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Clashes erupt on Athens streets ahead of vote on proposed cuts

By Daniel Howden

Athens was rocked by a day of street battles on the eve of a critical vote on austerity measures demanded of Greece if the country is to avoid a potential disaster.

The escalating confrontation between people and political leaders, expected to resume today, has stoked fears of a banking and eurozone crisis that some analysts are equating with a "second credit crunch".

A day that began with a peaceful show of force from Greece's unions quickly descended into running battles between masked youths and riot police outside parliament yesterday.

With much of the country at a standstill thanks to a general strike and rolling power cuts, Greek MPs will vote later today on a package of austerity measures which are seen as essential by much of the rest of Europe but are unpopular in the country itself.

Deputy prime minister Theodoros Pangalos said tanks may have to be sent in to stem the chaos if the bill fails to pass and a run on Greek banks begins.

Syntagma Square, occupied by protesters for the last month, was yesterday carpeted with broken paving stones, smashed glass and tear-gas canisters.

Amid the destruction, a young woman, who gave her name as Lisa, walked holding a placard that said: "We didn't invite you here, leave now."

Asked whether it referred to the ranks of heavily armoured police or the black-shirted hooligans with their clubs and gas masks, she said: "Both."

The protests have reflected broader tensions over the country's response to its debt crisis with a small minority bent on violent confrontation while a peaceful majority has failed to voice clear proposals beyond furious condemnation of politicians.

The protesters have spurred similar demonstrations in other European countries affected by the sovereign-debt crisis.

Greece's first experiment with austerity and bailouts has failed, most economists agree, with the country still running a primary deficit, unemployment rising, debt increasing and the economy shrinking.

But observers of Greek politics point out that many reforms proposed by the EU and IMF have not been implemented and a "deep state" of tax collectors, senior civil servants and recipients of state contracts remains mostly untouched.

The Governor of the Bank of England, Sir Mervyn King, said that "contingency plans were necessary" as market expectations of a Greek default were running at around 80%.

Background

Greece abandoned the drachma in favour of the euro in 2002. In May 2010, Greece was given €110bn (£100bn) of bailout loans to help it get through the global financial crisis.

This month the European Union and the International Monetary Fund agreed to lend Greece €120bn (£105bn) in a second bailout.

If Greece's five-year austerity plan is not approved, the country could run out of money within a matter of weeks.

It involves cutting €14.32bn (£12.82bn) of public spending while raising €14.09bn (£12.5bn) in taxes over five years.

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