Strikes hit Greece as crisis enters decisive week

Strikes halted ferries to the Greek islands and left rotting trash piling up in Athens for the 16th straight day, as unions fought back against more austerity cuts at the start of a crucial week for both Greece and the 17-nation eurozone.

Tax collectors and customs officers also walked off the job and protesting civil servants occupied the finance and labor ministry buildings in the Greek capital.

Greece faces a key vote on new austerity measures on Thursday, and other eurozone countries are rushing to find a comprehensive solution to Europe's escalating debt crisis in time for a Sunday summit in Brussels by European leaders. Both the Greek vote and the debt plan are needed so Europe can avoid a loss of confidence in global markets that some fear would plunge the world economy back into a recession.

Amid the barrage of union protests, parliament's finance committee approved the new austerity measures, which include pension cuts and across-the-board tax hikes, as well as pay and staff cuts in the civil service.

"The government is destroying its central administration and cutting away the safety net for our citizens, while dramatic cuts in pay are driving workers into poverty and deprivation," the civil servants' union ADEDY said. "The latest measures are the deathblow for our income."

Prime Minister George Papandreou said he was determined to see the latest reforms through.

"It will demonstrate that we, by ourselves, are seeking to make major changes," he said at an emergency meeting with President Karolos Papoulias. "It will mean we can go to the (debt) negotiations ... with our heads held high and with a stronger negotiating position."

He added: "This is the most critical week for Europe, and of course for Greece, with decisions that will determine the fate of the eurozone."

The government was considering using the army to help clear the trash in Athens, but was to decide on emergency plans later in the day, an official with knowledge of the contingency plans told The Associated Press. He asked not to be named because discussions were still ongoing.

Police said a private truck, commissioned by the government to replace striking garbage collectors, was attacked and set on fire Monday by dozens of unidentified men in an Athens suburb. The driver escaped unharmed.

A 48-hour general strike looms for Wednesday and on Thursday that will ground flights for two days, cripple public and many private services, even shut down essential services like gas stations and bakeries.

The Socialist government is facing mounting party dissent over a vote in parliament on Thursday to pass a new punishing round of tax hikes and pay cuts agreed upon in exchange for international bailout loans. With a majority of just four seats in parliament, the government is facing the prospect of an embarrassing defeat over a central part of the new legislation — its plans to strip Greek workers of decades-old labor rights.

Greece has admitted it will not meet its deficit-cutting targets this year and has promised tougher austerity in 2012 to compensate for the slippage.

The Greek Statistical Authority on Monday reported the country's budget deficit at €24.1 billion or 10.6 percent of gross domestic product in 2010 and the national debt at €329.4 billion or 144.9 percent of GDP. Both 2010 figures were worse than revised expectations.

The dissent and fierce protests by Socialist-led unions are piling pressure on the Papandreou government as Greece awaits formal approval this week of its next rescue payout of €8 billion from the International Monetary and eurozone countries, which are increasingly skeptical of Athens' ability to catch up with its deficit-cutting targets.

European officials intend to have ready by the end of the week a comprehensive plan to fight the debt crisis with new tools. That is expected to include new agreements on lightening Greece's debt load, boosting the health of Europe's banks to withstand the debt turmoil and enhancing the impact of the eurozone bailout fund's lending capacities.

On Sunday, German Finance Minister Wolfgang Schaeuble said private holders of Greek bonds would likely have to endure bigger voluntary losses than the 20 percent level set in a July agreement. That is considered crucial if Greece is to have a fighting chance of emerging from its massive debt hole.

He later said not to expect a definitive solution to the financial crisis at Sunday's summit of EU leaders.

German Chancellor Angela Merkel's spokesman Steffen Seibert said all sides involved in negotiations had agreed to keep the discussion of possible measures confidential, and refused to provide any details.

AP