Two-Day Strike Cripples Greece, As Unions Rebel at New Austerity Measures

June 28, 2011 - 3:15 AM

Greece Financial Crisis

Protesters of a communist party-backed union, PAME, hang banners in English and Greek reading:

ATHENS, Greece (AP) — Workers across Greece walked off the job Tuesday at the start of a 48-hour general strike as lawmakers debate a new round of austerity reforms designed to win the country additional rescue loans needed to avoid bankruptcy.

More than 5,000 police were to guard Athens' city center, with union protest rallies due to head to Parliament. The strike disrupted or halted most public services. Everyone from doctors and ambulance drivers to casino workers and even actors at a state-funded theater was to join the protest, which is to continue Wednesday.

Hundreds of flights were canceled or rescheduled as air traffic controllers walked off the job for four hours from 8 a.m., and were to also strike between 6 p.m. and 10 p.m. Public transport workers joined the strike, snarling traffic across the capital. About a dozen protesters cordoned off one of Athens' busiest avenues that runs past Parliament, forcing hundreds of cars down small side streets.

Unions are angry at a new euro28 billion ($40 billion) austerity program that would slap taxes on minimum wage earners and other struggling Greeks, following months of other cuts that have seen unemployment surge to more than 16 percent.

The package and an additional implementation law must be passed in parliamentary votes Wednesday and Thursday so the European Union and the International Monetary Fund release the next installment of Greece's euro110 billion ($156 billion) bailout loan. Without the euro12 billion installment, Greece faces the prospect next month of becoming the first eurozone country to default on its debts — a potentially disastrous event that could drag down European banks and affect other financially troubled European countries.

"These measures are a massacre for workers' rights. It will truly be hell for the working man. The strike must bring everything to a standstill," said Thanassis Pafilis, a lawmaker with the Greek Communist Party which is leading one of Tuesday's main rallies.

The measures have caused outrage even among lawmakers from the governing Socialists, and Prime Minister George Papandreou has struggled to contain an internal party revolt that saw him reshuffle his Cabinet and call for a confidence vote in his government — which he survived last week.

Speaking at the start of the three-day debate Monday night, Papandreou called on lawmakers to fulfill a "patriotic duty" by voting in favor of the new measures. While he holds a majority of five seats in the 300-member parliament, two of his own deputies have suggested they will not vote for the bill.

"I call on you to vote for survival, growth, justice, and a future for the citizens of this country," Papandreou told lawmakers.

The debate began as word came that French banks are willing to defer Greek debt claims and ease pressure on Athens.

Greece remains frozen out of bond markets and is surviving on the euro110 billion in promised bailout loans. But the initial plan had predicted the country would be able to return to the markets next year — a prediction which is not panning out. It has become clear Greece will need more help, and Athens is negotiating for a second bailout, which Papandreou has said will be roughly the same size as the first.

Papandreou said he hoped the terms would be better than those for the first bailout.

"I call on Europe, for its part, to give Greece the time and the terms it needs to really pay off its debt, without strangling growth, and without strangling its citizens," he said.

Papandreou's new finance minister, Evangelos Venizelos, said the government acknowledged the new cuts were "unfair." He said Greece wants to conclude negotiations for a second bailout by the end of the summer "at the latest," and urged opposition parties to back the austerity program.

"These measures will take us from running budget deficits to achieving primary surpluses. It's a difficult but necessary step," Venizelos said.

Theodoros Pangalos, the outspoken deputy prime minister, criticized financial experts who have suggested Greece might be forced to abandon the euro and return to its old currency, the drachma.

"A return to the drachma would mean that the next day banks would be surrounded by people trying to get their money out. The army would have to use tanks to protect (the banks) because there wouldn't be enough police to do it," Pangalos said in a weekend interview with the Spanish daily El Mundo.

"There would be riots everywhere, shops would have empty shelves and people would be jumping out of windows ... It would also be disastrous for the entire economy of Europe."

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Derek Gatopoulos contributed.