Greece Set for Crucial Vote on Austerity

ATHENS—As thousands of demonstrators clashed Sunday with police outside Greece's parliament, lawmakers inside debated painful austerity measures the country must take in exchange for a multibillion-euro bailout and debt-restructuring program.

The loan-for-austerity package to be voted on at midnight local time foresees steep spending cuts and sweeping structural reforms, and also outlines the terms of a separate debt-swap plan that Greece has been negotiating with its private-sector creditors.

The austerity program must be passed in parliament—which seems likely, given the government's super majority—if Greece is to receive a second, €130 billion ($172 billion) bailout from its European partners and the International Monetary Fund.

The measures have stoked opposition from a crisis-weary population, with the Greek economy now stumbling through its fifth year of a grinding recession that has led to soaring unemployment and business bankruptcies.

In the city's main Syntagma square, protesters played revolutionary music, banged drums and hoisted banners decrying the cutbacks and calling for revolution. Many chanted "thieves, thieves" at the parliament building.

Some 4,000 riot police were guarding the parliament building as dozens of hooded, self-styled anarchist youth attacked police amid a large protest in Athens' main Syntagma Square called by Greece's unions to protest the new measures.

The youths hurled gasoline bombs, rocks and other projectiles at police, who responded with successive volleys of tear gas. There were also reports of street battles near the University of Athens located several blocks away from the main square.

According to police estimates, there were some 45,000 protesters taking part in two separate demonstrations organized by Greece's two main umbrella unions—private sector GSEE and public-sector ADEDY—and the Communist-backed PAME union.

"Social revolution. Direct Democracy Everywhere" read one banner. Another depicted German Chancellor Angela Merkel and International Monetary Fund chief Christine Lagarde as vultures.

"Life has become unrecognizable," said Maria Laspa, 51, who was attending the demonstration with her husband and adult son. "I blame the corrupt politicians first and foremost."

Speaking in a stormy parliamentary session inside parliament, Finance Minister Evangelos Venizelos defended the government's decision to rush through the package under expedited parliamentary rules that restrict debate on the new measures to a single, 10-hour session.

"That has to happen by tonight, in other words by Sunday midnight, so that by the early hours of Monday the financial and banking markets have got the message that Greece wants to and can survive," he said. "That is why we are doing this under expedited procedures."

Greece's prime minister and the leaders of the country's two major parties on Saturday moved to rally lawmakers behind the painful austerity plan. The plan is expected to pass, given the overwhelming majority that Greece's two major parties have in parliament, But a large number of defections are expected.

In a televised address to the nation Saturday evening, Prime Minister Lucas Papademos warned in stark and dramatic tones of the consequences Greece will face if it fails to secure fresh aid and is forced to default on its debts.

"A disorderly default would throw the country into a disastrous adventure. It would create conditions of uncontrollable economic chaos and social eruption," Mr. Papademos said.

He added that banks could collapse, deposits would be threatened, the country would be unable to pay salaries and pensions or keep schools and hospitals running.

Speaking to a meeting of fellow Socialists, party chief George Papandreou said Saturday Greece was one step away from securing that badly needed aid package, and warned that failure to do so would lead to default and bring "chaos" to the country.

Riot policemen stood guard outside the Greek Parliament in Athens on Saturday.

Just moments later, conservative New Democracy party leader Antonis Samaras issued a similar call to his party deputies commanding them to toe the party line in the coming vote.

Speaking to an emergency session of parliament's finance committee Saturday, the country's finance minister said Greece had to make its final bond-exchange offer to private-sector bondholders by Friday, Feb. 17, at the latest. The bond offer is expected to run for three weeks.

That will give Greece just enough time to complete the debt-writedown—and receive a fresh injection of aid—before a looming March bond redemption. On March 20, Greece must pay back an outstanding €14.4 billion bond that it can't pay without fresh aid from its European partners and the IMF.

Before then, Greece faces a tight schedule. The vote Sunday will be followed by a meeting of euro-zone deputies—the working group known as the eurogroup—Tuesday in Brussels and an extraordinary meeting of euro-zone finance ministers Wednesday.

Leading up to the vote, Greece's cabinet unanimously approved the reform measures late Friday, which include implementing steep cuts in private sector wages, sacking 15,000 public-sector workers, and drumming up a further €3 billion worth of government spending cuts this year alone.

During the parliamentary debate Sunday, the head of the small, nationalist Laos party, Giorgios Karatzaferis, called for immediate elections in the face of the growing opposition to the measures.

The call came just three days after Laos effectively withdrew from Greece's coalition government, in opposition to the new austerity program."The only solutions is here and now, the dissolution of parliament and immediate elections," Mr. Karatzaferis said.

The Laos party controls 16 seats in Greece's 300-member parliament. Even without its support, the two main coalition partners—the Socialists and the conservative New Democracy party—have a combined 236-seat majority.

The two main parties are facing dissent in their own ranks, and analysts say there may be yet dozens of defections when the vote comes, though not enough to imperil parliament's backing of the reforms.

Most of those defections are expected among the Socialists, who have seen their public support collapse in recent opinion polls. According to one recent poll, the Socialists would command just 8% of the vote if elections were held today—the lowest approval rating for the party since it was formed in the mid-1970s.

But Mr. Samaras, whose party is leading in the polls and looks set to become Greece's next prime minister, has also seen defections in his party with two New Democracy party members Saturday saying they would vote against the new measures.

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