Greece teetering between chaos and calm

On the garbage-strewn streets of central Athens, amid the carcasses of burnt cars, black-clad youths spray a message in red paint on concrete walls: “Revolt.” Nearby, sanitation workers clear debris from the remains of fire-bombed banks and shops.

But a few blocks away, state offices operate as normal, cafes and upscale boutiques serve well-heeled customers and the nation’s Parliament echoes with debate.

Like Athens’ scarred streetscape, Greece is teetering between chaos and calm. It’s unclear whether the uneasy quiet that settled Friday, two days after violent demonstrations, will prevail, or whether brewing social unrest will jeopardize the $146-billion international bailout package intended to stave off a humiliating bankruptcy for Greece that many fear could lead to broader defaults across Europe.

“It’s anyone’s guess at this point,” said Dimitris Mavros, head of the Athens polling firm MRB Hellas. “What’s certain is that we’re heading for a rocky ride and there is a lot of anger out there.”

On Friday, the German Parliament defied popular opposition and approved $28.2-billion for the rescue package after a raucous session of the Bundestag, the lower house, helping pave the way for the aid plan. Because of its financial might, Germany is crucial to the bailout.

German Chancellor Angela Merkel said the vote sent an important signal for the future stability of the euro. “We’ve ensured greater security for the euro with a large majority,” she said. “This is a very important decision that sends the message that we will protect the single currency for our citizens.”

France, Italy and Portugal also approved their share of the package.

In Athens, well into the throes of Greece’s worst financial crisis in recent history, the public has grown increasingly angry and angst-ridden since Prime Minister George Papandreou announced last month that his Panhellenic Socialist Movement government would accept the bailout loans patched together by the European Union and the International Monetary Fund.

The exchange? A painful dose of budget cuts — the third since the start of the year — designed to rake $40 billion into the state’s cash-starved coffers.

“I understand the need to make sacrifices, but how many cuts can we endure?” said Maria Alexopoulou, an unemployed single mother. “Why should I pay and suffer for this mess when it’s the crooked politicians who brought Greece to the edge of the abyss in the first place? Who’s going after them?”

By slashing public spending, raising the sales tax to 23% and overhauling an ailing pension system that allows generous benefits from the age of 50, the government hopes to slim the state’s yawning budget gap of 13.6% of gross domestic product — the highest in the 16-nation Eurozone — to less than 3% by 2014.

Still, the cost of such severe fiscal reform, financial analysts warn, may spell a deeper and darker recession, with a 4% decline in growth projected for this year and a further drop anticipated next year.

Such fears, coupled with mounting mistrust in Greece’s political elite, have millions of workers feeling that their livelihoods are at stake.

“Ever seen how a cat acts when trapped in corner?” asked Pantelis Simotis, a retired bank employee. “It hisses and lashes its claws out to fight back. That’s how we feel. That’s what we’re doing.”

On Wednesday alone, tens of thousands of workers stormed up to the gates of Parliament as lawmakers debated the controversial austerity bill. When news of its ratification spread, protesters ran amok, with militant youths and self-styled anarchists piggy-backing on a tidal wave of public fury, clashing with baton-wielding security forces.

Some observers here fear that a drawn-out summer of discontent could polarize society, pitting private sector employees who have been spared the shock of reforms against civil servants and pensioners who will feel the brunt of cuts.

“When social cohesion fades, violence sparks,” said criminologist Angelos Tsigris. “And that, is a worrying element here.”

A chronic violator of EU budget rules, Greece has met the Eurozone’s deficit ceiling of 3% only once. Greece owes overseas banks $220 billion, or about 115% of its GDP.

But Papandreou — the sober-sided antithesis of his father, Andreas, who dominated Greek politics for nearly two decades — surged to power in October promising to shield salaries and pensions.

A $4.5-billion stimulus package had once been envisioned to resuscitate the economy through infrastructure projects and environmentally sustainable development. But those promises have gone out the window.

“I voted for him and I supported his party for years,” said civil servant Kostas Batis. “Now I don’t want to hear of him or any other politician. They are all corrupt cheaters and liars.”

Special correspondents Carassava reported from Athens and Connolly from Berlin.