VOTES & VIOLENCE

GREECE fended off a bankruptcy that would have disturbed global markets and threatened the future of the euro when lawmakers backed controversial austerity measures in the face of violent protests.

Investors cheered the bill, which aims to cut spending and raise taxes by €28 billion and raise €50bn in privatisations over five years, but, in Athens, the mood was dark. In a haze of tear gas, protesters hurled anything they could find at riot police and tried to blockade the parliament building.

A Greek default would threaten the viability of the euro and send shock waves through global markets similar to those that kicked off the global financial meltdown after the collapse of Lehman Brothers in 2008.

While world markets rose on the news that the bill passed, Greece was not out of the woods. The bill, along with another that must be passed today on implementing the austerity package, will release a €12bn installment of a €110bn bailout from the EU and IMF.

The installment Greece hopes to get will only see it through September, leaving open the question of how the country, burdened with piles of debt, will right itself.

On Sunday, eurozone finance ministers will meet in Brussels to make progress on a second bailout that is hoped will address long-term problems. Banks are expected to share some of the burden, possibly rolling over Greek bonds they hold, as French banks have already volunteered to do.

Greece’s prime minister George Papandreou has said the second bailout will be roughly the same size as the first. But many economists expect even that reprieve will not be enough and Greece will need a more significant restructuring of its debt.

As lawmakers voted, stun grenades echoed outside parliament and acrid clouds of tear gas and orange and green mist from smoke bombs and flares hung in the air.

Several banks and shopfronts were smashed, while a socialist dissenter who had backed the government, Alexandros Athanassiadis, was briefly assaulted by protesters.

Smoke billowed from a post office beneath the finance ministry, before the fire was put out. Rioters set up burning barricades along Syntagma Square, where demonstrators have staged a sit-in for the past month.

Nearby streets were littered with thousands of chunks of smashed marble and ripped up paving stones used to throw at police.

“That’s really good news,” German chancellor Angela Merkel said when told of the outcome of the vote. Germany is Greece’s biggest creditor.

In a joint statement, the heads of the EU commission and council, Jose Manuel Barroso and Herman Van Rompuy, said Greece had taken “a vital step back — from the very grave scenario of default”.