’t continue. All the state buildings are under occupation. The garbage is in the street. They must go to elections. It’s not the best, but they must do something.”

Debt-ridden Greece is desperately trying to stave off bankruptcy with the help of fellow European countries and the International Monetary Fund. But the international lenders have pushed Greece to make drastic reforms in exchange for the bailout loans.

European Union leaders are under pressure to finally hammer out a long-term solution to the Greek debt crisis at this weekend’s euro zone summit. Fears are mounting that the crisis could spill over to other European countries.

Papandreou’s socialist party (PASOK) has slashed generous pensions, cut salaries and raised taxes since confronting a $400 billion debt upon taking office two years ago.

More: Greece says "Don't blame us"

The austerity measures up for final approval Thursday are critical for Greece’s next, $11 billion installment of a $150 billion loan negotiated in May 2010.

But for a society accustomed to government largesse, the speedy u-turn by their socialist leader has been deemed too harsh. Unemployment has reached 16.5 percent, and the economy forecast to shrink by 5.5 percent this year.

“Wanted” posters featuring dual images of Papandreou and Finance Minister Evangelos Venizelos were seen throughout downtown Wednesday.

One couple walking past the Bank of Greece proudly smiled for photos in front of a cement wall plastered with the “Wanted” posters. Many more protesters carried similar placards.

Tensions have been mounting for weeks. Local media reported recently that three bullets were mailed to the PASOK headquarters, with a threatening note. The head of the union of striking garbage collectors claimed there will be “blood in the streets” if the government tries to hire private firms to pick up the trash.

While protesters packed Syntagma Square beyond the front steps of Parliament, riot police positioned their large blue Renault buses at key intersections in the neighborhood behind the building.

On one street, garbage that has been spilling into streets because of the lengthy strike by trash collectors served as a makeshift police barricade, blocking a sidewalk.

Papandreou, in a speech to parliament Tuesday night, pleaded for national unity and to “stop the recrimination.”

But hours later, hope for a last-minute truce before the key vote faded. Papandreou and opposition leader Antonis Samaras of the center-right New Democracy party met briefly but failed to reach consensus.

Looking at the crowds Wednesday, 30-year-old Yiannis, who did not want his last name published, said people are desperate. With a degree in finance, he is unemployed and said there are few prospects, even for entry-level sales jobs.

“The reforms are so radical,” he said as angry protesters marched past him. “Tell me, are all of these people wrong? We’ll see.”