Riots usher in age of austerity

Greece entered a new age of austerity with central Athens in flames, shops and businesses vandalised and police hunting hooded rioters through ransacked office buildings and the tourist district in the shadow of the Acropolis.

While MPs were smuggled out of Parliament after a narrow vote in favour of severe cuts, dozens of protesters were being treated at a field hospital set up in the metro station beneath them.

Earlier, Prime Minister George Papandreou urged his party to avert the country's "collapse" and swallow a package of measures some economists called an economic "suicide pill".

Outside in Syntagma Square, stun grenades and a relentless volley of tear-gas canisters were met with a barrage of rocks and petrol bombs by some of the protesters.

Internationally, the result was hailed as a "vote of national responsibility" by the European Commission and international markets climbed as the prospects of a rapid default that could rock the eurozone receded.

"In years to come, this vote may be seen as a turning point for Greece and the eurozone," said Jerzy Buzek, the European Parliament President.

"This was not an easy choice to make and I salute those who voted in favour of this tough reform package."

After three days of bitter debate in Parliament, national strikes and mass protests, the vote was carried by 155 to 138. A second austerity bill must also be passed today before Greece gets a €12 billion ($20.98 billion) loan it needs from the European Union and International Monetary Fund to avoid going bankrupt in two weeks.

Yesterday's violence brought an end - temporarily, at least - to the month-long occupation of Syntagma Square. The demonstrators' efforts to maintain a peaceful protest against an internationally mandated austerity programme were overwhelmed by clashes between 5000 police and several hundred masked rioters.

Hundreds of police officers on motorcycles swarmed into the square after the vote and waves of stun grenades and tear gas were fired to clear out the remaining protesters.

The battleground at Syntagma, a square fringed by luxury hotels where sections of the international media have watched from the rooftops, has presented some surreal scenes.

Few surpass the moment when some rioters put down their stones to help police in body armour hunt for the severed finger of a colleague. A bare-chested, tattooed protester eventually found the finger and signalled to officers, who wrapped it in tissue and rushed it from the scene.

Gripped by its worse recession since the dictatorship in the 1970s, Greeks now face bleak years of spending cuts and tax hikes while national assets are sold off in a privatisation programme designed to relieve the €600 billion national debt. Youth unemployment is 35 per cent and climbing. There is little prospect of Greece finding the growth it needs to reverse the crisis, analysts say.

International lenders have lost all confidence in Greece, whose bonds have been downgraded by the rating agencies to junk status - making it the first highly developed economy to slump so far. A technical default is seen by markets as a near certainty.

There are still serious concerns over the implementation of reforms, with many MPs telling constituents damaging cuts will be undone or ignored in practice. But the way should now be clear for a second €100 billion bailout from the IMF, EU and European Central Bank.

TAX AND SLASH
The measures introduced by Parliament yesterday are a mix of tax rises and spending cuts. They include:

* Tax increases of €2.02b this year.

* Reducing the public-sector wage bill, with a curb on hiring and the axing of all temporary staff. The Government will replace only one in 10 workers who retire this year.

* Slashing social benefits. Some benefits will be cut, others will be reduced through means-testing.

* Campaign against tax evasion with rising sums targeted to be saved every year and more than €1b in 2015.

* Defence cuts of more than €1b by 2015.

* Health-spending savings, partly from cutting subsidised drugs.

- INDEPENDENT