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Greek PM vows to rescue bailout deal, amid protests, political turmoil
ATHENS, Greece (AP) ' Greece's prime minister has promised to "do everything necessary" to rescue a euro130 billion ($170 billion) bailout deal, after six members of his cabinet walked out over harsh new austerity measures, triggering a political crisis in the near-bankrupt country.
In a televised address Friday, Prime Minister Lucas Papademos said senior members of his government would be expelled if they oppose the austerity program, due to be voted in parliament late Sunday.
Earlier Friday, a small right-wing party in Papademos' coalition said it would not back the new measures and four of its officials in the cabinet resigned.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
ATHENS, Greece (AP) ' Greece's future in the euro grew increasingly precarious Friday as violence erupted on the streets of Athens during a general strike and five politicians resigned from the government after European leaders demanded deeper spending cuts.
Hours after Greece claimed it had reached an agreement among its squabbling party leaders on new cutbacks, European officials dashed any hopes that the country was close to getting its bailout. Finance ministers said more austerity needs to be agreed and set a deadline for the middle of next week.
If Greece's government fails to meet Europe's demands, the debt-ridden country faces a chaotic debt default next month that would send shockwaves around the world economy and could doom a generation of Greeks to even deeper hardship.
If it does deliver those demands, Europe has committed to give it a euro130 billion ($172 billion) lifeline that would at least postpone Greece's day of reckoning.
"No disbursement without implementation," Jean-Claude Juncker, the Luxembourg premier who also chairs the eurozone's finance ministers' meetings, said Thursday after they declined to fully back the deal Greek leaders had agreed.
The eurozone finance ministers want Greece to find another euro325 million ($432 million) in savings and say Parliament must to vote the austerity through. Worried that Greek political leaders could later renege on the austerity promises, they also requested that the party heads commit to the measures even after general elections in April.
The fallout from the eurozone's demands was immediate in Athens.
Thousands of people marched through the streets to protest the cuts, which include a 22 percent drop in the minimum wage at time when the unemployment rate is over 20 percent and the economy is in a fifth year of recession. Clashes broke out, with demonstrators hurling fire bombs at riot police shooting tear gas.
Resistance was also growing in Athens' halls of power, with six members of the 48-strong Cabinet leaving the government over the past two days because they could not agree to the new demands.
The five were Deputy Foreign Minister Mariliza Xenogiannakopoulou, a majority Socialist lawmaker, the transport minister and the deputy ministers of defense, merchant marine and agriculture ' all members of the rightist LAOS party, a junior coalition member. On Thursday, Deputy Labor Minister Yiannis Koutsoukos, a Socialist, also quit.
"They are trying to impose measures that will make the recession worse and drive the country to despair," Xenogiannakopoulou said in a letter, adding that she would vote against the cutbacks in parliament.
LAOS leader George Karatzaferis said he was withdrawing support for the measures agreed a day earlier, describing the country's treatment by its European partners as "humiliating."
Though LAOS is a small party, its action underscores the growing discontent, both among political leaders and households ' nearly one in two young people are out of work.
LAOS has 16 deputies in the 300-seat parliament in a coalition backed by 252 lawmakers, posing no direct threat to the measures that are due to be voted late Sunday and backed by the two major coalition parties, the Socialists and conservatives.
The Socialists and conservatives have both called emergency meetings of their parliament members following a Cabinet meeting scheduled for about 1600 GMT.
The uncertainty hit global markets, as shares on the Athens Stock Exchange plunged 4.6 and the euro sank 0.7 percent to $1.3180.
As well as trying to secure the bailout, Greece is close to concluding a related debt-relief agreement with banks that would slash euro100 billion ($132 billion) from the country's national debt.
In return for the promised debt relief, Prime Minister Papademos and heads of the three parties backing his government ' including Karatzaferis ' have already agreed to demands to fire 15,000 civil servants in 2012, slash the minimum wage and significant reductions in health, social security and military spending.
Karatzaferis insisted it was not his intention to withdraw from the government, and urged other countries in the European Union to challenge what he described as Germany's domination of the union.
"Of course we do not want to be outside the EU, but we can get by without being under the German jackboot," he told a news conference. "Like all Greeks, I am very irritated ... by this humiliation."
In central Athens, clashes erupted outside Parliament between dozens of hooded youths and police in riot gear. Police said eight officers and two members of the public were injured, while six suspected rioters were arrested.
The violence broke out as thousands took to the streets of the capital after unions launched a two-day general strike against the planned austerity measures.
Police said some 7,000 people took part in the demonstration. Another 10,000 Communist supporters held a separate, peaceful march.
Scores of youths, in hoods and gas masks, used sledge hammers to smash up marble paving stones in Athens' main Syntagma Square before hurling the rubble at riot police.
The country's two biggest labor unions stopped railway, ferry and public transport schedules, and hospitals worked on skeleton staff while most public services were disrupted. Unions were planning protests in Athens and other cities around midday.
The harsh measures follow two years of severe income losses, repeated tax hikes and retirement age increases that failed to materially improve the country's finances.
Greek politicians have taken a lot of criticism for the situation, and polls show the majority Socialists, elected in a 2009 landslide are now languishing at around 8 percent.
"We are experiencing tragic moments," Deputy Prime Minister Theodoros Pangalos told Parliament Friday.
EU Commission President Jose Manuel Barroso on Friday offered hope a deal could still be struck.
"I am confident that a solution will be reached next week as this is critically important for Greece and the Greek citizens first and foremost but also for the whole euro area," he said during a visit to India.
Gabriele Steinhauser and Slobodan Lekic in Brussels and Angela Charlton in Paris contributed.