Greece adopts austerity bill amid protests

ATHENS (Reuters) - The Greek parliament approved a painful set of austerity measures on Thursday, defying violent protests in central Athens and a general strike which shut down much of the country.

The struggling government of Socialist Prime Minister George Papandreou won the parliamentary vote with 154 votes in favor and 144 against, despite the decision by one deputy in the ruling party to oppose one article in the package.

The victory should ensure the European Union and International Monetary Fund release a vital 8 billion euro ($11 billion) loan tranche which the government needs to keep paying its bills past November.

The mix of deep pay and pension cuts, tax hikes and changes to collective bargaining agreements has been bitterly opposed and at least 70,000 people joined protests in Athens’ Syntagma Square in front of parliament.

Groups of black-clad youths clashed with rivals from PAME, a communist-affiliated labor group, and police later cleared the square.

At least 74 people were taken to hospital with injuries and one man died of a heart attack on the fringes of the protest, but officials said he had not been hurt in the incidents.

Papandreou now flies to Brussels for a meeting of European leaders on Sunday to try to prevent the debt crisis spinning out of control. A second summit is also expected to be held on Wednesday.

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“We are at a critical point, not only for us but for European history. I have never, in my memory, heard before from leaders of major European countries that there is danger of Europe coming apart,” Papandreou told a cabinet meeting before the vote.

“It is time for all of us now to assume our collective responsibility.”

As night fell, streets were strewn with rubbish and debris after hours of sporadic clashes but the square in front of parliament was cleared of demonstrators.

The head of the Greek Communist party, Aleka Papariga condemned the violence which she said had been deliberately provoked by groups of “hood-wearers”.

“This was a pre-meditated attack,” she told reporters, saying the rioters served the interests of what she termed “specific mechanisms”.

“No matter what happens, we’re not leaving,” she said. “There’s no other way out, people have to take the situation into their own hands.”

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With Greece reeling from three years of recession and a mountainous public debt which has shut it out of bond markets, Papandreou’s government is trapped between lenders demanding tougher action and public anger at the cuts.

Hostility to the new austerity measures has also imposed a severe strain on the ruling PASOK party and Papandreou expelled Louka Katseli, a close family friend, after she voted against an article in the bill restricting collective wage agreements.

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“Today’s vote is not a matter of party discipline, it’s an issue of national responsibility,” Papandreou said in a letter read out by the house speaker.

Two other deputies who had threatened to rebel bowed to pressure from party leaders but deep unease remained at measures many feel punish the weak and will only drive the stricken economy further into the ground.

“I will vote in favor, but this is the last time -- I am struggling with my conscience,” said Vasso Papandreou, one of the dissenters who decided to go along with the package.

“Enough is enough, society is despairing, the country is collapsing,” she said to applause from other PASOK deputies.

The general strike called by unions representing around half the Greek workforce was one of the largest protests since the start of the crisis two years ago and brought more than 100,000 people to the streets on Wednesday.

“I will be protesting every day, it’s a matter of survival. They must go,” said 49-year-old Yannis Zahariadis, a civil servant and father of four. “I was forced to borrow money from my mother, a pensioner, to make ends meet.”

There has been widespread speculation the government will fall early, forcing a election before the scheduled date in 2013, but Papandreou has repeatedly ruled out stepping down early.

“People sent a message on Wednesday that they have reached their limits and can’t take any more austerity,” said Theodore Couloumbis of the ELIAMEP think-tank.

Banks, schools and government buildings were closed, transport services were hit and hospitals ran on skeleton staffing on Thursday and unions have vowed to continue their opposition with further stoppages.

Additional reporting by Lefteris Papadimas and Dina Kyriakidou; Writing by James Mackenzie; Editing by Robert Woodward