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1 of 3. A policeman stands guard in front of a presidential guard during an anti-austerity rally in Athens February 18, 2012. Greece's cabinet tackled on Saturday how to implement austerity demanded by the EU and IMF as a 130-billion-euro ($171-billion) rescue seemed within reach, while the euro zone considered modifying a deal with private creditors to help Athens reduce its huge debts.
Credit: Reuters/Yiorgos Karahalis
By George Georgiopoulos
Sun Feb 19, 2012 9:32am EST
ATHENS (Reuters) - Riot police shielded Greece's national parliament Sunday as demonstrators gathered to protest against austerity measures on the eve of talks in Brussels on a 130-billion-euro ($171 billion) bailout needed to avert bankruptcy.
Hopes for a deal at the meeting of euro zone finance ministers have risen after Athens last week detailed new budget cuts. But skeptics, led by Germany, are wary about Greece's determination to shrink its debt mountain.
Only a few hundred protesters had assembled outside the national parliament by early afternoon but authorities are on guard after demonstrations last Sunday degenerated into looting and torching of buildings in central Athens.
"Maybe some people are scared after last week's rioting," said retired state electricity worker Costas Xenakis.
"The austerity measures are really hurting pensioners - we can't just sit and take it," said Costas, 70, whose monthly pension will be hit again by new cuts approved by caretaker Prime Minister Lucas Papademos' cabinet late Saturday.
Banners such as one reading "Down with the memorandum of hunger" bore testimony to the anger many Greeks feel toward a political elite that allowed the country over the years to rack up a national debt worth 160 percent of national output while the super-rich took advantage of lax tax collection.
Ahead of an election due in April, a survey released on Sunday showed the two parties that have dominated politics since the 1974 end of junta rule - the Socialist PASOK and conservative New Democracy - would muster little more than a quarter of the votes between them, with parties to the left gaining ground.
One survey by pollster MRB showed that while 73 percent of Greeks want the country to stay in the single currency, just 49 percent believe it will manage to do so in the next two years.
After months of often acrimonious negotiations, Greek hopes are nonetheless rising that Monday's meeting in Brussels will endorse the rescue which Athens needs to avoid bankruptcy on March 20 when major debt repayments fall due.
"The Greek people have done everything they can and we are determined to make good on our commitments," Public Order Minister Christos Papoutsis said before an emergency cabinet meeting to outline final measures in a 3.3-billion-euro package which includes defense, health and labor ministry cuts.
Friday, German Chancellor Angela Merkel, Italian Prime Minister Mario Monti and Papademos voiced optimism about a Greek accord during a conference call, Monti's office said.
Austrian Finance Minister Maria Fekter said Sunday it appeared a deal was finally taking shape.
"I don't think there is a majority to go a different way because a different way is enormously arduous and costs lots and lots of money," she said in a television interview.
However, Jean-Claude Juncker, who will chair Monday's meeting of the Eurogroup in Brussels, had earlier made clear that urgent work was still needed over the weekend to get a program to reduce Greece's crippling debts back on track.
Euro zone crisis in graphics r.reuters.com/hyb65p
Interactive timeline link.reuters.com/pys56s
MISSING THE TARGET
At stake is a target of lowering debt to a more manageable 120 percent of gross domestic product by 2020.
EU and IMF officials believe that target - which assumes Greece will run a budget surplus next year, excluding the massive cost of its debts - will be missed.
Under the main scenario of an analysis by the European Commission, the European Central Bank and the International Monetary Fund, Greek debt will fall to only 129 percent of GDP in 2020, one official said.
The euro zone is therefore looking at modifying the deal negotiated over many months with private creditors under which they would accept a cut of around 70 percent in the real value of their Greek bondholdings.
Senior euro zone finance officials meet Sunday to discuss the analysis and find ways to bring the debt closer to the 120 percent target before the finance ministers gather Monday.
"If you do a number of things you can bring the 129 close to 120," one euro zone official familiar with the document said.
These might include changes to interest accrued on privately held bonds, but the EU and its national institutions might also play their part, the official said.
Interest rates on EU loans to Greece could be cut, and those national central banks in the euro zone which hold Greek bonds might accept similar terms to private creditors.
The national central banks own an estimated 12 billion euros of Greek debt. The European Central Bank has refused to take part in the complex deal for the private creditors, which involves swapping old bonds for new ones with a lower face value, lower interest rates and longer maturities.
(Additional reporting by Mike Shields in Vienna; Writing by Mark John; Editing by Janet Lawrence)
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