Clashes erupt as protesters in Greece fight austerity drive

Greek police fired tear gas on youths yesterday as marchers swarmed through central Athens to protest unprecedented austerity cuts needed for more than €100 billion in EU and IMF loans.

Thousands of protesters used traditional May Day marches to vent popular anger against deep budget cuts the government has promised in the face of a debt crisis that pushed the country to the brink of default.

Anti-riot forces used tear gas to contain several isolated clashes on the margins of the marches, which police said drew 15,000 people.

Tear gas was also fired in the northern city of Thessaloniki where about 5,000 people demonstrated, according to police.

The protests piled fresh pressure on the government as it raced to wrap up negotiations with the EU and the International Monetary Fund to slash spending and raise taxes in return for the desperately needed loans worth as much as €120 billion.

After months of hesitation, the governments of Greece's 15 euro area partners want to prevent Athens' debt crisis from spreading to other countries, and regional heavyweights Germany and France vowed to quickly unblock loans.

The cabinet of socialist Prime Minister George Papandreou will meet early today to announce live on television the bailout package reached with the EU and the IMF, a Greek government source told AFP.

Greek union leaders meanwhile called a nationwide general strike last Wednesday against a new round of budget cuts hitting the public sector particularly hard.

"It's the biggest attack on workers for centuries. They want to return us to the 19th century," said protester Ericos Finalis, a printer.

"This is not going to be a battle but a war that will last for months or even years."

Clashes erupted when several dozen youths, some armed with sticks, charged a line of anti-riot forces protecting the finance ministry, prompting police to respond with tear gas.

A second group set fire to a van with a molotov cocktail. Police also fired tear gas when a group of anarchists came close to the entrance of a luxury hotel on Athens' central Syntagma square.

In Thessaloniki, police fired tear gas at youths attacking banks and businesses, using iron bars to smash up to cash machines and store windows.

"In the next months there will be many demonstrations, nobody knows what really is going to happen. But people know that there is no other way than to come down into the streets and protest," said protestor Marina Yotis.

The IMF and the EU have asked for Greece to slice off by next year 10 percentage points from a public deficit that reached 13.6 per cent of output in 2009, according to a top union official last Thursday.

French President Nicolas Sarkozy and German Chancellor Angela Merkel agreed in a telephone conversation yesterday "to act quickly to implement the support plan," the French presidency said.

Elysee officials have repeatedly said that Greece must not be allowed to become the "Lehman Brothers of Europe", referring to the 2008 collapse of the US investment bank that sparked the world's worst financial crisis in decades.

Merkel said meanwhile that stronger sanctions should be imposed on countries that break euro stability pact rules, a German media reported yesterday. "We really have to learn from the current crisis to ensure the euro remains a strong and stable currency," Merkel said, quoted in the newspaper Bild am Sonntag.

Polls showed Greeks to be divided between anger and resignation towards the shock therapy the EU and IMF were demanding in exchange for loans.

Nearly 80 per cent of those questioned were against cuts in private sector wages, but 50.6 per cent considered a lifeline from the EU and IMF was necessary, according to a survey of 1,256 people.