Bloomberg News

Greeks Clash With Police as Papandreou Demands Austerity

October 19, 2011

(Updates with vote in fourth paragraph, police injuries reported in eighth. See EXT4 for more debt-crisis news.)

Oct. 19 (Bloomberg) -- Greek protesters clashed with police in central Athens after Prime Minister George Papandreou vowed to push through a further round of austerity and appealed to Europe to cut Greece’s debt load at an Oct. 23 summit.

Riot police in white helmets used tear gas to hold back demonstrators from the parliament building in the Greek capital today as lawmakers debated the extra austerity measures demanded by Greece’s international creditors to keep aid flowing. Police said about 70,000 people gathered in Athens at the start of a 48-hour strike in one of the biggest protests yet against Papandreou’s latest program of cost-cutting and tax rises.

“Without the measures, the 2011 budget won’t be met, neither will the budget in 2012,” Finance Minister Evangelos Venizelos told lawmakers in comments broadcast live, as groups of hooded protesters in gas masks lobbed Molotov cocktails at the riot police outside. “We are giving the battle of battles up to Sunday evening.”

With a four-seat parliament majority, Papandreou is banking on his Pasok party lawmakers to face down public anger and pass the bill in a vote due tomorrow, when the unions have called more protests. A test of support for the bill will be held in parliament later today. The package, which follows a round of austerity measures passed in June, includes new taxes, more cuts to pensions and wages and plans to dismiss 30,000 state workers.

Unknown Soldier’s Tomb

The reverberations of tear-gas rounds echoed across the city’s central Syntagma Square as police maintained a protective cordon around the parliament. Some protesters broke through to the tomb of the unknown soldier in front of the assembly, a monument more usually patrolled by Greek military in traditional uniform. Most of the demonstrators stuck to the square, chanting slogans and brandishing labor-union banners or Greek flags.

“This policy has no future, and those who express this policy have no future,” Yiannis Panagopoulos, the head of GSEE, Greece’s biggest private-sector union, said in a statement. “Those who are voting through these measures need to think again, and again, what they’re about to do, against a people undergoing conditions of social barbarity.”

In Greece’s second city of Thessaloniki, protesters smashed the facades of about 10 shops that defied the strike to remain open, as well as five banks and cash machines, the Associated Press reported. Police fired tear gas and threw stun grenades, AP said.

At one point in Athens, a fire was started in recycling bins outside the Finance Ministry opposite the parliament, sending smoke across the square. Police said 14 officers were injured and they had reports of 3 civilians hospitalized. By about 6 p.m. local time, the tear gas had dispersed and Syntagma Square was quiet.

‘Held Hostage’

Two years after the debt crisis came to light in Greece, Papandreou is courting social unrest that risks boiling over as he pushes through additional austerity. The steps, which are needed to continue receiving outside support under a 110 billion-euro ($152 billion) bailout agreed last year, have provoked a wave of strikes by public-sector employees who shut down government services and buildings in protest at the bill.

“Greece is being held hostage by strikes and protests,” Papandreou told lawmakers late yesterday as he opened the parliamentary debate. “This government has been fighting for two years to save the country and still has much work ahead,” he said. “We will give battle and we will win.”

GSEE said that strike participation was 100 percent today at refiners, shipyards, on transport, ships and at ports, and 90 percent in the construction industry, commerce, banks, the power company, phone company, postal service and water companies. Municipal garbage collection workers were ordered back to work yesterday by an executive decree to clear more than a week’s worth of refuse piled up in the streets. Hospitals, schools and courts were hit, shops shuttered and newspapers absent.

Targets Slipping

With Greece’s debt-reduction targets slipping as the cuts bite, EU leaders are preparing to meet on Oct. 23 to reopen the terms of a second bailout three months after it was sealed under a package to stave off Greek default and end the debt crisis.

Papandreou urged the rest of Europe to end the “great uncertainty” over efforts to stamp out the crisis. “Europe hasn’t been able to halt the crisis,” he told his ruling Pasok party lawmakers. “We have to achieve the relieving of the debt burden which is weighing on each Greek.”

Successive rounds of tax increases and cuts to wages and pensions have deepened a recession now in its fourth year, with the economy set to contract 5.5 percent this year and 2.5 percent next, according to the 2012 budget. The unemployment rate reached 16.5 percent in July, data released yesterday by the Hellenic Statistical Authority showed.

Article 37

Drawing particular fire from labor unions and some members of Papandreou’s own party is an aspect of the legislation known as Article 37, which suspends the power of unions to impose wages and work rules through collective labor agreements. One Pasok deputy has said she’ll vote against the article if it isn’t changed.

“What the country is going through now is not the ultimate point of the crisis, it’s an agonizing attempt to avoid experiencing the ultimate and deepest point of the crisis,” Venizelos said. Negotiations were due to begin today ahead of an Oct. 21 meeting of euro-area finance ministers that will start a weekend of debt-crisis consultations, he said.

“If Greece can dramatically reduce its debt burden and interest payments, that may well mean that it needs to implement slightly less austerity in the near term,” Ben May, an economist at Capital Economics Ltd. in London, said in a Bloomberg Television interview. “It certainly won’t solve all of Greece’s problems and it will have to continue to reduce its deficit over time, but it might make that process a bit more manageable and less painful.”

--With assistance from Eleni Chrepa, Marcus Bensasson and Paul Tugwell in Athens and Caroline Connan in London. Editors: Alan Crawford, Maria Petrakis

To contact the reporters on this story: Natalie Weeks in Athens at nweeks2@bloomberg.net; Tom Stoukas in Athens at astoukas@bloomberg.net

To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net


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