Greek Violence Heats Up

Greek police fired tear gas at demonstrators in central Athens on Tuesday at the start of a 48-hour strike to protest austerity measures demanded by international lenders as the price for more financial aid.

As Greece teeters on the edge of bankruptcy, parliament is due to vote this week on a package of spending cuts, tax increases and privatisations agreed as part of a massive bailout aimed at averting the euro zone's first default.

As thousands rallied in Syntagma square near the parliament, hundreds of hooded youths threw stones and bottles at police who responded with teargas as the initially peaceful mood turned violent. A street umbrella was set fire outside a record-and-book store sending black smoke spiralling into the air above Syntagma Square near the parliament.

The protesters had marched through the capital chanting slogans, banging drums and carrying banners attacking the bailout deal which many Greeks feel imposes harsh and unjust penalties on ordinary pensioners and workers while sparing the wealthy.

Transport and public services were hit, schools were shut and many shops and businesses were closed, while the streets of central Athens were virtually deserted.

"We expect a dynamic and massive participation in the strike and the march to the centre of Athens. We will have 48 hours of working people, unemployed, young people in the streets," ADEDY's leader Spyros Papaspyros told Reuters.

Deep in deficit and unable to borrow on financial markets, Greece depends on international support to keep going. A default would spread contagion around the 17-nation single currency area and cause a deep shock to the global economy.

Finance Minister Evangelos Venizelos called on lawmakers to back the measures in two votes on Wednesday and Thursday, saying it was vital to convince Greece's creditors that it had a plan and that the austerity measures could be implemented.

"The government is running out of time and so is the opposition," he told parliament. "We are handling our country's history right now and nobody can play with that."

Voting on the first bill is due to begin following a debate that is due to begin at 10 a.m. (0700 GMT). Parliamentary officials said the timing of the vote itself was still unclear but would probably come some time in the afternoon.

Although the socialists have a majority, with 155 deputies in the 300-seat house, the final outcome is unclear, with some rebels from the ruling PASOK party opposed to the deal but a handful of conservatives expected to back it.

More serious problems may lie ahead however when the government has to implement the programme, which will slash public sector jobs, shut down state-owned companies and take on the endemic tax evasion.

Euro zone authorities are working flat out with banks and insurers to devise a scheme whereby private bondholders can share the burden of further funding for Greece without prompting credit ratings agencies to declare a selective default.

European policymakers are also quietly exploring contingency plans to keep Greece afloat with emergency liquidity if parliament were to reject all or part of the package, three euro zone sources told Reuters on Monday.

RECESSION

More than 5,000 police are expected to be deployed in central Athens, especially to protect parliament, the focus of weeks of protests by demonstrators who have camped out in Syntagma Square.

The austerity plan has caused deep anger among Greeks disillusioned with years of political corruption and inefficiency and now bitterly resentful of the tough conditions imposed by the European Union and International Monetary Fund.

By the early afternoon, well over 20,000 people had assembled in hot sunshine in front of the parliament, but the mood appeared calm.

"They are asking the people to bow down for 50 years and pass even worse measures in the future," Communist party leader Aleka Papariga said in a statement.

In a sign the discontent has spread well beyond the union movement and far left, the Greek Confederation of Commerce (ESEE), a trade association of retailers, also rejected measures its leader Vassilis Korkidis denounced as "predatory".

It urged shopkeepers to raise Greek national flags at their stores and announced an internet campaign to convince cabinet members and MPs to renege on the austerity plan.

Greece is stuck in its worst recession since the 1970s, with a youth unemployment rate of more than 40 percent and public finances shattered by a debt equivalent to some 150 percent of gross domestic product. In a speech to shareholders in Athens, the head of EFG Eurobank , Greece's second-largest bank, said it was vital that the austerity measures were passed in parliament.

"Today, what is at stake for the country is its very future. Individually and collectively, we must all realise how crucial the situation is and join the collective effort for the big changes," Nicholas Nanopoulos said.

However the conservative opposition has refused to back the package and the view that the bitter medicine demanded by the EU and IMF will kill off any hopes of growth is widespread. "The medium-term austerity package is a recipe that deepens the recession and puts Greece in deep freeze," ADEDY's Papaspyros said.

"We must get out of this situation fast, we need policies that support social cohesion and growth so that the people's lives will not go bankrupt," he said.