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Greeks protest austerity cuts at May Day rally

By the CNN Wire Staff
  • Greek protesters clash with police who fired tear gas during May Day rally
  • Rally had angry tone as Greek government prepares to enact austerity measures
  • Greece's credit rating has been slashed twice in the past two weeks

Athens, Greece (CNN) -- Greek protesters clashed with police who fired tear gas during the annual May Day rally on Saturday in Athens, where thousands of people gathering for the event seethed over government belt-tightening plans to deal with the country's debt problems.

Waving red flags, the crowd at times surged toward the line of police, who wore helmets and carried riot shields. The police pushed them back each time.

Protesters threw objects toward police, and scattered fires were burning on the streets. A van belonging to state broadcaster ERT was set on fire, and 19 people were taken in for questioning, a spokesman for the Greek national police told CNN.

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About 12,000 people were protesting in Athens, and rallies were also taking place in the northern city of Thessaloniki, the spokesman said. Protesters there smashed two ATMs, the glass frontage of a bank, and a car, but no one was arrested or being questioned, the spokesman said.

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The annual May Day rally has taken on an angry tone this year as the Greek government prepares to enact austerity measures to cap its large deficit and massive debt.

The package of measures was expected to be revealed Sunday. It is likely to include cuts in civil servants' salaries, pay freezes, reductions in pension payments, changes to tax rates, and increases in the value-added tax consumers pay on purchases, Ilias Iliopoulos, the general secretary of the public sector union ADEDY said Thursday.

The International Monetary Fund and the European Union are discussing a bailout for Greece, whose economic problems threaten the stability of the common European currency, the euro.

The amount of the aid package being negotiated was not clear, but the IMF and EU are likely to demand the austerity measures as a price for a bailout.

May Day observed around the world

Greece's national debt of 300 billion euros ($394 billion) is bigger than the country's economy, and some estimates predict it will reach 120 percent of gross domestic product in 2010.

Standard & Poor's this week downgraded Greece's sovereign credit rating to junk status, making Greece the first European country to fall below investment grade.

The downgrade makes it harder and more expensive for Greece to borrow money to pay back its debts. That makes the prospect of a bailout more crucial for Athens.

Also this week, Moody's Investors Service downgraded nine Greek banks, including the National Bank of Greece, citing their weakened financial strength and the country's "challenged" economic prospects.

CNN's Diana Magnay and journalist Mary Retiniotis contributed to this report.