Greek police clashed with protesters in central Athens as lawmakers debated a new bailout of up to 86 billion euros ($94 billion) that will impose further austerity on a country already ravaged by recession.
Riot police fired tear gas to disperse crowds gathered in Syntagma Square, across the road from the Greek parliament, at the start of the debate at about 9:15 p.m. local time. Lawmakers are due to vote on the bailout bill, which will endorse tax increases and spending cuts, by about midnight.
The protests show the challenges Prime Minister Alexis Tsipras faces convincing a country whose economy has shrunk by a quarter in the last five years to accept further spending cuts. In a July 5 referendum, 61 percent of Greeks voted “no” to a package of cuts less onerous than the one Tsipras accepted on Monday after capitulating to creditors’ demands.
“I want to say something to my comrades,” Greek Finance Minister Euclid Tsakalotos told lawmakers. “On Monday morning, at 9:30 a.m., it was the most difficult moment of my life. It was a decision which will be a burden for me for the rest of my life. I don’t know if we did the right thing. But I know we did something to which there was no alternative.”
Echoes of 2011
U.S. stocks fell after the violence started, with the Standard & Poor’s 500 Index slipping as much as 0.3 percent. The euro was little changed at $1.1095.
The scenes outside parliament were reminiscent of the turmoil that rocked Greece at the height of the crisis in 2011, when hooded protestors in gas masks fought running battles with police. About 13,000 people gathered to protest in central Athens tonight, police spokesman Takis Papapetropoulos said, though by about 9:45 p.m. many had been dispersed by riot officers.
Hotels and shops around the square pulled down shutters and deployed security guards as night fell. A few blocks away, business continued as normal in the tourist-heavy Plaka district.
Television images showed a protester throwing a Molotov cocktail shortly before the tear gas was fired.
The events highlight how Greek politics have gone through the looking glass since Tsipras and his Coalition of the Radical Left, or Syriza, came to power in January. As the sound of percussion grenades reverberated across Syntagma Square, lawmakers who had campaigned against austerity just six months before now prepared to vote for just the opposite.
Tsipras is likely to lose the support of 30 to 40 Syriza lawmakers in tonight’s vote, and to be forced to rely on opposition lawmakers to pass the bill, Eurasia Group analyst Mujtaba Rahman said in a note to clients.
As a result, “Tsipras will reshuffle his cabinet and may call a vote of confidence,” allowing him to rule with a minority of the legislature at least for a few weeks, Rahman said. After that, a “national unity” government comprising the major Greek parties could be formed.
The vote is a key milestone in the plan to unlock fresh aid for Greece. Banks have been closed for more than two weeks to stem withdrawals and without an injection of funds the government will miss a July 20 payment of 3.5 billion euros to the European Central Bank.
The Frankfurt-based ECB plans to make a decision on extending emergency liquidity to Greek banks on Thursday, after the parliamentary vote, which may allow Greek lenders to gradually re-open. The bailout deal must also still be approved by six other euro-area national parliaments, including the lower house in Germany.