Austerity bill OK’d in Greece, sparking riots

May 7, 2010 at 12:00a.m.

Associated Press

ATHENS, Greece

Greek lawmakers approved drastic austerity cuts Thursday needed to secure international rescue loans worth $140 billion, and clashes briefly erupted in the streets outside parliament, forcing police to use tear gas.

The new clashes came a day after violent protests left three people dead after a bank was firebombed in Athens.

Greek lawmakers voted 172-121 to approve the austerity measures — worth about $38.18 billion through 2012 — that will slash pensions and civil servants’ pay and further hike consumer taxes.

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 money will come from the International Monetary Fund and the 15 other governments whose countries use the euro.

Fears of Greek default have undermined the euro, and though the current package should keep Greece from immediate bankruptcy, its long-term prospects are unclear.

The country’s growth prospects are weak, and the population’s willingness to accept cutbacks may wane, leading some economists to predict an eventual debt restructuring somewhere down the road.

Opposition parties 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,” conservative opposition leader Antonis Samaras said.

Clashes in Athens broke out at the end of a main protest that drew tens of thousands of people as police pushed back a few thousand demonstrators outside parliament.

The violence was quickly contained with riot police firing tear gas at the protesters, who had earlier pelted them with stones, oranges and bottles. Several small fires burned in surrounding streets. No injuries or arrests were reported.

“We have done what was necessary, not what was easy,” Finance Minister George Papaconstantinou said after the vote. “Without these measures, we’d be thrown into the deepest recession this country has ever known.”

The bulk of Thursday’s protest — organized by the Greek Communist Party — quickly dispersed, leaving about 5,000 demonstrators outside parliament before police pushed them back.