Anger in Greece as Parliament to Vote on Bailout

By Harry Papachristou and Ingrid Melander

February 10, 2012 8:28 PM EST

Greek lawmakers will vote this weekend on a controversial austerity bill that Athens needs to avoid a messy default, but which is fuelling a domestic political and social crisis that has brought thousands of Greeks out on the streets in protest.

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The cabinet approved the draft bill late on Friday -- paving the way for a new multi-billion euro bailout and a debt-cut plan -- after another day of rocky politics duirng which six cabinet members resigned over the additional austerity demands.

Analysts expect the deeply unpopular package to be adopted by parliament on Sunday after being discussed in committee on Saturday, but the political situation remains highly unstable, and a number of lawmakers have said they would vote against it.

Even after the vote is completed, the EU expects the government to specify a further 325 million euros ($430 million) of spending cuts before it agrees to the 130-billion-euro bailout.

The EU and IMF have been exasperated by a series of broken promises and weeks of disagreement over the terms of the bailout, which would be Greece's second since 2010, and they will not release the aid if they do not get clear commitments by main party leaders that the reforms will be implemented.

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The uncertainty has roiled world financial markets, with stocks snapping a five-day winning streak on Friday and the euro slumping as planned wage and pension cuts in Greece hit a new obstacle.

Outside Greece's parliament, police fired teargas at black-masked protesters who threw petrol bombs, stones and bottles at the start of a 48-hour general strike against the cuts ordered by the "troika" of international lenders.

But the street protests against the austerity -- which many Greeks blame on Germany -- were relatively small compared to last year's mass rallies.

Unions have called protesters to rally again on Saturday and Sunday after they chanted on Friday: "Do not bow your heads! Resist! No to layoffs! No to salary cuts! No to pension cuts!"

The biggest police trade union said it would issue arrest warrants for Greece's international lenders for subverting democracy, and refused to "fight against our brothers."

EXACT AMOUNT LEFT OUT

The bill, approved by the cabinet, along with hundreds of pages of accompanying documents, sets reforms that include a cut of the minimum wage by 22 percent, pension cuts worth 300 million euros this year, and health and defense spending cuts.

But it does not spell out the exact amount of the bailout, which is left blank. Eurozone officials have said another 15 billion euros may be needed for the recapitalization of Greek banks after the debt swap.

"The government believes that sustained implementation of this policy program, complemented by debt restructuring, will put the public debt on a clear downward path," it says in a draft letter to EU and IMF chiefs, attached to the bill.

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