16 Jun 2011

Greek PM proposes unity government

7:56 pm on 16 June 2011

The Greek prime minister has proposed a national unity government and has reportedly offered to step down to facilitate that.

George Papandreou must push through a new five-year campaign of tax rises, spending cuts and sell-offs of state property to continue receiving aid from the European Union and International Monetary Fund and avoid default.

Mr Papandreou said he could step down if there was agreement on reforms, but would stay on as prime minister if there was no agreement, a government source told Reuters.

Earlier in the day, tens of thousands of protesters marched on parliament to oppose government efforts to pass new austerity laws.

One group hurled petrol bombs and clashed with police at buildings housing the Finance Ministry.

Witnesses saw flames in front of an entrance to the main building and a similar clash a few buildings down. However the vast majority of the diverse crowd remained peaceful.

Unions also launched a nationwide strike, shutting government offices, ports, schools and reducing hospitals to skeleton staff.

Mr Papandreou not only faces public protests and resistance from a conservative opposition, but some backbenchers in his own parliamentary grouping are also threatening to reject the plan.