Greece Passes New Austerity Deal Amid Rioting

5 years 10 months 3 days ago Sunday, February 12 2012 Feb 12, 2012 Sunday, February 12, 2012 5:28:00 PM CST February 12, 2012 in News
By: Associated Press

ATHENS, Greece (AP) -- Greek lawmakers on Monday approved harsh new austerity measures demanded by bailout creditors to save the debt-crippled nation from bankruptcy, after rioters in central Athens torched buildings, looted shops and clashed with riot police.

The historic vote paves the way for Greece's European partners and the International Monetary Fund to release $170 billion ((euro) 130 billion) in new rescue loans, without which Greece would default on its mountain of debt next month and likely leave the eurozone -- a scenario that would further roil global markets.

Lawmakers voted 199-74 in favor of the cutbacks, despite strong dissent among the two main coalition members. A total of 37 lawmakers from the majority Socialists and conservative New Democracy party either voted against the party line, abstained or voted present.

Sunday's clashes erupted after more than 100,000 protesters marched to the parliament to rally against the drastic cuts, which will ax one in five civil service jobs and slash the minimum wage by more than a fifth.

At least 45 businesses were damaged by fire, including several historic buildings, movie theaters, banks and a cafeteria, in the worst riot damage in Athens in years. Fifty police officers were injured and at least 55 protesters were hospitalized. Forty-five suspected rioters were arrested and a further 40 detained.

As the vote got under way early Monday, Prime Minister Lucas Papademos urged calm, pointing to the country's dire financial straits.

"Vandalism and destruction have no place in a democracy and will not be tolerated," Papademos told Parliament. "I call on the public to show calm. At these crucial times, we do not have the luxury of this type of protest. I think everyone is aware of how serious the situation is."

Since May 2010, Greece has survived on a $145 billion bailout from its European partners and the International Monetary Fund. When that proved insufficient, the new rescue package was approved. The deal, which has not yet been finalized, will be combined with a massive bond swap deal to write off half the country's privately held debt.

But for both deals to materialize, Greece had to persuade its deeply skeptical creditors that it has the will to implement spending cuts and public sector reforms that will end years of fiscal profligacy and tame gaping budget deficits.

As protests raged Sunday, demonstrators set bonfires in front of parliament and dozens of riot police formed lines to keep them from making a run on the building. Security forces fired dozens of tear gas volleys at rioters, who attacked them with firebombs and chunks of marble broken off the fronts of luxury hotels, banks and department stores.

Clouds of tear gas drifted across the square, and many in the crowd wore gas masks or had their faces covered, while others carried Greek flags and banners. Masked rioters also attacked a police station with petrol bombs and stones.

A three-story building was completely consumed by flames as firefighters struggled to douse the blaze. Streets were strewn with stones, smashed glass and burnt wreckage, while terrified passers-by sought refuge in hotel lounges and cafeterias.

"I've had it! I can't take it any more. There's no point in living in this country any more," said a distraught shop owner walking through his smashed and looted optician store.

Athens Mayor Giorgos Kaminis said rioters tried to storm the City Hall building, but were repelled. "Once again, the city is being used as a lever to try to destabilize the country," he said.

Conservative New Democracy leader Antonis Samaras said the rioting "hurts the entire country."

"We are seeing scenes from a future that we must do our utmost to avert," he said.

Papademos' government -- an unlikely coalition of the majority Socialists and their main foes, New Democracy -- had been expected to carry the austerity vote. Combined, they control 236 of Parliament's 300 seats.

Still, they faced strong dissent: Besides the 37 lawmakers who voted against the bill or abstained, a further six voted against sections of the proposed measures. After the vote, the coalition government announced those 43 lawmakers had been expelled.

Finance Minister Evangelos Venizelos said the measures were vital to the country's very economic survival.

"The question is not whether some salaries and pensions will be curtailed, but whether we will be able to pay even these reduced wages and pensions," he told lawmakers before the vote. "When you have to choose between bad and worse, you will pick what is bad to avoid what is worse."

The new cutbacks, which follow two years of harsh income losses and tax hikes amid a deep recession and record high unemployment, have been demanded by Greece's bailout creditors in return for a new batch of vital rescue loans.

Greece's eurozone partners, meanwhile, kept up the pressure for real reform.

German Finance Minister Wolfgang Schaeuble was quoted as telling the Welt am Sonntag newspaper on Sunday that Greece "cannot be a bottomless pit."

Highlighting previous pledges he said weren't kept, Schaeuble said "that is why Greece's promises aren't enough for us any more."

Asked whether Greece has a long-term future in the eurozone, Germany's Vice Chancellor Philip Roesler said "that is now in the hands of the Greeks alone."

"It is not enough just to give financial aid -- they must tackle the second cause of the crisis, the lack of economic competitiveness," he told ARD television. "For that, they need ... massive structural reforms. Otherwise Greece will not get out of the crisis."

Introducing the legislation Sunday, Socialist lawmaker Sofia Yiannaka said the intense pressure from Greece's EU partners to pass the measures was the result of delays in implementing already agreed reforms.

"The delays have our imprint. We should not blame foreigners for them," she said. "We have finally found out that you have to pay back what you have borrowed."

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