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Greek lawmakers pass austerity bill despite riots

By Nicholas Paphitis

Associated Press

Published: Thursday, Oct. 20 2011 2:01 p.m. MDT

Protesters stand amongst tear gas as a petrol bomb explodes during clashes in Athens, Thursday, Oct. 20, 2011. A protester died during an anti-austerity demonstration that turned violent in the Greek capital Thursday, authorities said, hours before lawmakers were to vote on deeply unpopular new cutbacks demanded by creditors to keep Greece afloat.

Thanassis Stavrakis, Associated Press

ATHENS, Greece — Ignoring two days of riots outside parliament, Greek lawmakers passed a deeply resented new austerity bill Thursday, caving in to the demands of international creditors in order to avoid a national bankruptcy.

The austerity measures won 154-144 in the 300-member parliament despite dissent from a prominent Socialist lawmaker who voted against a key article of the bill. The vote was expected to pave the way for a vital €8 billion ($11 billion) payout from creditors within weeks so Greece can stay solvent.

Clouds of tear gas choked central Athens ahead of the vote as riot police intervened to separate rival demonstrators who fought with firebombs and stones outside parliament, leaving one man dead and dozens injured.

The new measures include pay and staff cuts in the civil service as well as pension cuts and tax hikes for all Greeks.

Former Labor Minister Louka Katseli voted against one article that scales back collective bargaining rights for workers. Although she voted in favor of the overall bill, Prime Minister George Papandreou expelled her from the party's parliamentary group, whittling down his parliamentary majority to a bare three seats — down from ten seats two years ago.

Passing the entire bill was "a matter of national responsibility for the critical negotiations that lay ahead in the next few days," Papandreou said in a statement announcing Katseli's expulsion. "The government exhausted every possible effort to incorporate proposals made by members of parliament."

Greece now heads into a series of tough negotiations in Brussels involving the 17 finance ministers of the eurozone and European leaders. The meetings kick off on Friday, when eurozone finance ministers gather, with the finance ministers of the full 27-nation European Union in talks on Saturday, and the EU heads of state and government on Sunday.

Greece has avoid bankruptcy only with an €110 billion ($152 billion) bailout loan from its 16 eurozone partners and the International Monetary Fund since May of last year. Creditors worried about Greece missing budget targets had demanded that Athens pass extra austerity measures before its gets the next payout. Greece says it will run out of money in mid-November without the next €8 billion ($11 billion) installment.

In Athens, deputies voted after an acrimonious debate held as rival groups of demonstrators outside fought police and each other in a second day of violence. The protests were held during a 48-hour general strike that brought much of the country to a standstill.

"That it was voted on is one thing. Its implementation is another. The people will tear it apart, they will dismiss it in practice," retiree Kleanthis Kizilis said at the protest.

A 53-year-old protester died of a suspected heart attack and at least 74 were injured in the violence, a local hospital said. Police said at least six people were arrested and another 24 detained, while six officers were injured.

The violence erupted after hundreds of masked anarchist youths attacked a peaceful rally of about 50,000 people in Syntagma Square outside parliament, pelting them with firebombs and jagged chunks of marble. The Communists-backed union members counter-attacked, and chaos ensued as the two sides fought with sticks and rocks before riot police fired volleys of tear gas to separate them.

Running battles ensued through the avenues and side streets of central Athens, with anarchist rioters ripping up paving stones, hewing masonry from buildings and using garbage to set up burning barricades.

The meetings on Greece this weekend are crucial because the efforts so far to get the country back on track financially have been failing. In July, eurozone leaders tentatively agreed to a second €109 billion ($150 billion) bailout for Greece, conceding that the first was not enough.

That second bailout would also see banks and other private bondholders give Greece easier terms on its debt. European banks that hold Greek bonds are fighting efforts to make them accept larger losses, and many experts are concerned about the ability of European banks to handle a Greek default.

But Greece's international creditors are warning that even the second bailout may not be enough to save the country from bankruptcy, according to a draft of a debt inspectors' report obtained Thursday by The Associated Press in Berlin.

The inspectors said Greece has missed its deficit-cutting targets and called the pace of its reforms insufficient. They still added that Athens should get the next €8 billion tranche as soon as possible so it does not default.

Papandreou called on Greece's eurozone partners to urgently end a deadlock in negotiations over a broader European debt deal.

"Europe is now at risk because of its inability to grasp the scale of the crisis in time — the systemic problems — and take the necessary decisions," he told an emergency Cabinet meeting in Athens. "Europe must now assume its responsibilities — all of us in Europe. A small fire has become a pan-European fire."

But fury at his government echoed across Athens.

"He (Papandreou) doesn't know what is going on. For me, it's the worst government of all time," said protester Haralambos Tahoulas.

Associated Press writers Demetris Nellas and Elena Becatoros in Athens contributed.

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