Greece faces protests as austerity plan goes to vote

ATHENS: reek politicians braced for fresh protests and strikes Friday, as the government prepared to push its austerity package through parliament and the prime minister headed to Germany for crunch talks.

A day after some 10,000 leftist protesters demonstrated in Athens and the second city Thessaloniki against the austerity cuts, more protests were expected Friday, including a demonstration outside parliament.

Inside parliament itself Friday, deputies from the ruling Socialist party were due to approve the controversial package.

Prime Minister George Papandreou was due to fly to Germany for talks with German chancellor Angela Merkel against a background of increased tension between the two countries.

Greek politicians have not appreciated insulting headlines in the German press and editorials denouncing the corruption there -- even if Papandreou himself has acknowledged the problem.

Nor were comments by two German politicians, published Thursday in the German daily Bild, likely to have gone down well in Athens.

"The Greek state must sell stakes in companies and also assets such as, for example, unpopulated islands," said Frank Schaeffler, a lawmaker with the pro-business Free Democrats, one of Merkel's coalition partners.

Marco Wanderwitz, of Merkel's conservative CDU party, agreed, saying Athens should put up "certain Greek islands" as collateral for any money it received from the European Union to help it out of its debt crisis.

"We give you cash, you give us Corfu," Bild commented.

Merkel was expected to make it clear to Papanderou that it was up to Athens alone to solve its problems.

"The rules are that each country must solve its problems. That's the status," German Economy Minister Rainer Bruederle told reporters on Thursday.

European Commission president Jose Manuel Barroso has welcomed the latest austerity measures from Athens.

"Greece's ambitious programme to correct its fiscal imbalances is now on track," he said in a statement Wednesday.

Merkel also seemed encouraging Wednesday, calling Greece's austerity measures "an important step" towards cutting its budget deficit and towards restoring trust in Athens and in the single currency.

And media reports have suggested that for all the stern words, Germany is drawing up contingency plans behind the scenes including either bilateral aid, joint European action or help from the International Monetary Fund.

Greece showed on Thursday it was willing to take the initiative, launching a five-billion-euro bond issue to raise desperately needed funds.

The yield on the latest issue was set at 6.38 percent, said HSBC, one of the five banks managing the offer.

The Socialist government has also increased sales, tobacco and alcohol taxes and cut public sector holiday allowances to save 4.8 billion euros (6.5 billion dollars), equal to about two percent of gross domestic product (GDP).

Pensions in the public and private sector were also frozen as part of the latest austerity measures.

The package has enraged the country's trades union movement, which argues that ordinary workers are being asked to pay the price for government incompetence.Chronology:Key dates in Greece's debt crisis

Greece's two main trades unions -- the million-strong General Confederation of Greek Workers (GSEE) and the 300,000-member civil servant union ADEDY -- called the latest strikes to put further pressure on the government.

Friday's action was expected to hit public transport in Athens while flights in Greece would be disrupted between 1000 and 1400 GMT.

The markets meanwhile will be watching to gauge the outcome of Friday's talks in Germany and will also be eyeing a meeting scheduled Saturday between Papandreou and French President Nicolas Sarkozy.