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Greek Parliament Adopts Austerity Plan After Day of Protests

A protester looks at a petrol bomb before throwing it at Athens' main Syntagma Square, during violent demonstrations, October. 20, 2011.

A protester looks at a petrol bomb before throwing it at Athens' main Syntagma Square, during violent demonstrations, October. 20, 2011.

The Greek Parliament adopted new austerity measures Thursday to satisfy its international creditors after a day of violent street protests against the government's latest move to boost taxes and cut wages.

All but one of the ruling Socialist lawmakers voted for the budget-cutting plan. The vote virtually ensures that Greece will secure an $11 billion segment of its $159 billion bailout from last year and avoid a default next month on its international loans.

But even as Greece moved to help itself, efforts to resolve Europe's cascading debt crisis fell into disarray. European leaders are set for a summit in Brussels on Sunday. But late Thursday, German Chancellor Angela Merkel and French President Nicolas Sarkozy called a second summit for next Wednesday after it became clear the leaders of Europe's two biggest economies could not reach agreement on a comprehensive debt plan in time for the weekend gathering.

The German and French leaders said they would meet Saturday to prepare what they called a "global and ambitious answer" to the debt crisis engulfing the 17-nation bloc that uses the common euro currency and for weeks has roiled international financial markets. Merkel and Sarkozy said they would seek to strengthen the continent's bailout fund, boost funding for banks and reinforce "economic integration" throughout the eurozone.

They said all aspects of the debt contagion would be "profoundly examined" at the Sunday summit, with adoption of a plan no later than Wednesday.

The Greek vote came after hours of violent anti-austerity protests in Athens.

At least 50,000 mostly peaceful, anti-austerity protesters gathered in Syntagma Square outside parliament on the second day of a nationwide general strike that idled a vast swath of Greek commerce and government services.

But the scene turned chaotic as some clashed with police, and violent protesters hurled fire bombs and stones at rival demonstrators. Protesters and masked youths armed with clubs fought each other as riot police fired tear gas volleys in an attempt to restore order. The government said one demonstrator died of a heart attack Thursday, while dozens of protesters have been injured in the last two days.

The hugely unpopular austerity plan will increase taxes and eventually eliminate 30,000 government jobs. Greece's international creditors had demanded passage of the austerity plan in exchange for release of the 2010 bailout funds.

The creditors - the International Monetary Fund, the European Union and the European Central Bank - say the money should be released to Greece as soon as possible. But a draft of their report approving the funding also said the debt-ridden country's finances are "extremely worrying" and that its economic downturn is far worse than just a few months ago.

The creditors said that a second Greek bailout approved in July may not be big enough to save the country from bankruptcy.

European leaders are considering several ways to end the crisis, possibly increasing the eurozone's $596 billion bailout fund for debt-ridden governments to as much as $2 trillion. They are also looking for ways to stabilize the bloc's banks even as they are forced to assume bigger losses on the Greek loans they hold.

Greece's economy is mired in the third year of a recession. The country's jobless rate hit 16.5 percent in July, just below the record set in May. But aside from assisting Greece, European leaders are worried about the spread of the debt crisis to other countries, especially Spain and Italy.

Some information for this report was provided by AP, AFP and Reuters.