Eirini Vourloumis for The New York Times  Demonstrators clashed with police during protests over austerity measures in Athens on Wednesday. More Photos »  Earlier in the day, as thousands took to the streets to protest austerity measures, Mr. Papandreou offered to step aside so that his Socialist party could form a coalition government with the center-right opposition, but only if the opposition would support a new bailout plan for the debt-ridden country.  Greece needs to pass a new round of austerity measures by the end of the month in return for fresh loans from the International Monetary Fund and the European Union.  Mr. Papandreou’s support has been plummeting, even within his party, and the Socialists appear to be lagging behind the center-right opposition for the first time since the current government was elected in 2009. With a five-seat majority in Parliament, Mr. Papandreou has been struggling to get his government fully behind the measures and to contain growing rifts within his party.  Antonis Samaras, the leader of the center-right New Democracy party, has opposed spending cuts. He has called instead for tax breaks and a renegotiation of the terms of Greece’s agreement with its foreign creditors.  After hours of speculation, Mr. Papandreou went on national television just before 10 p.m. local time and announced the cabinet reshuffle. He also criticized the opposition for playing politics with the country’s future.  Mr. Samaras defended his actions in a televised speech after Mr. Papandreou’s appearance, saying it was impossible to participate with the Socialists because “they have lost the trust of both the Greek citizens and the markets.”  Speaking of Mr. Papandreou, he said, “If he can govern, he shouldn’t have asked us for support. If he can’t, he should call elections."  On Wednesday, thousands of people joined a nationwide strike as Parliament prepared to debate what would be a second round of sharp reductions in government spending. The measures are highly unpopular with Greeks, who have already suffered deep salary and pension cuts.  “We had the first set of measures, that’s over, now they want a second,” said Angeliki Kolandretsou, 63, a retired private nurse who joined the nationwide strike Wednesday. “But what will we see from this? Nothing at all. It will just go to the banks.”  On Wednesday, the police fired tear gas and scuffled with protesters in the central Syntagma Square here. The demonstrators were largely peaceful and from across Greek society, but some in the crowd smashed the windows of a luxury hotel and tried to prevent legislators from entering Parliament. Police officials said they detained more than 20 people.  Violent and often theatrical protests have long been a mainstay in Greece, even before the financial crisis hit. But in a more telling sign of the depth of the anger, peaceful demonstrators have gathered daily in Syntagma Square for three weeks, some sleeping in tents, to protest the austerity measures.  In Greece, there is a deep divide between policy experts, who tend to believe that the country is taking the right steps to get back on track, and a large percentage of Greeks, who feel they are unfairly suffering from the government’s mistakes.  “We didn’t create the debt, they created the debt,” said Lina Pantazi, 40, a public school French teacher, as she stood in Syntagma Square wearing a surgical mask and sunglasses to protect against tear gas that police fired on the crowds.  The new austerity measures aim to raise about $9.1 billion this year through additional tax increases and cuts to public sector spending.  They include a “solidarity tax,” ranging from 1 to 4 percent according to income, and an additional 3 percent tax on the incomes of civil servants — whose salaries have already been cut by up to 20 percent over the last year.  Owners of large properties, yachts and swimming pools would be subject to an emergency tax. The new austerity drive would also slash the Greek civil service, which employs about 800,000 people, by a quarter over the next few years, and sell off $71.45 billion in state-owned assets, including stakes in Greece’s main electricity utility.  Critics accuse the government of cutting wages and pensions while failing to adequately address rampant tax evasion or take on the powerful labor unions that remain a pillar of the Socialists’ power base.  But analysts said that in spite of the political turmoil, the Greek Parliament was still likely to pass the new austerity measures. “It’s going to be difficult, but the dilemma is clear,” said George Pagoulatos, a professor of European political economy at Athens University of Economics. “If the measure doesn’t pass and we don’t get the money, we go bankrupt.”
The prime minister said he would reshuffle his cabinet and request a vote of confidence after talks with the opposition about a unity government foundered.