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Page last updated at 21:54 GMT, Wednesday, 5 May 2010 22:54 UK

Greek protesters urged to retreat from 'abyss'

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Petrol bombs were thrown at police, who responded with pepper spray and tear gas

Greece is "on the brink of the abyss", President Karolos Papoulias has warned, after three people died during protests over planned austerity measures.

"We are all responsible so that it does not take the step into the void," the president said in a statement.

It followed a day of violence during which protesters set fire to a bank, killing three employees.

Greece's government has vowed to pursue the spending cuts - a condition of its 110bn euro ($142bn; £95bn) bail-out.

"We are prepared to pay the heavy political cost," Finance Minister George Papaconstantinou told parliament during Wednesday's debate on the bill.

"We will not take a single step backwards."

The euro hit a fresh 13-month low against the dollar and European stock markets were also hit, amid concerns over Greek bail-out plans.

ANALYSIS
Malcolm Brabant
By Malcolm Brabant, BBC News, Athens


The situation in Athens is very tense at the moment - people are pausing and reflecting on what has happened.

Some people think that the deaths of the bank workers will have the impact of dampening down the protests because people will think that losing human lives is not worth it. But there are others who believe that this is the start of a social explosion.

This is a very volatile country.

If the outside markets look at Greece and think it is about to collapse, it may become a self-fulfilling prophecy.

There are also fears Greece's debt crisis could spread to other countries.

The austerity measures - which the Greek parliament is due to vote by the end of the week - include wage freezes, pension cuts and tax rises. They aim to achieve fresh budget cuts of 30bn euros over three years, with the goal of cutting Greece's public deficit to less than 3% of GDP by 2014. It currently stands at 13.6%.

The general strike is the third to hit Greece in as many months. The protest became violent, with petrol bombs thrown at police who responded with pepper spray and tear gas.

The bodies of two women - one pregnant - and a man were found inside the Marfin bank branch on Stadiou Avenue in central Athens. They were among 20 people working there when the petrol bomb was thrown.

Most of the employees managed to escape the fumes as the flames took hold, but the three found their way blocked as they tried to escape to the roof and they suffocated.

Prime Minister George Papandreou told MPs in parliament the killings were a "murderous act".

GREEK AUSTERITY MEASURES
Public sector pay frozen till 2014
Public sector allowances cut by 20%
State pensions frozen or cut
Average retirement age up from 61 to 63
VAT increased from 19% to 23%
Taxes on fuel, alcohol and tobacco up 10%
One-off tax on profits, plus new gambling, property and green taxes

"Nobody has the right to violence and particularly violence that leads to murder. Violence breeds violence."

But one of the protesters told the BBC it had been the fault of the police, whose "brutality" had led to the escalation.

"It's something tragic but I think that the responsibility in the last instance lies with the government because the government unleashed a tremendous amount of police violence against a huge demonstration," Panayotis Sotiris said.

Europe future 'at stake'

Meanwhile, the German parliament has begun considering the bail-out plan for Greece. Chancellor Angela Merkel urged MPs to back the emergency loan package agreed by European finance ministers at the weekend.

What went wrong in Greece?

An old drachma note and a euro note
Greece's economic reforms that led to it abandoning the drachma as its currency in favour of the euro in 2002 made it easier for the country to borrow money.
The opening ceremony at the Athens Olympics
Greece went on a debt-funded spending spree, including high-profile projects such as the 2004 Athens Olympics, which went well over budget.
A defunct restaurant for sale in central Athens
It was hit by the downturn, which meant it had to spend more on benefits and received less in taxes. There were also doubts about the accuracy of its economic statistics.
A man with a bag of coins walks past the headquarters of the Bank of Greece
Greece's economic problems meant lenders started charging higher interest rates to lend it money and widespread tax evasion also hit the government's coffers.
Workers in a rally led by the PAME union in Athens on 22 April 2010
There have been demonstrations against the government's austerity measures to deal with its 300bn euro (£267bn) debt, such as cuts to public sector pay.
Greek Prime Minister George Papandreou at an EU summit in Brussels on 26 March 2010
Now the government is having to access a 110bn euro (£95bn; $146.2bn) bail-out package from the European Union and International Monetary Fund.
Greece's problems have made investors nervous, which has made it more expensive for other European countries such as Portugal to borrow money.
Greece's problems have made investors nervous, which has made it more expensive for other European countries such as Portugal to borrow money.
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It requires Germany to pay the largest proportion of the loans.

"Quite simply, Europe's future is at stake," she said.

The EU has agreed to provide 80bn euros (£69bn) in funding - of which around 22bn euros would come from Germany.

Another 30bn euros will come from the International Monetary Fund and the remainder from other eurozone members.

European Council President Herman van Rompuy said the European Union was watching events in Greece.

"We are all concerned by the Greek economic and budgetary situation, but at this moment our thoughts are with the human victims in Athens," Mr van Rompuy said

"A major programme has just been finalised. This programme is ambitious and credible in efforts that it represents towards the budgetary plan and competitiveness."

The bail-out deal is designed to prevent Greece from defaulting on its massive debt.

However, it must first be approved by some parliaments in the 15 other eurozone countries.

Map detailing 5 May flashpoints


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