ATHENS, Greece — With creditors demanding solutions to the Greek debt crisis and the financial world increasingly on edge, Athens on Wednesday froze pensions, cut civil service salaries and slapped new taxes on everything from cigarettes and alcohol to fuel and precious gems.
Markets and the European Union reacted well to the euro4.8 billion ($6.5 billion) austerity plan. But Greek unions were outraged — and the country's embattled premier, who had likened the situation to a "state of war," is headed to Germany and France seeking more definite expressions of support.
Prime Minister George Papandreou warned that unless the new measures won European Union and market backing, bringing down the cost of borrowing for the country, Greece would turn to the International Monetary Fund.
Such a move would be unpalatable for the European Union, highlighting the bloc's inability to manage the crisis on its own.
The Greek crisis has hammered the euro, the common currency used by 16 nations, and made Greece's cost of borrowing on the international markets skyrocket.
The financial world is focused on Greece with an eye out for a trickle-down effect, fearing that a Greek default could lead to similar crises in larger European economies including Spain and Italy. Such events could have worldwide economic implications.
What Greece wants is a clear indication from Europe that it would receive help if that became necessary, Finance Minister George Papaconstantinou said.
He said the perception of Greece had been that it wasn't facing up to its responsibilities. "That has broken today," he said.
The IMF in Washington said it approved of the new plan, which is to be voted on in Parliament on Friday.
EU Economy Commissioner Olli Rehn, who had demanded new measures during a visit Monday to Athens, described the new plan as a "potential turning point."
While the markets were happy, Greece's labor unions were not.
"These measures are terrible. I think the government does not realize how little people in this country are being paid," said Despina Spanou of the civil servants union ADEDY. "We have no other choice other than to step up (our protests)."
Smaller business owners warned that the cutbacks would eat into their earnings, forcing closures and cutting jobs. Greek unemployment hit a five-year high of 10.6 percent in November.
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