Greece votes for bitter pill - and rioters spit their fury

GREEK MPs have imposed tax hikes and spending cuts to stave off bankruptcy amid a second day of rioting that left dozens injured.

Having voted through a new austerity package yesterday, the Athens parliament will vote today on changing the law to implement the measures.

But a 48-hour strike and violent protests have raised fears of widespread defiance of further belt-tightening.

In the run-up to the vote, violence engulfed the square outside the parliament building for the second day, while services across the country ground to a halt in the latter half of a 48-hour general strike.

Riot police fired volleys of tear gas at swarms of young men hurling rocks and other debris as well as setting fire to trash containers.

Protesters threw flares and orange and green smoke bombs, and a few sprayed fire extinguishers at police, who picked up rocks and tossed them back. Heavy clouds of tear gas wafted over the chaotic scene.

Authorities and emergency services said 26 police and 15 protesters were injured and taken to hospitals, while 29 people were detained and nine arrested.

London's leading shares climbed in value as the vote allayed City fears that Greece would default on its debts. The FTSE 100 finished the day 89 points higher and stocks on Wall Street and in Europe were also higher on the news.

Agreement on the €28 billion (25bn) austerity package to try to lower the massive Greek deficit was a condition for receiving the next 10.7bn instalment of a 96.5bn Greek bail-out programme from the EU and the IMF.

Warnings that the alternative to more austerity was imminent national bankruptcy persuaded opposition MPs to back prime minister George Papandreou and impose deeply unpopular cuts.

The 155-138 vote for austerity was welcomed in Brussels as the only option for a Greek economy still on the slide.

Greece needs nearly 4bn of the latest bail-out instalment by 15 July to pay its most pressing debts.

If the necessary law changes to impose the austerity package go through today, eurozone finance ministers are likely to nod the payment through at emergency talks in Brussels on Sunday.

• Greek protests in pictures

That does not solve the long-term Greek crisis, and a second massive bail-out, worth more than 100bn, is expected to be signed off for Greece later this year.

Meanwhile, the Greek government must face the fall-out from its decisions, with millions of angry workers threatening to rebel against the imposition of more job cuts, pay cuts and tax rises.The fear in Greek political circles is of a longer-term orchestrated campaign of public sector strikes which will worsen the crisis.

"This is bad, the country will be sold for a piece of bread," said Dimitris Kostopoulos, a 48-year-old insurer. "There were many other more appropriate alternatives to this. Parliament has once again betrayed us."

But the new austerity package was hailed as a "vote of national responsibility" by European Commission president Jose Manuel Barroso and European Council president Herman Van Rompuy.

In a joint statement they said: "With today's approval by the Greek parliament of the revised economic programme, the country has taken an important step forward along the necessary path of fiscal consolidation and growth-enhancing structural reform.

"But it has also taken a vital step back - from the very grave scenario of default."

The statement made clear the danger is not over.

It said: "The eyes of Europe will again be turned towards Athens as parliamentarians are called upon to approve the implementing measures for the programme.

"A second positive vote would pave the way for the disbursement of the next tranche of financial assistance.

"It would also allow for work to proceed rapidly on a second package of financial assistance, enabling the country to move forward and restoring hope to the Greek people."

The EU and the IMF are determined not just to save Greece, but to restore the credibility of the single currency and prevent euro "contagion" spreading to other struggling member states, including Ireland and Portugal.

The unpopular package of spending cuts and tax hikes passed by 155 votes to 138, with five opposition deputies voting "present" - a ballot that backs neither side.

A sole deputy from the governing socialists, Panayotis Kouroublis, dissented over government plans to sell a further stake in Greece's state electricity company and was quickly expelled from the parliamentary group by Mr Papandreou.

In a dramatic vote, socialist deputy Alexandros Athanassiadis, who had previously vowed to vote against the bill, overturned his decision at the last minute and backed the package, saying he had been swayed by the prime minister's comments in parliament.

A conservative deputy broke ranks with her party's line to also vote in favour, bolstering the government's majority of five seats in the 300-member parliament.