* Government pushes through austerity, labour reform package
* Nearly 100,000 Greeks take to streets to protest
* Police use water cannon, protesters hurl petrol bombs
* Second day of strike causes severe disruptions
By Lefteris Papadimas and Harry Papachristou
ATHENS, Nov 8 Greece's government voted by a
razor thin margin on Thursday to approve an austerity package
needed to unlock vital aid and avert bankruptcy, despite an
internal rift and violent protests at the gates of parliament.
Lawmakers approved the spending cuts, tax hikes and measures
making it easier to hire and fire workers after nearly 100,000
Greeks waving flags and chanting "Fight! They're drinking our
blood!" descended on Syntagma Square in central Athens.
Despite the abstention of their junior ruling partner the
Democratic Left, Prime Minister Antonis Samaras's New Democracy
Party and its Socialist PASOK allies passed the 500-odd page
bill shortly after midnight.
They mustered 153 of parliament's 300 seats, with New
Democracy and PASOK expelling seven deputies from their ranks
for not backing the measures.
Earlier in the evening, clashes erupted when a handful of
protesters tried to break through a barricade to enter the
assembly. Riot police responded with teargas, stun grenades and,
for the first time in an anti-austerity protest here, water
There was also chaos inside the assembly, where
parliamentary workers briefly stopped the session by walking out
when they discovered their salaries would be cut.
The bill covering the bulk of 13.5 billion euros' ($17.2
billion) worth of belt-tightening measures is a precursor to the
2013 budget law, which the government is expected to push
through on Sunday.
If it does, it is expected to unlock a 31.5 billion euro aid
tranche from the International Monetary Fund and European Union
that Greece needs to shore up its banks and pay off loans.
"We must now pass the budget and right after that work for
the recovery of the economy," Samaras told Reuters after the
The euro rose briefly to around $1.2780 from $1.2765 before
"We're seeing little bit of a bounce in the euro because the
threat of a Greek exit from the euro zone is dissipating now
that the Greeks have made the difficult decision to move forward
with painful austerity measures," said Kathy Lien, managing
director of BK Asset Management in New York.
The vote came on the second day of a two-day national strike
called by the country's two biggest unions, which halted public
transport and shut schools, banks and government offices.
Garbage piled up on the streets.
Backed by the leftist opposition, unions said the measures
would hit the poor and spare the wealthy, while deepening a
five-year recession that has wiped out a fifth of the country's
output and driven unemployment to a record 25 percent.
Anger has also been growing at the relaxed approach
consecutive governments have taken towards catching tax cheats,
with many saying officials have dragged their feet on
investigations to protect a wealthy elite.
"You live in constant fear and uncertainty. You never know
what's waiting for you around the corner," said Panos Goutsis,
58, who works in a small corner shop in Athens.
"How many times will they tell us these are the last
measures? We're sick of hearing it."
Outside parliament, loud booms rang out through the evening
as hooded protesters wearing gas masks hurled molotov cocktails
and rocks at police. Billowing smoke and small fires dotted the
square and streets next to parliament.
At least 35 people were detained. There were no reports of
serious injuries, police said.
"These measures are killing us little by little, and
lawmakers in there don't give a damn," said Maria Aliferopoulou,
a 52-year-old mother of two living on 1,000 euros a month.
"They are rich, they have everything, and we have nothing
and are fighting for crumbs, for survival."
BALL IN EU COURT
Calm returned as protesters emptied the square during a
steady downpour. The anti-austerity rally appeared to be the
largest in Athens since summer last year.
Analysts said that if the government pushed through the
budget on Sunday as expected, euro zone finance ministers could
agree at a meeting in Brussels on Monday to let Greece push back
its fiscal targets by two years to 2016 and ease austerity's
grip on growth.
That, in turn, will allow the European Central Bank to also
take measures to give Athens some slack, and the debate can then
turn to ways of easing Greece's debt load, which is expected to
peak at more than 190 percent of gross domestic product in 2014.
Eurasia Group analyst Mujtaba Rahman said Samaras's
government had shown stronger will than any of its predecessors
in pushing through the belt-tightening.
But a key question remains over whether the Mediterranean
state, having failed to implement numerous austerity plans in
the past, would be able to overcome intransigence in the
country's institutions and put Wednesday's package into force.
"There is political will. The question is whether the
bureaucracy has the capacity to implement reforms," Rahman said.
"Whether it can work is still an open question."