Greek parliament takes up painful cutbacks as part of bailout, a day after 3 die in riots

By Elena Becatoros, AP
Thursday, May 6, 2010

Greece: Bailout only way to avoid collapse

ATHENS, Greece — Greece’s only hope of avoiding bankruptcy is to take money from a joint EU and International Monetary Fund rescue package, the government said Thursday during a heated Parliamentary debate overshadowed by the deaths of three people during protests against spending cuts.

Greece has to impose harsh austerity measures, including slashing salaries and pensions and increasing taxes, to get money from the €110 billion ($140 billion) three-year package which will provide loans from other eurozone countries and the IMF.

“Today things are simple. Either we vote and implement the deal, or we condemn Greece to bankruptcy,” Prime Minister George Papandreou said ahead of a parliamentary vote on the austerity measures. Papandreou’s Socialists hold a comfortable majority and the bill is expected to pass easily.

“Some people want that, and are speculating (on it), and hope that it will happen,” he said, referring to speculative attacks that have been blamed for raising Greece’s borrowing costs to unsustainable levels. “We, I, will not allow that. We will not allow speculation against our country, and bankruptcy to happen.”

The rescue loans are aimed at containing the debt crisis and keeping Greece’s troubles from spreading to other countries with vulnerable state finances such as Portugal and Spain. The euro has sagged as those countries have seen debt downgrades, falling below $1.27 Thursday; late last year it was as high as €1.51.

The spending cuts have sparked outrage in Greece, with an estimated 100,000 people spilling onto the streets of Athens during a nationwide general strike Wednesday to protest the measures.

Demonstrations quickly turned violent, with protesters trying to storm parliament and clashing with police in extensive riots that saw banks, stores and hotel windows smashed and two buildings burned. A man and two women — one of whom was pregnant — died when they became trapped in a burning bank torched by protesters. Firefighters used a crane to rescue another four people from the building’s balconies.

“I understand the anger, I share it and participate in the suffering,” said Papandreou, who a day earlier condemned the deaths as murder.

Finance Minister George Papaconstantinou said the government had no choice but to impose the austerity measures, which were being rushed through Parliament as urgent legislation because the country was two weeks away from default, with €8.5 billion worth of bonds maturing on May 19.

“The state’s coffers don’t have that money,” Papaconstantinou said. “Because today … the country can’t borrow it from the international market. And because the only way for the country to avoid bankruptcy and suspension of payments is to take the money from our European partners and the International Monetary Fund.”

But in order to receive the funds, Greece must agree to a three-year austerity program.

“We are asking for loans from countries that also have deficits and from countries that are also the subject of speculative attacks. And for those to be granted, we must persuade them that we are putting our house in order,” Papaconstantinou said.

But the opposition lambasted the government for imposing measures that are too harsh for the population to bear.

“The dose of the medicine you are administering is in danger of killing the patient,” said main opposition leader Andonis Samaras, who has said his party will vote against the austerity bill.

“You know that these measures have sparked a social explosion … The citizens of this country have to believe there is a way out. Because whoever cuts pensions of €700 cannot convince anyone.”

Wednesday’s deaths — the first such fatalities in protests in nearly 20 years in Greece — have shocked the public in a country where violence during demonstrations is frequent but rarely results in casualties.

An impromptu shrine with flowers and candles was set up in the burned-out windows of Marfin Bank where the three bank workers lost their lives.

Still, unions and far-left groups planned more protests against the measures later Thursday.

Forty-one policemen and 15 civilians were injured in the riots, while 25 people were arrested, police said.

The bank workers’ union, OTOE, called a strike for Thursday to protest the loss of life, condemning the violence but saying the deaths were the result of the government’s austerity measures.


Associated Press writers Nicholas Paphitis and Derek Gatopoulos in Athens contributed.

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