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Decision day for Greek politicians as citizens rebel

The Greek Parliament is set to take one of its toughest decisions - impose more austerity measures on its rebellious citizens or bankrupt the nation.

That is the stark choice offered to his MPs by prime minister George Papandreou in his desperate bid to win support for a new €28bn package of tax hikes, pay cuts and privatisations to tackle the worst economic crisis for decades.

Without more austerity, the EU and the International Monetary Fund says it will not provide more bail-out money for the country.

But if more austerity is imposed, Mr Papandreou may face a public backlash which will undermine his efforts to reduce the deficit and lead to bankruptcy anyway.

A second day of violent protests is expected in Athens as the moment of the vote approaches, with militant leaders warning of civil disobedience to defy the new austerity cuts.

On Tuesday a peaceful protest by about 20,000 people descended into violence, with riot police using tear gas and stun grenades to prevent attacks by youths. At least 37 policemen were injured.

The EU's economics Commissioner Olli Rehn has warned the MPs to back the bill. He said: "The only way to avoid immediate default is for Parliament to endorse the revised economic programme."

The appointment on Tuesday night of Christine Lagarde as the new head of the International Monetary Fund did not affect that message to Athens. She immediately called for "national unity" in Greece to take the necessary steps to avert economic disaster.

Mr Rehn for the EU and Ms Lagarde for the IMF are united in insisting that the new austerity programme must be approved if the next €12bn instalment of EU-IMF bail-out money is to be released in time to pay Greece's immediate debts as planned by July 15.

Mr Rehn said: "The programme includes both the medium-term fiscal strategy and the privatisation programme. They must be approved if the next tranche of financial assistance is to be released. To those who speculate about other options, let me say this clearly: there is no Plan B to avoid default. The EU continues to be ready to support Greece. But Europe can only help Greece if Greece helps itself."

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