Ahead of austerity cuts, Greek protests get violent

Athens descended into violence Wednesday when a few hundred protesters clashed with riot police ahead of a crucial parliamentary vote on new spending cuts.

An anti-austerity demonstration by more than 80,000 people in Athens degenerated into violence Wednesday as hundreds of protesters clashed with riot police ahead of a crucial parliamentary vote on new spending cuts.

The vote is the toughest test yet for the country's fragile four month-old coalition government, which must pass the €13.5 billion ($17 billion) package of measures to ensure Greece continues receiving bailout loans and avoids bankruptcy.

"Today we must confirm Greece's new credibility," said Prime Minister Antonis Samaras. "We choose whether we want to stay in the eurozone ... or return to the drachma. That is the choice."

The measures will pile more pain on the Greeks, who have suffered wave after wave of spending cuts and tax hikes since their government revealed in 2009 that public debt was actually far higher than officially declared.

On Wednesday, hundreds of rioters hurled rocks and gasoline bombs at lines of police guarding Parliament, who responded with volleys of tear gas and stun grenades, and the first use of water cannon in Greece in years.

Some in the 80,000-strong demonstration, which braved sometimes torrential rain, ran for cover as running battles broke out with police on the second day of a 48-hour general strike. Clouds of tear gas rose from Syntagma Square.

Austerity 

The austerity package is expected to scrape through when the vote is held later in the night. But any defections or abstentions could severely weaken the conservative-led coalition formed in June.

"Today we face the most critical decision any government has taken in the past 37 years," Samaras said. "Many of these measures are fair and should have been taken years ago, without anyone asking us to.

"Others are unfair — cutting wages and salaries — and there is no point in dressing this up as something else," he said, adding that the country was, however, obliged to take them.

The alternative is bankruptcy, triggering financial chaos as the country would likely have to leave the 17-country euro bloc.

"The alternative is much worse than any of these measures," said Samaras.

The government combined has 176 of Parliament's 300 seats, and needs a simple majority of those present to pass the bill. Without the Democratic Left, which has said it will vote against, Samaras' conservatives and the Socialists control 160 votes. However, there is a threat of more dissenters, particularly from the Socialist party.

The next bailout installment

Greece's next bailout loan installment of €31.5 billion, out of a total of €240 billion, is already five months overdue. Without it, Samaras says, Greece will run out of money on Nov. 16.

If Athens cannot raise sufficient funds otherwise, it will quickly find it impossible to pay its huge debts. As well as pushing the country out of the euro, this could trigger a nightmare of bank runs, hyperinflation and currency depreciation that would vaporize savings and put many basic goods out of the reach of many Greeks.

The measures are for 2013-14 and include new, deep pension cuts and tax hikes, a two-year increase in the retirement age to 67, and laws that will make it easier to fire and transfer civil servants who are currently guaranteed jobs for life.

The reforms aim to lower public debts but will in the process also hurt the economy, which is set to enter a sixth year of recession with unemployment at a record 25 percent.

'Will they starve?'

"You are throwing people onto to the street, people who need a few more years till they get their pensions," said Panagiotis Lafazanis of the main opposition Syriza, or Radical Left, party. "What will happen to them? Will they starve? ... This is an illegal and unconstitutional law."

Opposition parties accused the government of trampling on Greece's constitution with the proposed cuts in pensions and benefits, and complained that the bill, several hundred pages long, was too complex to be debated in a single session.

Meanwhile, judges in the country's Supreme Court ruled that new cuts to their own pay contained in the draft bill were illegal.

Socialist MP Theodora Tzakri verbally shredded the bill, but said she was forced to back it as Greece had no other way of raising the funds it needs.

"The recession has exceeded every limit, and not only is no light visible at the end but we are still at the beginning of the crisis," Tzakri said. "I will vote for the measures with a gun to my forehead."

Greece's main trade association warned that the new cutbacks would further reduce consumer and government spending, driving more retailers out of business.

"To vote for the measures ... will deal the coup de grace to an exhausted and battered society," association head Vassilis Korkidis said.

Lawmakers interrupted Wednesday's debate as Parliament employees went on strike to protest cuts to their wages that Finance Minister Yannis Stournaras brought in a last-minute amendment to the bill. Stournaras later withdrew the amendment, and the tempestuous debate resumed after Parliament employees returned to work.

What about Germany?

While Samaras has been facing increasing pressure at home, other members of the eurozone have been doing what they can to ensure Greece stays in the currency group. Germany's Chancellor Angela Merkel, for example, has softened her tough stance — paving the way for a deal to give Greece more time to meet its loan conditions.

Even if Parliament approves the draft legislation, it is unlikely that Greece will receive the next bailout installment in time for Samaras' Nov. 16 deadline. The payment was expected to be approved at a meeting of European finance ministers on Monday Nov. 12.

However, the ministers' vote hinges on a report by the so-called troika of austerity inspectors from the European Union, IMF and European Central bank, which may not be ready in time. Furthermore, some eurozone countries can only give the go-ahead after their own Parliaments have voted on it. Germany is not expected to do so before Nov. 19.

As a result, the EU or ECB may have to step in with some interim financing.

The 48-hour general strike against the bill shut down the public administration, left hospitals functioning on emergency staff and closed schools and tax offices. All ferry and train schedules have been canceled until Thursday, flights were disrupted by a four-hour air traffic controllers' strike and Athens was without public transport for most of the day.

The country's biggest union has also called for a demonstration on Sunday evening, when the 2013 state budget is due to be voted on.

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Elena Becatoros in Athens contributed to this report.