Cinemas, cafés, shops and banks were set ablaze in central Athens and black-masked protestors fought riot police outside parliament before lawmakers voted on the package that demands deep pay, pension and job cuts – the price of a €130 billion bailout needed to keep the country afloat.
State television reported the violence spread to the tourist islands of Corfu and Crete, the northern city of Thessaloniki and towns in central Greece. Police said 150 shops were looted in the capital and 34 buildings set ablaze.
Altogether 199 of the 300 lawmakers backed the bill, but 43 deputies from the two parties in the government of Prime Minister Lucas Papademos, the socialists and conservatives, rebelled by voting against it. They were immediately expelled by their parties.
Asian shares and the euro gained modestly early today, relieved by the Greek parliament's passage of austerity measures that put the country a step closer to securing a much-needed bailout fund and avoiding a messy default.
The rebellion and street violence foreshadowed the problems the Greek government faces in implementing the cuts, which include a 22% reduction in the minimum wage – a package critics say condemns the economy to an ever-deeper downward spiral.
Second bailout agreed on Wednesday?
Greece needs the second EU/IMF bailout before 20 March to meet debt repayments of €14.5 billion, or suffer a chaotic default which could shake the entire eurozone.
The bill sets out €3.3 billion of extra budget cuts for this year alone.
It also provides for a bond swap to ease Greece's debt burden by cutting the real value of private-sector investors' bond holdings by some 70%. Greece would have missed a 17 February deadline to offer a debt "haircut" to private bondholders if the vote had not been passed.
Eurozone Finance ministers are scheduled to meet in Brussels on Wednesday (15 February) to examine Greece's latest round of reforms and possibly give their green light to a new €130 billion aid package.
The package is conditional on the new austerity measures being passed as well as on a commitment by political leaders to implement them, no matter who wins a parliamentary election scheduled in April.
There would be "no disbursement without implementation," said Eurogroup chairman Jean-Claude Junker at the conclusion of a meeting of eurozone finance ministers last week.
"We are fully aware of the significant efforts made by Greek citizens, but we also underline the further and joint efforts that are needed to return Greek society to the growth and sustainability path", Juncker said after the Eurogroup meeting on 9 February.
Greece promises 'not enough for us anymore': Schäuble
Eurozone paymaster Germany ratcheted up the pressure on Sunday (12 February). "The promises from Greece aren't enough for us any more," German Finance Minister Wolfgang Schäuble said in an interview published in the Welt am Sonntag newspaper.
"Greece needs to do its own homework to become competitive, whether that happens in conjunction with a new rescue programme or by another route that we actually don't want to take."
When asked if that other route meant Greece quitting the eurozone, Schäuble said: "That is all in the hands of the Greeks themselves. But even in the event [Greece leaves the eurozone], which almost no one assumes will happen, they will still remain part of Europe."
'Short-term sacrifices': Papademos
Papademos admitted that imposing more austerity on a nation that has already endured several years of cuts would be tough.
"The full, timely and effective implementation of the programme won't be easy. We are fully aware that the economic programme means short-term sacrifices for the Greek people," the prime minister said.
But many Greeks believe their living standards are collapsing already and the new measures will deepen their misery.
"Enough is enough!" said 89-year-old Manolis Glezos, one of Greece's most famous leftists and a national hero. "They have no idea what an uprising by the Greek people means. And the Greek people, regardless of ideology, have risen."
Glezos is a national hero for sneaking up the Acropolis at night in 1941 and tearing down a Nazi flag from under the noses of the German occupiers, raising the morale of Athens residents.