Euro Countries Vote To Save Greece From Default

After months of wrangling and marathon talks in Brussels, European Union finance ministers approved a second bailout for Greece worth more than $170 billion to help save the country from bankruptcy. It's the second massive aid package for Athens in two years during a debt crisis that has pushed the euro currency union to the breaking point.

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RENEE MONTAGNE, HOST:

It's MORNING EDITION from NPR News. Good morning. I'm Renee Montagne.

STEVE INSKEEP, HOST:

And I'm Steve Inskeep. After months of debate and more than a few expressions of regret, European nations have taken the next step toward keeping Greece afloat. European Union finance ministers approved a second bailout for Greece. It's worth more than $170 billion and it's meant to help save the country from bankruptcy.

In order to get that money, Greek leaders had to approve austerity measures so severe they prompted another round of violent protests in Athens. Even though Europeans approved the latest payments, some are voicing doubts that Athens will keep its commitments. And as we'll hear in a moment, Greeks too have their doubts about the financial rescue.

NPR's Eric Westervelt starts our coverage in Brussels.

ERIC WESTERVELT, BYLINE: After meeting for more than 13 hours, a tired looking Jean-Claude Juncker, who chairs the Eurogroup of finance ministers, told a pre-dawn news conference that this new deal would allow Greece to get back on a path toward sustainable growth and employment.

JEAN-CLAUDE JUNCKER: We have reached a far-reaching agreement on Greece's new program and private sector involvement that will lead to a very significant debt reduction for Greece and pave the way towards an unprecedented amount of new official financing to secure Greece's future in the euro area.

WESTERVELT: The deal now hinges on persuading enough private bondholders to take even bigger than expected losses on Greek debt and for Athens to commit and implement deep cuts.

Juncker said the goal is to try to reduce Greece's debt to 120.5 percent of domestic economic output by 2020. Currently, Greece's debt is 160 percent of GDP.

The EU also agreed to let Athens pay lower interest rates on its bailout loans. The agreement will now let Athens move ahead with a bond swap with private investors that will see about 100 billion euro of Greek debt written off as banks and insurers swap bonds they hold for ones with a lower interest rate and longer maturation date. Private sector holders of Greek debt will take losses of more than 53 percent on their bonds, an almost 70 percent loss on the real value of the debt.

The International Monetary Fund's contribution to this still needs approval by its board. This morning, IMF head Christine Lagarde voiced confidence enough of the private sector would buy into the program, which she said should set the conditions for Greece to return to fiscal health.

CHRISTINE LAGARDE: Should really give enough space for Greece to restore its competitiveness, to improve its debt sustainability, and to demonstrate that with good and solid and rigorous implementation, checked on a regular basis by the various partners associated with the program, it can get back on track.

WESTERVELT: For many in the eurozone, increased overnight is key. Under the new terms there will be a permanent monitoring team in Athens and bailout money will be paid into a special account to ensure that Greece prioritizes servicing its debt above all else. Yet fear remains that Greece's chronic lack of growth and history of back-sliding on implementation could derail this latest package and again threaten the stability of the currency union.

For their part, Greeks are deeply frustrated. Parliament has passed big spending, wage and pension cuts, measures that have sparked street protests and riots. Greece's political leaders have had to commit in writing that they will stick with the bailout terms even after April elections, which many Greeks see as loss of sovereignty and democratic control.

This second bailout comes as relations between Greece and its eurozone partners have hit a low point. Many in Germany, Greece's biggest paymaster, are conflicted. They want a strong euro and good relations for their export-dependent economy. But taxpayers are also tired of pouring money into Athens.

Alex Hund sells cheese - yes, including Greek feta - at an outdoor market in Berlin.

ALEX HUND: We as Germans, we export so much, so of course for us it's very important to have the European community. But at the moment I think that Greece might be a little bit bottomless barrel, right? So there should be some things they do to prove that the money isn't just running away.

WESTERVELT: The second bailout now faces scrutiny from lawmakers in eurozone capitals, including next week in the German and Dutch parliaments - the two nations that have been the most critical of Greece's handling of its two-year-old debt crisis.

Eric Westervelt, NPR News, Brussels.

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