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Germans demand austerity; Greeks go on the rampage Add to ...

Shortly after mass protests in Athens turned violent, filling the streets with flames and tear gas, German Chancellor Angela Merkel assured Europeans that the euro can – and must – survive.

“If the euro fails, Europe fails and we will not allow that,” she said Wednesday at an event in Frankfurt.

Greeks want to know how much Ms. Merkel’s ambitions will cost and many suspect the price will be the destruction of the Greek economy, the result of a seemingly endless series of austerity programs designed to crush the budget deficit and stabilize the national debt.

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Greeks are blaming the cutbacks for an ever-deepening recession that has boosted the unemployment rate to 16.5 per cent, pushed down wages and eviscerated pensions. They are getting angry. Protests, strikes and violence are becoming frequent as a sense of desperation sets in.

While the economic downturn is proving painful for Greece, it is proving an embarrassment to Germany, France and a few other wealthy European countries. They were supposed to have cured the Greek debt disease a long time ago. The sorry string of dithering, squabbling and false starts on fixing Greece has allowed a tiny country worth no more than 3 per cent of the euro zone’s gross domestic product to trigger an existential crisis for the common currency.

As the save-the-Euro campaign reaches fever pitch, French President and expectant father Nicolas Sarkozy managed only a brief visit at the bedside of his wife, Carla Bruni, before his presence was needed at emergency meetings in Frankfurt with Ms. Merkel. Ms. Bruni gave birth to a girl on Wednesday night.

A crucial meeting of European Union leaders this weekend is supposed to come up with a final fix for the Greek debt crisis, though already Ms. Merkel is playing down the chances of a breakthrough.

Strikes and demonstrations have also hit Spain, where the unemployment rate is 21 per cent, and Portugal, which, along with Ireland and Greece, were forced to accept bailouts from the European Union and the International Monetary Fund as their economies stalled and debt costs rose to unsustainable levels.

Last Saturday in Rome, as many as 250,000 demonstrators took to the streets to protest government cutbacks and new labour laws they believe are unfairly tilted in employers’ favour. It, too, turned violent and about 100 people were taken to hospital.

Wednesday’s protests in central Athens were some of the biggest ever seen here. They coincided with a 48-hour strike that shut almost every shop and restaurant, along with public transportation, schools, museums and the airport, which stranded thousands of travellers.

An estimated 100,000 protesters filled Syntagma Square in front of the parliament buildings and the streets around it. What started as a peaceful demonstration on the day ahead of yet another austerity vote in the Greek parliament descended into chaos in the late afternoon, when small groups of helmeted anarchists threw rocks and petrol bombs at the police. They smashed the windows and steps of hotels lining the square and set fire to garbage bins, filling the streets with thick smoke. The police responded with tear gas and stun grenades, triggering even more aggression from the protesters.

Konstantinos Katsigiannis, an Athens lawyer and president of the Hellenic-Canadian Chamber of Commerce, said the deep recession, soaring unemployment rates and rising crime have put his country at the precipice. “Greeks feel that they’re on the edge of an abyss,” he said as Wednesday’s protests gained momentum just down the road from his office.

Greeks are not alone in their sense that fixing the debt crisis in the 17-country euro zone is proving too costly to economies such as theirs, which seems trapped in a vicious cycle of decline as deeper spending cuts trigger deeper recessions.

The government of Prime Minister George Papandreou has already passed six austerity programs since 2009 and is set to pass a seventh on Thursday, one that would reduce civil service wages by about 14 per cent, eliminate 30,000 jobs by the end of the year and impose higher property taxes. The first reading of the bill was adopted Wednesday night.







Demonstrators hope Mr. Papandreou’s socialist government loses Thursday’s austerity vote (a narrow victory is expected). If it does, it would almost certainly trigger an election. Approval of the new program is required before the IMF releases its next aid instalment, worth €8-billion, from 2010’s €110-billion Greek bailout. Athens has warned that the government will shut down unless the funds are received soon.







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