Greeks unhappy with cabinet debt deal OK

Athens - Thousands of protesters massed in Greece under heavy police watch on Saturday after the government approved unpopular austerity cuts to get vital rescue funds and avoid the "chaos" of a default.

More than 3 500 people streamed to Syntagma Square in Athens on a second day of protests and a general strike, with hundreds of riot police standing guard following clashes that erupted during the rallies on Friday.

The defection-hit coalition government approved in the early hours on Saturday the painful belt-tightening measures that the EU and the IMF have demanded in return for a €130bn rescue package that Athens needs to avoid default in March.

"We are here to say no to what they want to impose on us," said Sophia, a 38-year-old researcher, as other protesters held up a banner reading: "They Are Ruining Our Lives".

The general strike brought public transport to a halt in the Greek capital, with no metro, bus or trolley services.

In the northern city of Thessaloniki, police estimated a crowd of some 4 000 at a similar protest.

As the cabinet debated the measures on Friday, Prime Minister Lucas Papademos issued a stern warning after six members of his coalition government resigned in protest at the new cuts.

"A disorderly default would plunge our country into a disastrous adventure," he told the cabinet. "It would create conditions of uncontrolled economic chaos and social explosion."

"Sooner or later, [Greece] would be led out of the euro," he warned.

Vote on Sunday

The remaining cabinet members finally approved the deal and the Athens News Agency (ANA) said parliament would vote on it on Sunday, with demonstrations expected during the vote.

Speaking to their respective parliamentary groups, the leaders of PASOK and New Democracy on Saturday urged their MPs to vote in favour of the new debt deal.

"The new programme is difficult and harsh, but it is our only hope for avoiding extreme situations," said former prime minister and PASOK leader George Papandreou.

"Now is the time of responsibility towards the country," he added.

"We can begin stabilising with the debt deal because we will remove €85bn [of debt] from our shoulders," New Democracy leader Antonis Samaras told his party's MPs.

"Now we must tell the truth and only the truth. We must look each other in the eye and be honest with the people to move forward... to ensure the nation's destiny," Finance Minister Evangelos Venizelos told PASOK's parliamentary group.

Greece was explicitly told by its eurozone partners this week that it must agree to austerity measures in order to secure the release of further loans under the €130bn bailout pending since October.

Greece needs the money to stave off bankruptcy on March 20, when Athens must repay nearly €14.5bn in maturing debt.

Three texts will be put to Sunday's vote: measures to recapitalise Greek banks, an authorisation for Papademos and the finance minister to sign the eurozone bailout, and a bond swap with private creditors designed to wipe out around €100bn from Greece's €350bn debt, ANA said.

20% unemployed

Details of the austerity measures will be included in a follow-up law to be introduced in the next two weeks, the agency said.

The measures, which include slashing minimum wages and facilitating layoffs, have sparked deep anger in a country where more than a million people, or more than 20% of the workforce, are unemployed.

The far-right LAOS party that was part of the coalition said it would not support the further austerity cuts, and its four members in government quit.

They were followed by the assistant foreign minister for European affairs, a socialist who accused the EU of "fixation" on a labour rights overhaul.

Another socialist, a deputy labour minister, resigned on Thursday.

The government intends to appoint replacements after the measures are approved by parliament on Sunday, state television NET said.

At least five socialist and conservative deputies have declared their intention to oppose the cuts on Sunday, and LAOS leader George Karatzaferis said his 16 lawmakers would do likewise.

"We are not going to vote," Karatzaferis told a news conference, adding: "Humiliation was imposed on us. I do not tolerate this."

In principle, the two senior coalition partners, socialist Pasok and conservative New Democracy, still have enough support to pass the measures.

Eurozone finance ministers on Thursday delayed a decision on a new bailout, giving Greek officials less than a week to meet tough conditions in exchange for fresh aid.

The ministers want Greek lawmakers to formally approve the measures, which include additional structural spending cuts of €325m for 2012.

They also want a written pledge from coalition leaders that they will implement the reforms, Eurogroup chief Jean-Claude Juncker said. If those conditions are met, the Eurogroup would meet again on Wednesday.

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