New Protests as Greek Parliament Backs Deep Cuts

ATHENS, Greece (May 6) -- Demonstrators clashed with baton-wielding security forces in central Athens today after lawmakers approved drastic budget cuts needed to secure a multibillion-dollar loan and stave off bankruptcy.

Television images of the running battles in the Greek capital were blamed for a precipitous, nearly 1,000-point decline in the Dow Jones industrial average before the market inched back up to regain some of those losses. Analysts said the historic swoon was at least in part a result of the market's concerns that Greece's fiscal crisis could spread to other European countries, and even to the U.S.

The market reaction might well have been even worse if the Athens Parliament had not passed the austerity budget, as such a vote would have all but assured a default on government bonds due next week. As it happened, the austerity bill passed by a clear vote of 172-121, but Socialist Prime Minister George Papandreou expelled three members of his party for abstaining on a vote he billed as a decision to either save Greece or allow it to go bankrupt.

Today's demonstrations involved an estimated 30,000 protesters, most of whom marched peacefully through the Greek capital. But after the main groups dispersed, a smaller group of hard-core demonstrators engaged with police in front of Parliament, presenting a disturbing image of a country in full crisis.

That followed on chilling events Wednesday, when a blaze started by a protester's firebomb killed three bank workers. The fire at the Marfin Egnatia Bank building was so hot it liquefied metal chairs and bubbled rubber mats like grilled cheese. Twenty workers tried to beat it back, but when the flames flared up to the third floor of a neoclassical bank building in the heart of Athens, all rushed to outrace them.

Two men plunged from a balcony to escape the blaze. Others stormed out the emergency exit, but a man and two women -- one of them four months pregnant -- remained trapped inside. Their bodies, firefighters said, were found later on a staircase scraped raw by the fire.

Europe is not used to protests ending like this. Yet the prospect looms of more as Greece and other southern European countries grapple with growing social discontent over harsh reforms to deal with looming debt crises.

"Fixing the numbers is one thing, but dealing with this crisis on a social level is entirely different, " said George Kirtsos, an Athens-based publisher and political commentator. "The government has been caught ill-prepared."

Indeed, Wednesday's tragedy morphed out of a 24-hour strike that kept millions of workers away from their jobs. More than 100,000 Athenians took to the streets of the Greek capital to protest austerity measures taken by the cash-strapped government to secure financial aid and avert a humiliating bankruptcy.

But what started out as a peaceful show of public defiance turned violent when mobs of masked and black-clad militant groups clashed with security forces, pelting them with stones and hurling crude gas bombs against state buildings and symbols of wealth, including the bank building where the three workers died of asphyxiation.

It's unclear how and whether the deadly demonstrations will hamstring the government's resolve to press ahead with austerity measures intended to rein in the country's runaway finances. But what is certain, pundits and politicians agree, is that the deadly riots have ushered Greece into what promises to be its rockiest period in recent history.

Greek President Karolos Papoulias said late Wednesday that the fatal demonstrations "brought Greece to the brink of the abyss" and warned that Greeks "are collectively responsible so that it does not take the step into the void."

By slashing public spending by $40 billion in budget cuts, raising the sales tax to 23 percent and overhauling an ailing pension system that allows early retirement and generous pension benefits from the age of 50, the socialist government hopes to slim the state's yawning budget deficit of 13.6 percent of gross domestic product -- the highest in the 16-nation eurozone -- to less than 3 percent by 2014.

The cost, financial analysts fear, may include a deeper and darker recession, with a 4 percent drop in growth projected for 2010 and a further fall anticipated in 2011.

"The party is over," said Takis Theodoropoulos, a writer and commentator. "It's as if we have been partying 30 years and we have to leave the nightclub and go home." The problem, he quipped, "is that most Greeks can't seem to find their way home. They see no vision for the future."

Such talk, mixed with a mood of resentment, bitterness and anger, resonated across Athens today as scores of people gathered before an impromptu shrine of flowers and candles set up outside the charred bank.

"Why?" asked Maria Kotandou, weeping as she filed by the shrine and peered through the soot-covered facade of the Marfin Egnatia Bank. "What's happening to this country? Where are we headed? How can any of these crooked politicians claim to be acting in our interests when they looted our country?"

Union leaders vow to press ahead with fresh protests today as lawmakers meet in an all-day debate and vote on the austerity measures.

With Greece facing a major debt redemption May 19, the European Union and the International Monetary Fund agreed last week to more than $140 billion in loans on condition that Athens makes unprecedented budget cuts.

The measures are likely to pass, with the ruling socialists controlling 160 of the 300 seats in Parliament. But Prime Minister George Papandreou, concerned about a fresh flare-up of unrest, has called on other political party leaders to restrain supporters from taking to violent shows of defiance.