Greek workers strike over cuts plan

Workers across Greece began a 48-hour general strike today as politicians debate a new round of austerity reforms designed to win the country additional rescue loans needed to avoid bankruptcy.

More than 5,000 police were guarding Athens city centre, with union protest rallies due to head to Parliament.

The strike disrupted or halted most public services. Everyone from doctors and ambulance drivers to casino workers and even actors at a state-funded theatre were expected to join the protest.

Hundreds of flights were cancelled or rescheduled as air traffic controllers walked out for four hours from 8am and were also to strike between 6pm and 10pm.

Public transport workers joined the strike, snarling traffic across the capital. About a dozen protesters cordoned off one of Athens' busiest avenues that runs past Parliament, forcing hundreds of cars down small side streets.

Unions are angry at a new 28 billion euro (£24.9 billion) austerity programme which would slap taxes on minimum wage earners and other struggling Greeks, following months of other cuts that have seen unemployment surge to more than 16%.

The package and an additional implementation law must be passed in parliamentary votes tomorrow and Thursday so the European Union and the International Monetary Fund release the next instalment of Greece's 110 billion euro (£97.8 billion) bailout loan

Without the 12 billion euro (£10.7 billion) instalment, Greece faces the prospect next month of becoming the first eurozone country to default on its debts - a potentially disastrous event which could drag down European banks and affect other financially troubled European countries.

"These measures are a massacre for workers' rights. It will truly be hell for the working man. The strike must bring everything to a standstill," said Thanassis Pafilis, of the Greek Communist Party, which is leading one of today's main rallies.

The measures have caused outrage even among politicians from the governing Socialists, and Prime Minister George Papandreou has struggled to contain an internal party revolt which saw him reshuffle his Cabinet and call for a confidence vote in his government - which he survived last week.

Speaking at the start of the three-day debate Monday night, Mr Papandreou called on politicians to fulfil a "patriotic duty" by voting in favour of the new measures. While he holds a majority of five seats in the 300-member parliament, two of his own deputies have suggested they will not vote for the Bill.

"I call on you to vote for survival, growth, justice, and a future for the citizens of this country," he told politicians.

The debate began as word came that French banks are willing to defer Greek debt claims and ease pressure on Athens.

Greece remains frozen out of bond markets and is surviving on the 110 billion euro (£97.8 billion) in promised bailout loans. But the initial plan had predicted the country would be able to return to the markets next year - a prediction which is not panning out.

It has become clear that Greece will need more help, and Athens is negotiating for a second bailout, which Mr Papandreou has said will be roughly the same size as the first.

He said he hoped the terms would be better than those for the first bailout.

"I call on Europe, for its part, to give Greece the time and the terms it needs to really pay off its debt, without strangling growth, and without strangling its citizens," he said.

His new finance minister, Evangelos Venizelos, said the government acknowledged the new cuts were "unfair".

He said Greece wants to conclude negotiations for a second bailout by the end of the summer "at the latest," and urged opposition parties to back the austerity programme.

"These measures will take us from running budget deficits to achieving primary surpluses. It's a difficult but necessary step," Mr Venizelos said.

Theodoros Pangalos, the outspoken deputy prime minister, criticised financial experts who have suggested Greece might be forced to abandon the euro and return to its old currency, the drachma.

"A return to the drachma would mean that the next day banks would be surrounded by people trying to get their money out. The army would have to use tanks to protect (the banks) because there wouldn't be enough police to do it," he said in a weekend interview with the Spanish daily El Mundo.

"There would be riots everywhere, shops would have empty shelves and people would be jumping out of windows... It would also be disastrous for the entire economy of Europe."