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Greece readies for crucial austerity vote

Protesters gather in front of the parliament in Athens on Wednesday Nov. 7, 2012. Greece’s fragile coalition government faces its toughest test so far when lawmakers vote later Wednesday on new painful austerity measures demanded to keep the country afloat, on the second day of a nationwide general strike. The euro13.5 billion ($17.3 billion) package is expected to scrape through Parliament, following a hasty one-day debate. But potential defections could severely weaken the conservative-led coalition formed in June with the intention of keeping Greece in the euro.(AP Photo/Dimitri Messinis)

ATHENS, Greece (AP) -- Greece's fragile coalition government faces its toughest test yet when lawmakers vote Wednesday on new austerity measures needed to avoid bankruptcy, while street protests swelled on the second day of a general strike.

Some 80,000 demonstrators, by police estimates, converged on the main square outside Parliament ahead of the vote. They chanted slogans against the cutbacks that will result in more pain for a country that has been in recession for half a decade.

The €13.5 billion ($17.3 billion) package is expected to scrape through, following a hasty one-day debate. But any defections or abstentions could severely weaken the conservative-led coalition formed in June.

Parliament has to approve the package of spending cuts and tax increases agreed with Greece's international creditors so the country can continue receiving vital bailout loans. The next loan installment of €31.5 billion, out of a total of €240 billion, is already five months overdue. Without it, Prime Minister Antonis Samaras says, Greece will run out of money on Nov. 16.

If Athens cannot raise sufficient funds otherwise, it will quickly find it impossible to pay its huge debts. As well as pushing the country out of the 17-country group that uses the euro, this could trigger a nightmare of bank runs, hyperinflation and currency depreciation that would vaporize savings and put many basic goods out of the reach of many Greeks.

Should Greece be forced into a default and begin printing its own currency, the entire eurozone's finances would become increasingly shaky as markets would assume other countries in the bloc might be the next to go. Investors would begin to pull their money out of the region or demand higher returns to keep it there.

"We must vote in favor of the measures," conservative New Democracy lawmaker Constantinos Tassoulas urged Parliament at the start of Wednesday's stormy debate. "It is our duty."

The measures being debated include new deep pension cuts and tax hikes, a two-year increase in the retirement age to 67, and laws that will make it easier to fire and transfer civil servants who are currently guaranteed jobs for life. The country is suffering a deep recession set to enter a sixth year, and record high unemployment of 25 percent.

Opposition parties accused the government of trampling on Greece's constitution with the proposed cuts in pensions and benefits, and complained that the bill, several hundred pages long, was too complex to be debated in a single session.

"This is blackmail," said Zoi Constantopoulou, of the main opposition party, the Radical Left Coalition.

The debate, scheduled to end around midnight, was delayed after opposition parties called for Parliament to rule whether the bill is unconstitutional. The motion was rejected by roll-call an hour later.

Adding to the confusion, Parliament employees declared a strike to protest an amendment that would cut their salaries. It was unclear how much disruption the strike could cause to the vote.

Meanwhile, judges in the country's Supreme Court ruled that new cuts to their own pay contained in the draft bill were illegal.

Samaras' small Democratic Left coalition partner has said it will not back the measures, while a handful of lawmakers from the third coalition party, the Socialists, are expected to vote against the austerity package.

Socialist MP Theodora Tzakri verbally shredded the bill, but said she was forced to back it as Greece had no other way of raising the funds it needs.

"The recession has exceeded every limit, and not only is no light visible at the end but we are still at the beginning of the crisis," Tzakri said. "I will vote for the measures with a gun to my forehead."

The government combined has 176 of Parliament's 300 seats, and needs a simple majority of those present to pass the bill. Without the Democratic Left, Samaras' conservatives and the Socialists control 160 votes. However, there is still a threat of more dissenters.

Greece's main trade association warned that the new cutbacks would further reduce consumer and government spending, driving even more retailers out of business.

"To vote for the measures ... will deal the coup de grace to an exhausted and battered society," association head Vassilis Korkidis said Wednesday.

While Samaras has been facing increasing pressure at home, other members of the 17-country eurozone have been doing what they can to ensure Greece stays in the currency group. Germany's Chancellor Angela Merkel, for example, has softened her previous tough stance — paving the way for a deal to let Greece take more time to meet loan conditions.

Even if Parliament approves the draft legislation, it is unlikely that Greece will receive the next bailout installment in time for Samaras' Nov. 16 deadline. The payment was expected to be approved at a meeting of European finance ministers on Monday Nov. 12.

However, the ministers' vote hinges on a report by the so-called troika of austerity inspectors from the European Union, IMF and European Central bank, which may not be ready in time. Furthermore, some eurozone countries can only give the go-ahead after their own Parliaments have voted on it. Germany is not expected to do so before Nov. 19.

As a result, the EU or ECB may have to step in with some interim financing.

The vote in Athens comes on the second day of a 48-hour general strike which has shut down the public administration, left hospitals functioning on emergency staff and closed schools and tax offices. All ferry and train schedules have been canceled until Thursday, flights were disrupted by a four-hour air traffic controllers' strike and Athens was without public transport for most of the day.

Earlier, a few municipal employees briefly invaded the Ministry for Administrative Reform, and about 40 uniformed police officers protested outside Parliament.

The country's biggest union has also called for a demonstration on Sunday evening, when the 2013 state budget is due to be voted on.