By Renee Maltezou and George Georgiopoulos
ATHENS (Reuters) - Thousands of Greek demonstrators massed at parliament and workers launched a national strike on Wednesday to protest against the government's efforts to approve new austerity measures for the debt-stricken euro zone state.
Prime Minister George Papandreou must push through a new five-year campaign of tax hikes, spending cuts and sell-offs of state property to continue receiving aid from the European Union and International Monetary Fund and avoid default.
He not only faces public protests and resistance from a conservative opposition that has surpassed his Socialist party in opinion polls, but backbenchers in his own parliamentary grouping are also threatening to reject the plan.
Thousands of activists and unionists converged on Athens' central Syntagma square on the parliament's front steps to try to prevent deputies from debating the measures.
"Thieves, traitors!" many chanted. "Where did the money go?"
"I feel rage and disgust," said 45-year old public sector worker Maria Georgila, a mother of two. "These are very tough measures and they won't get us out of the crisis. I can't believe they have no alternative."
Around 1,500 police closed a swathe of the city center and erected two-meter metal barricades in front of parliament and surrounded it with police vans and a water canon.
The deal foresees 6.5 billion euros ($9.4 billion) in tax hikes and spending cuts this year, doubling measures agreed with bailout lenders that have pushed unemployment to a record 16.2 percent and extended a deep recession into its third year.
The government has appealed for national consensus on the laws, on which the EU and IMF have conditioned the release of another 12 billion euros in aid next month that Athens needs to pay off maturing debt or face default.
"We are fighting the battle to serve the common good, in the most crucial moment in the country's modern democracy," government spokesman George Petalotis told reporters.
The mid-term plan includes new luxury taxes, a crackdown on tax evasion, increased taxes on soft-drinks, cars, swimming pools and real estate, and cutting the Mediterranean state's 750,000-strong public work force by a fifth.
With those and other measures worth total savings of 28 billion euros through 2015, it also aims to raise 50 billion euros by selling off state-owned firms.
"CRUEL AS A TIGER"
Euro zone finance ministers failed to reach agreement on Tuesday on how private holders of Greek debt should share the cost of a new bailout for Athens worth an estimated 120 billion euros before a June 23-24 summit.
The European Central Bank opposes such a move, saying that if such participation is involuntary it could be deemed default that could shock markets and put weaker euro states at risk.
Papandreou was due to meet President Karolos Papoulias in the early afternoon when he would most probably appeal for national support. PASOK has a majority in parliament and wants to push the plan through by the end of June, possibly with a handful of opposition deputies voting in favor as well.
But one PASOK deputy defected on Tuesday, reducing its presence in parliament to 155 of the chamber's 300 seats. Another deputy has said he will not back the package.
"You have to be as cruel as a tiger to vote for these measures. I am not," George Lianis said in a letter to Parliament Speaker Filippos Petsalnikos on Tuesday.
Many others oppose the plan. Public sector union ADEDY, representing half a million workers, said it would join other demonstrators in peaceful protest. Trains were due to stop, ports close and hospitals were due to cut staffing.
Airports will stay open.
Passing the plan will be the first step, to be followed by another set of laws on how to implement it. Analysts said it was likely to make it into law.
"It is very difficult for them to defend the measures," daily Eleftherotypia wrote, referring to PASOK deputies.
"However, they know that voting down the mid-term fiscal plan will mean the fall of the government and possibly difficulties in our country's relations with its lenders, who are still searching for a solution to the Greek problem."
(Writing by Michael Winfrey; editing by Mark Heinrich and Elizabeth Piper)