ATHENS?? Police fired tear gas at stone-throwing youths in central Athens on Wednesday, where thousands of striking state sector workers marched against cuts the government says are needed to save the nation from bankruptcy.
Youths broke up marble paving slabs and hurled the chunks of rock at police in full riot gear. The police responded by firing tear gas grenades, chasing the protesters through the square into surrounding streets.
Flights were grounded, schools shut and government offices closed in Greece's first nationwide walkout in months. Labor leaders call it the start of a campaign to derail emergency austerity steps launched last month by a government that has already imposed two years of tax hikes and wage cuts.
Greece's worsening debt crisis poses a risk to the euro currency and the international financial system. Reforms to Greek finances took on a new urgency this week after the government announced it would miss its 2011 deficit target.
Thousands of state workers, retirees and students had gathered peacefully, beating drums and waving banners reading "Erase the debt!" and "The rich must pay." They marched into the square outside parliament where lawmakers were debating holding a referendum on the response to the fiscal crisis.
Reuters saw one bare-chested man covered in blood, rescued by bystanders after scuffling with demonstrators. Other protesters tried to storm an Economy Ministry building, shattering heavy glass at the entrance.
Police said at least two people were hurt. Still, violence was less serious than in June, when more than 100 people were injured in battles between demonstrators and police in Syntagma Square.
Public services stopped or slowed
The strikes forced hospitals to run on emergency staff and the closure of some state schools. Trains were halted, and more than 400 international and domestic flights were cancelled at Athens airport. The Athens Acropolis and major museums were shut.
Judicial authorities also postponed a trial of eight Greek terror suspects until later this month, as lawyers were participating in the strike. The suspect group first appeared in 2003 and is best known for firing a rocket-propelled grenade into the U.S. Embassy in Athens in 2007. They have also claimed responsibility for bombing the Athens Stock Exchange and for a gun attack that severely wounded a riot policeman in 2009.
Despite its new measures demanded by the EU and IMF, the government was forced to announce this week it would still fall short of its 2011 deficit target by nearly 2 billion euros, rattling global markets. Polls show nearly four of five Greeks expect a default on the massive national debt within months.
"We want this government out. They deceived us. They promised to tax the rich and help the poor, but they didn't," said Sotiris Pelekanos, 39, an engineer and one of the striking workers gathered in central Athens. "I don't care if we go bankrupt. We are already bankrupt."
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Greece's main labor unions ADEDY and GSEE expect hundreds of thousands of people to walk off the job.
"They are not trying to save Greece. They are just killing workers," ADEDY Vice President Ilias Vrettakos said in a rally speech. "They should get the money from the rich, not from us."
Private sector workers did not participate in the strike but will take part in a bigger general strike on Oct. 19. Many in the Greek private sector resent perks of state workers, who are protected from layoffs by the constitution.
Avoiding a second blow
Greece's announcement this week that it would not meet its 2011 deficit target has put in doubt the viability of a 109 billion euro bailout agreed in July ? the second huge bailout in two years. If that deal must be renegotiated, European banks that hold Greek debt could suffer a heavy blow.
EU officials are scrambling to protect banks from a repeat of the crisis that froze the world financial system in 2008.
They have postponed until mid-November a decision on whether to approve the next 8 billion euro ($10.7 billion) tranche of bailout loans, giving negotiators more time to press the government to enact promised reforms.
OnWednesday, the IMF pushed for radical changes in the way the eurozone region's debt crisis should be handled.
Antonio Borges, the head of the IMF's Europe program, said the eurozone's bailout fund should get more firepower and new tools. To help, he said the IMF could intervene in bond markets to keep the crisis from engulfing large economies like Italy and Spain. The surprise proposal would profoundly alter the fund's role in the crisis.
It has so far contributed close to ?80 billion ($105 billion) to eurozone bailouts, about a third of the total, but never intervened in open markets.
"We have a whole set of options that could be put on the table to restore confidence in those countries," Borges said at a news conference in Brussels.
His comments are the first open acknowledgment of a radical change in approach by the IMF to the eurozone's debt crisis. The currency union's debt troubles have intensified severely as most investors expect a default by Greece and fear much larger Italy and Spain will be dragged into the crisis.
In public statements until now, IMF officials had insisted on agreements made at a eurozone summit in July, which gave a first range of new powers to the region's bailout fund and tentatively offered a second, ?109 billion bailout for Greece, with modest losses accepted by banks on their Greek investments.
'National cohesion and solidarity'
But Borges made clear on Wednesday that those decisions were no longer sufficient.
He said that the ?109 billion figure was an estimate based on conditions that have since changed, adding that a new program needed bigger focus on Greece's massive debt and growth. He said that didn't necessarily entail bigger losses for banks and other private Greek bond holders.
Borges also piled pressure on Greece to take more stringent measures to get its economy back on track, saying there was no rush to take a decision on the payment on the next slice of bailout money because the country doesn't face a big bond repayment deadline until December.
Athens has said it will start running out of money to pay salaries and pensions in mid-November if it doesn't get the ?8 billion ($11 billion) installment of its first ?110 billion ($145 billion) bailout.
Finance Minister Evangelos Venizelos said on Tuesday Greek finances for this year could slip even further behind its target if the country failed to rally round the reforms and show "national cohesion and solidarity."
His government has promised to hold a referendum on the fiscal crisis this autumn but has not said what question Greeks would be asked. Parliament debated the referendum law on Wednesday as the protesters gathered outside.
The country's main labor unions, representing about half of Greece's 5 million-strong work force, have staged repeated strikes since Athens asked the European Union and International Monetary Fund for a first bailout last year. They say salary cuts, tax hikes and layoffs hurt the poor and prevent the economy from emerging from three years of recession.
"The government is panicking and has no strategy," said Thessaloniki port unionist Fani Gourgouri. "These measures are only extending poverty. We'd be willing to shoulder the cost and say 'yes' to austerity if they proceeded with reforms that would create jobs instead of cutting them."
The Associated Press and Reuters contributed to this report.
Source: http://www.msnbc.msn.com/id/44783144/ns/world_news-europe/
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