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Eurozone crisis live: Greece bailout decision due today

• Eurozone finance ministers gather in Brussels
French finance minister offers Greece support
FTSE 100 hits seven-month high
Today’s agenda

9.58am: The smell of teargas hung over the streets of central Athens last night as protesters gathered for an an anti-austerity rally outside the Greek parliament.

This photo shows one demonstrator being detained by riot police.

9.43am: In Greece, the talk is that this could be a historic day in the country’s history, despite the political infighting and public anger over the terms of its financial rescue package.

News anchor Nikos Evangelatos confidently told the nation that:

By this time tomorrow our debt should have been reduced by €100bn and we will have €130bn in aid, which ultimately is more debt but debt that we will pay back on more favourable terms.

Helena Smith in Athens has more:

The next ten days will be “the days that changed Greece”, pundits say, as the country races to enact reforms it has delayed implementing over the past two years in time for the first tranche of aid in March when Athens must redeem €14.5bn euro in debt.

Labour laws will change, public sector jobs for life will go, civil servants will be axed – in what will amount to a drastic overhaul of the inefficient modern Greek state.

“It sounds barbaric, almost impossible but it has to be done,” an economics analyst told a local radio station. “Everything about the way our country works is about to change because the troika [the EU, ECB and IMF] has made clear that without such reforms there can be no money and withouth the money bankruptcy lies ahead.”

9.21am: Greek flags were spotted on the streets of Madrid last weekend as part of the protests against Spain’s austerity programme.

The “We’re All Greek Now!” movement has called on people the world to show solidarity with Greece’s population.

This photo, published by Twitter user @soniabouzas, shows two Greek flags on display in Madrid on Sunday.

@northaura #19FTomaLaCalle Madrid ayer en Sol banderas con Grecia twitter.com/soniabouzas/st…

— Sonia (@soniabouzas) February 20, 2012

9.02am: News in from Athens, where Greek media is reporting that Lucas Papademos is “working feverishly” to avoid any let-up in the loan deal.

Our correspondent Helena Smith explains:

With so much hanging on the agreement – future aid but also the country’s fate as a euro zone member – the technocrat prime minister will hold back-to-back meetings ahead of euro group finance ministers assembling at 3:30 PM CET to make their crucial decision.

“He will be holding meetings all day so there is no short-circuit,” said Flash news.

Among these will be a meeting with representatives of the Institute of International Finance (IIF) about the long-delayed debt restructuring also on the cards for Greece. Greek officials say the private sector bondswap, which will write off around €100bn euro from Greece’s €350bn euro debt pile, still awaits “finishing touches.”

Despite Papademos rushing through emergency legislation on pension and pay cuts ahead of the meeting – parliament is expected to vote on the bill this week – not everyone is convinced that Greece’s febrile political atmosphere will allow for spending cuts and structural reforms to be enacted. The former vice president of the European Central Bank will have to muster all of his expertise, persuasion and charm to convince hardier euro zone nations that this is not the case.

8.51am: The idea that Greece’s second bailout should be paid into an ‘escrow’ account is gaining ground this morning.

An Escrow account would means that although Greece would have been granted its funds, its access would be restricted. Miss its targets and the funding stream could run dry.

Austrian finance minister Maria Fekter has said that the eurogroup’s working group has been working on escrow options in recent days.

That is being prepared on the technical level. The finance ministers will discuss this intensely at their meeting. I welcome such a special account.

French finance minister Francois Baroin also said this morning that he supported the idea of paying Greece’s funds into an escrow account.

8.42am: French finance minister Francois Baroin says he will urge his eurozone counterparts to approve Greece’s bailout package today.

Baroin told Europe 1 Radio this morning that:

All the elements are in place…both with the bankers, private sector creditors, and public sector creditors, the states and central banks….

That is what I will plead for as minister of finance today. I think we should take account of everything that has been done in recent weeks by the Greek government, and by political parties both on the left and the right.

Baroin (who famously described the UK’s economic situation as ‘very worrying’ last December) added that Greece could find itself in “bankruptcy” unless the deal is agreed in time for its €14.5 bn debt repayment on March 20.

8.33am: European stock markets have opened strongly this morning, on optimism that Greece’s bailout will be agreed.

The FTSE 100 is 34 points higher at 5938 – its highest level since last July.
The French CAC is also up 0.6%, with Germany’s DAX a little higher.

Michael Hewson, senior market analyst at CMC Markets, said traders are hopeful that a deal will come today, having driven shares higher over the last couple of weeks.

The markets certainly think that the odds are good, given the way they have front run a possible outcome over the last few days as the euro and equity markets have continued to rise.

Shares have been gaining ground for most of this year – the Footsie is 6.5% higher since 2012 began.

8.23am: There’s plenty of coverage of the Greek crisis in today’s Guardian:

David Gow reports that Lucas Papademos’s unexpected flight to Brussels came after Germany voiced new fears about Greece:

Wolfgang Schäuble, the German finance minister and focus of mounting Greek fury at austerity measures imposed on Greece, accused Athens of rejecting offers of help in rebuilding its shattered economy and of dragging its feet on reforms.

The German economic ministry, according to the paper Welt am Sonntag, has drawn up a “sobering” report on what it sees as Greece’s failure to make implementing reforms its priority, and has called for greater co-operation with Brussels as a pre-condition for approving the bailout.

Papademos is to be on hand to assure sceptics that his government can deliver on these planned reforms and iron out final technical details of the package.

From Athens, Helena Smith explained that the Greece cabinet has agreed new spending cuts:

The legislation is expected to include wage and pension cuts, and a supplement to the 2012 budget which already foresees €3.2bn in savings.

“It has been impossible not to cut pensions,” said Papademos, a former vice president of the European Central Bank, appointed to the post last November with the sole purpose of averting a potentially disastrous default by the euro zone member.

Ministers also worked to sign off reforms ahead of their submission to parliament this week.

Larry Elliott argues that the conflict over Greece’s bailout has Tolkienian overtones:

There’s a scene in The Lord of the Rings where the wizard Gandalf confronts the Balrog, a hellish monster, on a narrow bridge in the Mines of Moria. The battle ends with Gandalf smiting the bridge with his staff, sending the Balrog plunging into a fathomless abyss.

There’s a twist to the tail, however. As the monster falls, one last swish of its whip curls round Gandalf’s ankle and drags him down into the pit as well. Views may differ, in the context of the eurozone debt crisis, whether Greece is Gandalf or the Balrog, but one thing is for certain; the risks of mutually assured destruction are high.

And Julia Kollewe explains how Greece’s debt swap with its private creditors will work

8.10am: The meeting of eurogroup finance ministers in Brussels is the main event on the agenda today. We’ll also learn how much the European Central Bank spend buying up government debt last week.

• Eurogroup meeting begins: 2:30pm GMT / 3.30pm CET
• ECB weekly bond-buying data: 2:30pm GMT / 3.30pm CET

France, the Netherlands and the UK are all selling government debt this morning…..

8.05am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis.

It’s decision time for Greece. Later today, eurozone finance ministers meeting in Brussels must decide whether the country has done enough to receive its second bailout package. The Greek prime minister Lucas Papademos has flown to Belgium to press the flesh and assure the Eurogroup that Greece will deliver on its pledges.

Over the weekend, Papademos’s cabinet approved further spending cuts demanded by his lenders. But there are rumours of discord within Europe, and concern that the €130bn package is no longer big enough to put Greece on a path to a sustainable future.

We’ll be tracking all the action in Brussels, as well as bringing you reaction and analysis from across Europe.

We’ll also keep an eye on Spain, where hundreds of thousands of people took to the streets on Sunday to demonstrate against austerity, spending cuts and labour reforms.

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