Protesters set dozens of buildings on fire in Athens as Parliament voted… (Louisa Gouliamaki, AFP/Getty…)
Reporting from Athens — As thousands of protesters took to the streets and violence ripped through central Athens, Greece's Parliament approved yet another round of punishing spending cuts to secure international rescue funds and ease fears of a calamitous financial collapse, potentially perilous for global markets and Europe's single currency.
The legislation, featuring about $4 billion in severe budget trims including steep wage and pension cuts as well as 15,000 job reductions this year alone, was backed by 199 lawmakers of the 300-member Parliament. Five abstained, 22 were absent and 74 lawmakers — including socialist and conservative supporters of the coalition government — voted against the bill that capped a ferocious 11-hour debate ending early Monday.
Throughout the marathon discussion, thousands of Greeks opposed to the austerity package descended on the sprawling grounds of Parliament shouting, "Get out!" and "Thieves!" The crowd swelled into the tens of thousands and their chants echoed across the capital — even renowned music composer Mikis Theodorakis showed up — as mobs of youths clashed with police and set fires to at least 34 buildings.
"It was the worst show of violence in recent years," a senior police official said. At least 37 people were injured, and at least 25 protesters were arrested.
Violence also spread to other cities, including Thessaloniki in northern Greece, towns in central Greece and the islands of Corfu and Crete.
But the outcome inside Parliament offered some sense of respite for member nations of the Eurozone and for Greek Prime Minister Lucas Papademos, visibly drained and despondent three months after being called in to lead a unity government and negotiate the complex restructuring deal.
"This is the biggest crisis facing Greece since the Second World War," Papademos said before the vote. "It is unfair for a country that gave birth to European civilization to go bankrupt and to be left alone in isolation.
"The social cost of these measures is minor to what will ensue if the country slips into a disorderly default," he said. "It is a time of ultimate responsibility."
Rejection of the bill could have pushed Greece's European Union partners and the International Monetary Fund to withhold funding from cash-strapped Greece, leaving it without the money to pay a $19-billion bond redemption on March 20.
If that happened, the state would have been unable to pay salaries and pensions, fuel and other commodities would have run short, thousands of businesses would have been forced to close, and many Greeks would have lost their savings.
"It would wreak economic chaos and a social explosion," Papademos warned.
The approved plan, including a debt restructuring deal that will shear $132 billion off Greece's near $500-billion debt, removes the biggest stumbling block to Greece's desperate bid to secure more time and money to fix its faltering economy.
The vote capped a high-stakes drama that unfolded over the last week as Papademos and party leaders supporting his government acceded to foreign creditors' demands for beefed-up budget cuts, only to be told by European finance ministers Thursday that the measures were not enough.
Instead, ministers from the 17 nations sharing the euro deferred approval of a new Greek bailout — the second since a $140-billion lifeline cast in May 2010 — until the Greek Parliament ratified the austerity measures. Then, they insisted, party leaders would also need to pledge in writing that they would not breach the deal. They are also expected to flesh out the details of $420 million in spending cuts that remain vague promises from the $4-billion budget cut package.
Government officials said Papademos would move to reshuffle his Cabinet on Monday to replace four deputies who quit their posts ahead of the vote. More than three dozen lawmakers in the governing coalition who voted against the bill were immediately expelled from their parties.
"What matters is that the bill was approved, and that by an overwhelming majority," a senior government official said.
Even so, it could still prove inadequate to solve Europe's financial woes. Since a new bailout deal was agreed to by European leaders and the IMF in October, the dimensions of the overall economic meltdown have multiplied, and far more cash might now be needed to quell the Greek crisis alone.
Last week, German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that the bailout plan would leave Greece's debt as high as 136% of gross domestic product by 2020. That's even more unbearable than the 120% foreseen in the deal being negotiated.
On Sunday and as Greek lawmakers geared to vote on the plan, Germany — Europe's paymaster — ratcheted up pressure for additional reform. Schaeuble was quoted as telling the Welt am Sonntag newspaper that Greece "cannot be a bottomless pit."
"The Greeks have to finally close that pit. And then, we can put something in there," he said.