Anarchy erupts in Athens as vote on severe cuts is passed
Greece entered a new age of austerity last night with central Athens in flames, shops and businesses vandalised and police hunting hooded rioters through ransacked office buildings and the tourist district in the shadow of the Acropolis.
While Greek MPs were smuggled out of parliament after a narrow vote in favour of severe cuts, dozens of protesters were being treated at a field hospital set up in the metro station beneath them.
Earlier in the day, the Greek Prime Minister George Papandreou urged his party to avert the "country's collapse" and swallow a package of measures described by several economists as an economic "suicide pill". Outside in Syntagma Square, stun grenades and a relentless volley of tear-gas canisters was met with a barrage of rocks and petrol bombs by some of the protesters.
Internationally, the result was hailed as a "vote of national responsibility" by the European Commission and international markets climbed as the prospects of a rapid default that could rock the eurozone receded.
"In years to come, this vote may be seen as a turning point for Greece and the eurozone," Jerzy Buzek, the European Parliament President, said. "This was not an easy choice to make and I salute those who voted in favour of this tough reform package."
After three days of bitter debate in parliament, national strikes and mass protests the vote was carried by 155 to 138. A second austerity bill must also be passed today before Greece gets a €12bn (£11bn) loan it needs from the European Union and International Monetary Fund to avoid going bankrupt in mid-July.
Yesterday's violence brought an end - temporarily, at least - to the month-long occupation of Syntagma Square, which had become a campsite for the Greeks who call themselves "the indignants". Their best efforts to maintain a peaceful protest against an internationally mandated austerity programme were overwhelmed by clashes between 5,000 police and several hundred masked rioters.
Hundreds of police officers on motorcycles swarmed into the square after the vote and waves of stun grenades and tear gas were fired to clear out the remaining protesters.
Gripped by its worse recession since the dictatorship in the 1970s, Greeks now face bleak years of spending cuts and tax hikes while national assets are sold off in a privatisation programme designed to relieve the €600bn (£539bn) national debt.
Youth unemployment is running at 35% and climbing. There is little prospect of Greece finding the growth it needs to reverse the crisis, analysts said.
The measures introduced by Greece yesterday are a mix of tax rises and spending cuts. They include:
- Tax increases of €2.02bn (£1.8bn) this year.
- Reducing the public-sector wage bill, with a curb on hiring and the axing of all temporary staff. The government will replace only one in 10 workers who retire this year.
- Slashing social benefits.
- Campaign against tax evasion.
- Defence cuts of more than €1bn by 2015.