Greek Parliament Backs Hefty Cuts

Greece's parliament has approved the hefty cuts and reforms proposed by the government to address the country's financial crisis. Members voted 172-121 to pass the bill, which includes tax rises and cuts in pensions and public sector bonuses.

Police used tear gas to disperse protesters who rallied outside, reports BBC News.

On Wednesday, three bank workers died in a petrol bomb attack as demonstrations over the planned austerity measures turned violent.The deaths have shocked many in Greece. Bank workers have gone on strike in anger at the loss of their colleagues.

Speaking in parliament ahead of the vote, Prime Minister George Papandreou said violence was "not a solution."

"The future of Greece is at stake," he said. "The economy, democracy and social cohesion are being put to the test." He expelled three Socialist deputies from his parliamentary team for abstaining in the vote.

In New York, the Dow Jones industrial index plunged almost 1,000 points as investors succumbed to fears that Greece's debt problems would halt the global economic recovery.

Greek Finance Minister George Papaconstantinou has warned Greece is two weeks away from defaulting on part of its debt; bonds worth 8.5bn euros ($12bn) fall due on 19 May.

"We have done what was necessary, not what was easy," Papaconstantinou said after the vote. "Without these measures, we'd be thrown into the deepest recession this country has ever known."

He warned that the only way for the country to avoid bankruptcy was to take a 110bn euro bail-out from 15 European countries and the International Monetary Fund, contingent on the three-year austerity program.

Those measures will mean a freeze on public sector pay until 2014, the average retirement age will rise by two years, and VAT will go up from 19% to 23%. The aim is 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%.

But Greece's conservative opposition leader has critized the austerity measures as being too harsh. "The dose of the medicine you are administering is in danger of killing the patient," Antonis Samaras was quoted as saying by AFP news agency.