Greek Prime Minister George Papandreou offers to resign as austerity protests swell

By Anthee Carassava, Los Angeles Times
June 15, 2011, 11:37 a.m.

Reporting from Athens— Greek Prime Minister George Papandreou offered to resign Wednesday after witnessing a sea of angry citizens turn up at his office in protest of plans for a new batch of budget cuts for the financially strapped nation.

Thousands of Greek workers girdled the sprawling grounds of Parliament in Athens, trying to choke off the start of a debate on the new austerity package.

Police set up metal barricades outside the building. But when rowdy crowds moved to tear them down, scuffles erupted.

Photos: Clashes in Athens over debt crisis

Some protesters flung yogurt and water bottles at police, but others threw rocks and firebombs.

As Athens, the capital, descended into violence, Papandreou offered to resign in a bid to shore up political support for the austerity package.

"He made it very clear to his political opponents that he was willing to step down for the sake of winning consensus on specific policies, goals and decisions," a senior aide to the prime minister said. "We're now waiting for their responses."

Papandreou, who met earlier with the country's president, was expected to make a televised statement.

A key aide to opposition leader Antonis Samaras said any agreement for a new unity government would include Papandreou's resignation and renegotiation of the bailout package.

Parliamentary approval of the austerity plan, including additional tax hikes, deep cuts in public sector wages and a fire sale of state assets, is critical for securing additional bailout funds, a year after Greece's European peers and the International Monetary Fund cast the cash-strapped nation a $146-billion lifeline to avert default.

Still, with political uncertainty looming and the specter of default rising, the country's bedraggled bonds took a beating in international financial markets Wednesday, with the cost of insuring against Greek default reaching record highs. It now costs $1.725 million a year to insure $10 million of Greek debt, according to data provider Markit.

At least 12 protesters were detained in the riots and scores of store windows, banks, cafes and hotels lining one of Athens' premier plazas, Syntagma Square, were destroyed. Thick plumes of tear gas hovered over Athens for hours, sending teary-eyed tourists to seek refuge in the capital's meandering side streets and alleys.

Demonstrators included members of the country's two largest labor unions, which staged a 24-hour nationwide walkout.

While European leaders look unlikely to let Greece collapse, Germany, the European Union's paymaster, and the union's central bank are still at odds over whether private creditors with vaults full of Greek bonds should share the burden of the bailout.

Eurozone finance ministers meet in Brussels on June 20 and European Union leaders gather three days later to thrash out details of the new Greek bailout.

For three weeks, crowds have crammed the main square of the capital.

On Wednesday and before violence engulfed Athens, thousands gathered in Syntagma Square, venting their anger at what they called the nation's kleftes, or thieves, as they have renamed members of Parliament. Only 26% of those surveyed in a new poll over the weekend said they backed the embattled Papandreou, while a whopping 38% said they would abstain from voting altogether if elections were called earlier than expected.

"The people decide," said Tassos Yalama, 34, a hotel employee. "And we the people want Papandreou to resign."

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