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Europe Finance Ministers Set to Approve New Greek Bailout

A shoe shiner tries to keep warm next to an hourglass graffiti in Athens, Greece, Feb. 20, 2012.
A shoe shiner tries to keep warm next to an hourglass graffiti in Athens, Greece, Feb. 20, 2012.

Eurozone finance ministers are set to approve a new $171-billion bailout for Greece, at a meeting in Brussels.

French Finance Minister Francois Baroin said Monday that after months of negotiations over terms of the deal for debt-ridden Greece, an agreement is in sight for the country's second bailout in two years.

"We have all the elements for an agreement," said Baroin. "From now on, the elements of a voluntary participation of the banks, of the private creditors and of the public creditors - the states, the central banks - are fully in place."

U.S. Treasury Secretary Timothy Geithner said Sunday Greece has adopted a very strong and difficult package of reforms that deserves the international community's support.  He said the United States encourages the International Monetary Fund to support the loan for Greece.

The Greek government has approved austerity measures that include a 22-percent cut in the country's minimum wage and the elimination of 15,000 government jobs.  Greece said without the bailout, it would not be able to pay investors $19 billion in debt when government bonds come due next month.

Video of austerity protests in Greece

The government is also nearing completion of negotiations to at least cut in half the debt it owes private creditors - a $131-billion reduction.  However, even as the finance ministers pored over details of the bailout, Greek Prime Minister Lucas Papademos renewed talks with the private creditors to seek an even bigger write-down of Greece's debt.

As the meeting of the finance chiefs started in Brussels, Dutch Finance Minister Jan Kees De Jager said he remained unconvinced Greece could meet its austerity commitments.  He called for an unprecedented permanent presence in Athens for Greece's international creditors to oversee the country's spending.

Analysts have warned that if Greece defaulted next month, it could have catastrophic consequences for the eurozone, and possibly lead to a sharp downturn in the world economy.  It was an argument that eventually pointed to agreement for the new bailout.

Even as the Greek government has complied with the international demands for more austerity, the country's workers have repeatedly taken to the streets in opposition.  

Millions of Greeks complain that they have already sacrificed enough, saying they do not know how they will cope when their salaries and benefits are slashed.  One Greek housewife, Panagiota Petraki, says she does not see better times ahead for her homeland.

"I don't see light on the horizon," said Petraki. "Unfortunately no matter how many loans we receive, if we don't stand on our own two feet we will never see a recovery in Greece."

Greece is mired in the fifth year of a severe recession.  Retired teacher Michalis Vikendios says the country's fortunes will not improve until the economy does.

"Even if they cut all pensions, all benefits for the unemployed, and disabled people, the problem will not be solved," said  Vikendios. "It's a dead end.  No matter how much money we get if commerce doesn't start working, if they don't write down debt, we will never exit the crisis.''

Some information for this report was provided by AP and AFP.

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