Greece Passes Austerity Deal

By Derek Gatopoulos and Nicholas Paphitis

ATHENS, Greece -- Greek lawmakers on Monday approved harsh new austerity measures demanded by bailout creditors to save the debt-crippled nation from bankruptcy, after rioters in central Athens torched buildings, looted shops and clashed with riot police.

The historic vote paves the way for Greece's European partners and the International Monetary Fund to release $170 billion (130 billion euros) in new rescue loans, without which Greece would default on its debt mountain next month and likely leave the eurozone -- a scenario that would further roil global markets.

Sunday's clashes erupted after more than 100,000 protesters marched to the parliament to rally against the drastic cuts, which will ax one in five civil service jobs and slash the minimum wage by more than a fifth.

At least 10 buildings were on fire, including a movie theater, bank and cafeteria, and looters smashed dozens of shops in the worst riot damage in years. Dozens of police officers and at least 37 protesters were injured, 23 suspected rioters were arrested and a further 25 detained.

As the vote got under way early Monday, Prime Minister Lucas Papademos urged calm, pointing to the country's dire financial straits.

"Vandalism and destruction have no place in a democracy and will not be tolerated," Papademos told Parliament. "I call on the public to show calm. At these crucial times, we do not have the luxury of this type of protest. I think everyone is aware of how serious the situation is."

AP

A riot police officer tries to extinguish flames from a petrol bomb thrown by protestors outside the Greek Parliament on Sunday.

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Since May 2010, Greece has survived on a $145 billion (110 billion euro) bailout from its European partners and the International Monetary Fund. When that proved insufficient, the new rescue package was approved. The deal, which has not yet been finalized, will be combined with a massive bond swap deal to write off half the country's privately held debt.

But for both deals to materialize, Greece has to persuade its deeply skeptical creditors that it has the will to implement spending cuts and public sector reforms that will end years of fiscal profligacy and tame gaping budget deficits.