Greek PM: Cuts and loans our only hope

Greece can only avoid bankruptcy by taking the joint EU-IMF rescue package, its government insisted today as it tried to push the measure through parliament.

“Today things are simple. Either we vote and implement the deal, or we condemn Greece to bankruptcy,” Prime Minister George Papandreou said.

The deal would force Greece to impose swingeing spending cuts, including slashing salaries and pensions and increasing taxes, in return for the €110bn three-year package.

The rescue loans are aimed at containing the debt crisis and keeping Greece’s troubles from spreading to other countries with vulnerable state finances such as Portugal and Spain. The euro has sagged as those countries have seen debt downgrades.

The spending cuts have sparked outrage in Greece, with an estimated 100,000 people spilling onto the streets of Athens during a nationwide general strike yesterday to protest at the measures.

Demonstrations quickly turned violent, with protesters trying to storm parliament and clashing with police in extensive riots that saw banks, stores and hotel windows smashed and two buildings burned.

A man and two women – one of whom was pregnant – died when they became trapped in a burning bank torched by protesters. Firefighters used a crane to rescue another four people from the building’s balconies.

Finance Minister George Papaconstantinou said the government had no choice but to impose the austerity measures, which were being rushed through Parliament.

He said the draft bill was introduced as urgent legislation because the country was two weeks away from default on bonds maturing on May 19.

“The state’s coffers don’t have that money,” Mr Papaconstantinou said. “Because today ... the country can’t borrow it from the international market. And because the only way for the country to avoid bankruptcy and suspension of payments is to take the money from our European partners and the International Monetary Fund.”

But in order to receive the money, Greece must agree to the three-year austerity program, he added.

“The government has the responsibility of implementing the most difficult financial measures ever taken in this country. It is a program which requires effort and sacrifice, and obliges us morally and politically to succeed,” Papaconstantinou said, describing the rescue package as “our country’s last hand.”

“We are asking for loans from countries that also have deficits and from countries that are also the subject of speculative attacks. And for those to be granted, we must persuade them that we are putting our house in order,” he minister said.

Yesterday’s deaths – the first such fatalities in protests in nearly 20 years in Greece – have shocked the public in a country where violence during demonstrations is frequent but rarely results in casualties.

An impromptu shrine with flowers and candles was set up in the burned-out windows of Marfin Bank where the three workers died.

“I have difficulty in finding the words to express my distress and outrage,” President Karolos Papoulias said. “Our country came to the brink of the abyss. It is our collective responsibility to ensure that we don’t step over the edge.”

However unions and far-left groups planned more protests against the measures today.

The bank workers’ union, OTOE, called a strike for today to protest at the loss of life, condemning the violence but saying the deaths were the result of the government’s austerity measures.

Many banks in central Athens remained open however.

The union blamed politicians, the police and bank management for being “morally responsible” for the deaths.