Greece's setbacks and strikes
02:37 - Source: CNN

Story highlights

NEW: Demonstrators disperse as riot police and hooded youths clash in front of Parliament

NEW: The Cabinet will meet later, as the government mulls tough demands from Europe

NEW: The third member of the governing coalition says it will not back the austerity measures

Euro area finance ministers want to see more cuts and austerity pledges from Greece

Athens CNN  — 

Hooded youths tossed stones and police fired stun grenades Friday in front of the Greek Parliament as lawmakers faced tough new conditions they must meet before euro zone finance ministers will give them billions of desperately needed euros to bail out the debt-ridden country.

Greece needs the euro zone ministers to sign off on a new €130 billion ($172.6 billion) bailout deal.

As investors in markets around the world nervously watched the Greek Parliament, trade unions began a two day strike to protest the austerity measures the deal would require.

The main Greek party leaders agreed to a last-minute deal Thursday after lengthy negotiations, which was presented to the other 16 eurozone leaders by Finance Minister Evangelos Venizelos.

But the deal and new conditions imposed by Europe must still be approved by Parliament this weekend. The third member of the governing coalition made clear Friday that it would not support the deal.

Jean-Claude Juncker, the prime minister of Luxembourg and head of the Eurogroup, which brings together euro-area finance ministers, said Thursday that more assurances were needed from Athens before the bailout could be paid out.

“Despite the important progress achieved over the last days, we did not yet have all necessary elements on the table to take decisions today,” he said.

Three elements must be nailed down, Juncker said. The sweeping reform package agreed to by Greece and the so-called troika, made up of the European Commission, European Central Bank and International Monetary Fund, must be approved by Parliament this weekend.

Secondly, Greece’s political leaders must pledge that they will continue to implement the measures after elections in April. Finally, Greece must also find a further €325 million in “structural expenditure” cuts for 2012, Juncker said.

“These three elements need to be in place before we can take decisions,” he said. “In short, there is no disbursement before implementation.”

Why the Greek Bailout Doesn’t Change Much of Anything

In a sign of the wide public unhappiness in Greece over ever deeper cuts and austerity measures, trade unions called a two-day strike starting Friday.

Crowds gathered in central Athens for a planned rally in Syntagma Square outside the Greek Parliament building.

But the protest largely dispersed as police and hooded youths clashed.

The youths smashed pavements and began throwing stones and pieces of marble, as well as launching Molotov cocktails at the police, who responded with stun grenades and teargas.

At least one person appeared to be injured in the clashes.

Police earlier said about 13,000 people were on the streets of the capital, with that number expected to rise. The city center is closed to traffic.

The plan hammered out by the leaders of the PASOK and New Democracy parties is due to be debated in the Greek Parliament and voted upon on Sunday.

But the leader of the third member of the coalition government, the right-wing LAOS party, told reporters Friday his party would not back the measures.

LAOS, the smallest member of the coalition, holds 16 seats in the 300-seat parliament, while PASOK has 153 and New Democracy 83.

A Cabinet meeting has been called for later Friday, the office of Prime Minister Lucas Papademos said.

Former Prime Minister George Papandreou is expected to address lawmakers from his PASOK party later to explain why he is supporting the deal.

Antonis Samaras will also address members of his New Democracy party Friday evening.

Eurozone dismisses Greek budget deal

The eurozone finance ministers are due to meet again next Wednesday, when they will sign the bailout agreement if Greece has met all the conditions required.

Greece needs to secure the bailout funds soon to avoid a potential default on a €14.5 billion bond redemption in March.

Juncker voiced confidence that agreement would be reached in the Greek Parliament.

But Greece’s lawmakers are likely to struggle to find another €325 million in cuts, given the short timescale and the painful negotiations that led to the deal reached Thursday.

“After a long, tough period of negotiations, we have finally a staff level agreement with the troika for (a) new, strong and credible program,” Venizelos said before presenting that deal to euro area finance ministers Thursday in Brussels.

Venizelos added that a deal has been reached on the “basic parameters” of a deal with private sector creditors to write down a portion of the nation’s debt.

The agreement, which would result in significant losses for bondholders, is intended to help reduce Greece’s debts to 120% of Gross Domestic Product by 2020, from about 160% currently.

The austerity measures are expected to include job and wage cuts, as well as pension reforms and other unpopular moves. Greek labor unions have waged protests against the measures this week and the issue has become politically charged ahead of planned elections in April.

Greece, which owes some €330 billion, has come close to default before.

The nation has struggled to follow through on austerity measures and economic reforms that were a condition of its 2010 bailout package. At the same time, the Greek economy has been in recession for years and many analysts warn that additional austerity could make the situation worse.

Greece has come under fire recently from top EU officials for the government’s lack of progress on policies aimed at boosting the nation’s economy.

“Greece hasn’t done up till now what the IMF has asked it to do,” German Finance Minister Wolfgang Schaueble told CNN’s Diana Magnay Wednesday. “No more promises, now they have to deliver.”

CNN’s Elinda Labropoulou reported from Athens and Per Nyberg from London.