Protesters clash with riot police in Athens strike (AP)

ATHENS, Greece ? Riot police fired tear gas at youths hurling rocks near the Greek finance ministry Tuesday, trying to quell the anger unleashed by a general strike as parliament debated new cost-cutting measures.

The latest austerity measures must pass in two parliamentary votes Wednesday and Thursday if Greece is to receive bailout funds from the EU and the IMF that will keep it from becoming the first eurozone nation to default on its debts.

The clashes with police came at the start of a two-day general strike called by unions furious that the government's new euro28 billion ($40 billion) austerity program will slap taxes on minimum wage earners and other struggling Greeks. The measures come on top of other spending cuts and tax hikes that have sent the Greek unemployment rate soaring to over 16 percent.

Hooded youths ripped up paving stones and set trash bins on fire in central Athens as police gave chase and fired tear gas and stun grenades. Earlier, about 20,000 people had marched peacefully in two separate demonstrations, while another 7,000 protested in the northern city of Thessaloniki without incident.

Everyone from doctors and ambulance drivers to casino workers and even actors at a state-funded theater were joining the strike or holding work stoppages for several hours.

Hundreds of flights were canceled or rescheduled as air traffic controllers walked off the job for four hours in the morning ? and were holding another walkout in the evening. Strikes by public transport workers snarled traffic across the capital, while other protesters blockaded the port of Piraeus.

"The situation that the workers are undergoing is tragic and we are near poverty levels," said Spyros Linardopoulos, a protester with the PAME union at the Piraeus blockade. "The government has declared war and to this war we will answer back with war."

Lawmakers began debating the latest austerity measures Monday and were continuing Tuesday. The package and an additional implementation law must be passed so the European Union and the International Monetary Fund release the next installment of Greece's euro110 billion ($156 billion) bailout loan.

Without that euro12 billion ($17 billion) installment, Greece faces the prospect of a default next month ? a potentially disastrous event that could drag down European banks, hurt other financially troubled European countries and even shock the whole global financial system.

But even lawmakers from the governing Socialists have been upset over the latest measures demanded by international creditors, and Prime Minister George Papandreou has struggled to contain an internal party revolt. He reshuffled his cabinet earlier this month to try to ensure his party's support for this vote, but the Socialists still only have a 5-seat majority in the 300-member Parliament.

Papandreou urged lawmakers Monday to fulfill a "patriotic duty" by voting in favor of the new measures, but two of his own lawmakers have suggested they won't.

European officials have also been pressuring Greece's the main conservative opposition party to back the austerity bill.

"Both the future of the country and financial stability in Europe are at stake," European Monetary Affairs Commissioner Olli Rehn said. "I fully respect the prerogatives and the sovereignty of the Greek Parliament in the ongoing debate. And I trust that the Greek political leaders are fully aware of the responsibility that lies on their shoulders to avoid default."

But conservative party leader Antonis Samaras has refused, arguing that while he backs some austerity measures, the overall thinking behind the package is flawed.

Greece remains frozen out of bond markets and is surviving on the euro110 billion ($156 billion) in promised bailout loans. But the initial plan had assumed that Greece would be able to return to the markets next year.

That won't happen, and a result 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" and that he hoped negotiations over a second bailout would be concluded by the end of the summer.

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

But many Greeks insist they should not be forced to pay for a crisis they believe the politicians are responsible for.

"We don't owe any money, it's the others who stole it," said 69-year-old demonstrator Antonis Vrahas. "We're resisting for a better society for the sake of our children and grandchildren."

Even with the new austerity measures, many investors still believe that Greece is heading for some sort of default because its overall debt burden is too great.

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Demetris Nellas in Athens contributed.

Source: http://us.rd.yahoo.com/dailynews/rss/business/*http%3A//news.yahoo.com/s/ap/20110628/ap_on_bi_ge/eu_greece_financial_crisis

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