New Greek government faces first test

Demonstrators are set to gather in Athens for a march marking the anniversary of a 1973 uprising that was brutally repressed by the military government, but which last year morphed into a protest against reforms introduced to tackle Greece's debt crisis.

Police are braced for trouble, deploying 7,000 officers for the protest, including about 700 riot police equipped with tear gas, shields and batons.

Late on Wednesday, the new unity government led by Lucas Papademos, comprising socialist, conservative and far-right nationalist parties, overwhelmingly won a vote of confidence in parliament with 255 votes to 38.

Papademos, a former vice-president of the European Central Bank, took over on Friday following days of political and market turmoil over Greece's huge debts, which sparked fears it may have to leave the eurozone.

He is now under pressure to implement deeply unpopular austerity measures and structural reforms demanded by Greece's European Union and International Monetary Fund creditors in return for two bailout deals.

Papademos must secure the latest installment of a 2010 bailout to avert bankruptcy by mid-December, and enforce reforms agreed as part of a second rescue deal agreed last month.

He took the first steps towards writing off a large chunk of Greece's €350-billion debt on Wednesday night when he held talks with Charles Dallara, the managing director of the Institute of International Finance.

Dallara, who also met with Finance Minister Evangelos Venizelos, is leading negotiations on a major Greek debt rollover agreed as part of last month's deal.

He and Venizelos discussed the eurozone package and "in particular the participation of private creditors", a finance ministry source said.

The banks have agreed to accept a 50 percent writedown on Greek debt as part of a rescue plan which also gives Athens €100 billion in loans and €30 billion to recapitalise its banks.

But the details of the so-called "haircuts" must still be hammered out, and Dallara will now head to Frankfurt for talks with financial institutions.

Addressing parliament shortly before the confidence vote, Papademos warned against raising expectations of what his government can achieve, with its coalition members angling for elections within a few months.

Brussels increased the pressure on Athens on Wednesday to commit itself in writing to the measures required by its foreign creditors, a move which two parties within the governing coalition have so far resisted.

Jean-Claude Juncker, who heads the group of eurozone finance ministers, said it would discuss before the end of November whether to release eight billion euros in frozen funds from a first rescue deal agreed in May 2010.

Greece needs the money before state coffers run dry on 15 December.

Thursday's demonstration will begin at a university in the centre of the city where the uprising took place 38 years ago. It was brutally repressed by the army dictatorship and at least 44 people died, but the junta fell the following year.