Greek finance mass protest ends in street battle

A protest march by 50,000 Greeks angry over planned government cuts to bring burgeoning debt under control ended in violent clashes with police today.

The violence lasted about 30 minutes when scores of youths hurled rocks, paint and plastic bottles near parliament and officers responded by firing tear gas.

Windows were smashed at the Finance Ministry which has been accused by the European Union of slipshod statistics-keeping that made the financial crisis worse.

The day's protests were otherwise peaceful. Unions organised the march amid a 24-hour general strike that grounded flights, shut schools and crippled public services, in a show of strength against the government.

The walkout comes as Greece is considering tougher austerity measures to ward off a financial crisis that has undermined the euro and raised fears that financial market contagion will spread to other weak economies such as Portugal, Spain and Italy.

The European Union has issued a vague promise to support Greece, which has £53 billion of debts coming due this year, but the government of Prime Minister George Papandreou has pressed for more specific guarantees to shore up market confidence.

The government says it will not need a bailout and will stick to its plans to make sharp cutbacks.

There was disruption elsewhere in Europe by workers unsettled by the threat to their jobs from the slow economy and government plans to cut back. In France, a strike by air traffic controllers disrupted flights for a second day. And in Spain, tens of thousands of demonstrators yesterday rallied in several cities to protest over a government proposal to raise the retirement age by two years to 67.

Greece has already imposed broad spending cuts but says it is under pressure from the European Union to cut salaries in the civil service, traditionally looked to as a jobs provider.

Officials from the EU and International Monetary Fund are in Athens to inspect public finances, ahead of a March 16 deadline to show signs of fiscal improvement or face imposed additional austerity measures.

Unions say cutting Greeks' so-called 14th salary - part of annual pay held back as a holiday bonus - for public workers would be taken as "an act of war."

The country's two largest unions, the private sector GSEE and public sector ADEDY, fiercely oppose a wave of belt-tightening measures announced over the past weeks to reduce the budget deficit from 12.7% of gross domestic product to 8.7% this year.

"If all these measures are enforced, unemployment will skyrocket. Our country will enter a massive recession and unemployment will reach a Europe-wide record," a GSEE spokesman said.

"This will be tragic because it will provoke social (unrest) and clashes."

Greek unemployment hit a five-year high of 10.6% in November 2009, up from 9.8% in October. The country's woes have affected confidence in the euro as a common currency, and raised its borrowing costs.

The governing Socialists have frozen civil service wages and hiring while cutting bonuses, raising consumer taxes and retirement ages.

Greek borrowing rates nevertheless remained high today, reflecting market worries of a default.

Greece is facing a March 16 deadline from the European Union to show signs of financial improvement and is under pressure to take additional measures. These could include raising VAT, currently 19%, and further civil service bonus cuts.

Greece's central bank governor George Provopoulos said the crisis heightened a pressing need for major economic reforms.

"The crisis could present an opportunity to carry out necessary reforms - and not just have a debate about them - given that not implementing these reforms would have a great price."

The strike will be a crucial test of support for the unions, with polls showing strong public support for the government's austerity plan.

A poll in the Ethnos newspaper showed 57.6% of Greeks believe measures taken so far are "in the right direction," while 75.8% think unions should show restraint until the end of the crisis.