Thursday, May 6, 2010

Greek Unrest Raises Fears About Impact on Bailout

As protests against austerity measures in Greece turned deadly, concern grew that extended unrest could undermine the government’s resolve and jeopardize the costly rescue package that is aimed at preventing a default that could ripple through Europe.
Back Story With The Times’s Dan Bilefsky
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Employees outside the Marfin Egnatia Bank where a fire broke out during protests in Athens on Wednesday. Three people died of smoke inhalation in the fire. More Photos »
The protests Wednesday saw swarms of violent groups lashing out at the government and security forces and hurling gasoline bombs that, according to the police, set fire to a bank building and killed three workers inside.
The unrest threatens to polarize Greek society at a time when millions are already reeling over the effects of the financial crisis.
But many observers here said that the violence probably would embolden the government not to back down, while spawning a backlash among Greeks against a growing number of extremists who are seen as using the austerity measures as a pretext to attack the state.
“This really represents a game change in what’s happening in Greece,” said Jens Bastian, an economist and senior research fellow at the Hellenic Foundation for European and Foreign Policy in Athens. “Greeks and the rest of the world will ask, ‘Why on earth are you firebombing your own?’
“I think Greece will rise up against these people, because now the conversation isn’t about austerity measures, but about a murderous rampage against innocent people,” Mr. Bastian said.
The demonstration had drawn tens of thousands of people near the central square in front of Parliament as part of a general strike that paralyzed flights, ferries, schools and hospitals. It did not initially appear different from many other, mostly peaceful protests in recent months, as the country’s financial crisis has deepened and the likelihood of painful sacrifices has grown into a certainty.
However, clustered among the protesters were subgroups numbering in the hundreds — mostly young and many clad in black, wearing hoods or masks and carrying helmets, wooden bats or hammers — that the police and other demonstrators identified broadly as anarchists. They led efforts to storm the Parliament building, chanting “thieves, thieves,” and hurling rocks and gasoline bombs. Some chased the ceremonial guards away from the Tomb of the Unknown Soldier in front of the building. The police responded with tear gas canisters that spread a choking pall over the crowd.
In mid-afternoon, in a nearby neighborhood, a firebomb was flung into the Marfin Egnatia Bank, trapping at least 20 people. Firefighters worked to evacuate them, but the police said a man and two women stuck on the bank’s second floor died from smoke inhalation. Colleagues sobbed in the street.
The deaths shocked many in Greece, where demonstrations have been a way of life for decades and played a pivotal role in the overthrow of the military regime in 1974. In December 2008, thousands of rioters across Greece clashed with security forces for weeks over the fatal shooting by the police of a 15-year-old boy, without any further deaths.“A demonstration is one thing and murder is quite another,” Mr. Papandreou told Parliament in an emotional session on the proposed cuts that was suddenly overshadowed.
Members of Parliament held a minute of silence for the dead — the first deaths during a protest in Greece since 1991, when five people were killed in two separate protests against a government education bill in Patras, in southwestern Greece, and in Athens.
While the focus of blame was on the violent fringe group or groups, the dark turn had an immediate effect on world markets. The euro sank to a 14-month low of $1.28 as fears grew that unrest could spread to Europe’s other debt-ridden economies.
Analysts warned that if the social unrest transformed into a long, hot summer of violence, it could add alarm to already jittery financial markets and undermine the government’s resolve to implement the austerity measures.
Mary Bossis, a professor and security expert at the University of Piraeus, stressed that Mr. Papandreou would need to soothe the tempers of many angry Greeks who still did not understand why they were paying the price for the profligacy of others. sports
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