Greece caught between protests, austerity demands

By Nicholas Paphitis

Associated Press

Published: Friday, Feb. 10 2012 12:00 a.m. MST

A protester throws a stone toward riot police during clashes in Athens, Friday, Feb. 10, 2012. Thousands took to the streets of Athens as unions launched a two-day general strike against planned austerity measures on Friday, a day after Greece's crucial international bailout was put in limbo by its partners in the 17-nation eurozone.

Petros Giannakouris, Associated Press

ATHENS, Greece — Greece's future in the euro grew increasingly precarious Friday as violence erupted on the streets of Athens and politicians resigned from the government after European leaders demanded that they deliver even deeper austerity.

A day after Greece claimed it had reached an agreement among its squabbling party leaders on new cutbacks, European officials dashed any hopes that the country is out of danger. Finance ministers said more needs to be done and set a deadline for the middle of next week.

If Greece's government fails to meet Europe's demands, the debt-ridden country faces a chaotic debt default next month that would send shockwaves around the world economy and could doom a generation of Greeks to even deeper hardship.

If it does deliver those demands, Europe has committed to give it a €130 billion ($172 billion) lifeline that would at least postpone Greece's day of reckoning.

"No disbursement without implementation," Jean-Claude Juncker, the Luxembourg premier who also chairs the eurozone's finance ministers' meetings, said Thursday after they declined to fully back the deal Greek leaders had agreed.

The eurozone finance ministers want Greece to find another €325 million ($432 million) in savings and say Parliament must to vote the austerity through. Worried that Greek political leaders could later renege on the austerity promises, they also requested that the party heads commit to the measures even after general elections in April.

The fallout from the eurozone's demands was immediate in Athens.

Thousands of protesters marched through the streets to protest cuts including a 22 percent reduction in the minimum wage

Resistance was also growing in Athen's halls of power, with two deputy ministers leaving the government because they could not agree to the new demands. Deputy Agriculture Minister Asterios Rondoulis announced his resignation on Friday a day after Deputy Labor Minister Yiannis Koutsoukos, a Socialist, did the same.

George Karatzaferis, leader of the rightist LAOS party that is backing the government coalition, said he was withdrawing support for the measures agreed a day earlier, describing the country's treatment by its European partners as "humiliating."

Though LAOS is a pretty small party, it's a sign of the discontent that's growing in a country that's in its fifth year of recession, embroiled in seemingly-daily strikes and mired in mass unemployment — nearly one in two young people are out of work.

Though LAOS is a small party, its action comes amid growing discontent country suffering a fifth year of recession and mired by frequent strikes and mass unemployment — nearly one in two young people are out of work.

LAOS has 16 deputies in the 300-seat parliament in a coalition backed by 252 lawmakers, posing no direct threat to the measures that are due to be voted late Sunday and backed by the two major coalition parties, the Socialists and conservatives.

Faced with growing dissent, the Socialists and conservatives have both called emergency meetings of their parliament members following a Cabinet meeting scheduled for 1600 GMT.

The uncertainty hit global markets, as shares on the Athens Stock Exchange plunged 4.6 and the euro sank 0.7 percent to $1.3180.

As well as trying to secure the bailout, it is close to concluding a related debt-relief agreement with banks that would slash €100 billion ($132 billion) from the country's national debt.

In return, it has caved in to pressing demands to fire 15,000 civil servants in 2012, slash the minimum wage and other private sector pay.

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