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 for the country to avert bankruptcy.
Hopes for a deal at a meeting of Eurozone finance ministers on Monday 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 demonstrators had assembled outside the national parliament by early afternoon, but authorities are on guard after protests 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 Xenakis, 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 set for 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 the conservative New Democracy -- would muster little more than one-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 that Athens needs to avoid bankruptcy on March 20 when major debt repayments become 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 that includes defense, health, and labor ministry cuts.
On Friday, German Chancellor Angela Merkel, Italian Prime Minister Mario Monti, and Papademos all 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, made clear that urgent work was still needed over the weekend to get a program to cut Greece's crippling debts back on track.
Missing the Target
At stake is a target of lowering debt to a more manageable 120 percent of gross domestic product by 2020.
European Union and International Monetary Fund officials believe that target -- developed with the assumption that 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 IMF, Greek debt will fall to about 129 percent of GDP in 2020, one official said.
The Eurozone is therefore looking at modifying the deal negotiated over many months with private creditors under which they would accept a cut of about 70 percent in the real value of their Greek bondholdings.
Senior Eurozone finance officials will 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 Eurozone 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 roles, the official said.
Interest rates on EU loans to Greece could be cut, and those national central banks in the Eurozone that hold Greek bonds might accept terms similar to those agreed with private creditors.
The national central banks own an estimated 12 billion euros of Greek debt. The ECB 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)