AlQa'dah 29, 1432, Oct 27, 2011, SPA -- Eurozone leaders claimed a debt-crisis victory Thursday after getting deals that cut Greece's debt in half and increase the main bailout fund to $1.4 trillion, UPI reported. In addition, Greece will get a new $140 billion bailout early next year, government leaders said. The accord, reached shortly before 4 a.m. Brussels time (10 p.m. EDT Wednesday), came after hours of fractious debate. "Because of the complexity of the issues at stake it took us a full night," French President Nicolas Sarkozy told reporters. "But the results will be a source of huge relief worldwide." Most Asian market indexes were up between 1.5 percent and 2 percent in late afternoon trading. Based on the deal, private banks will take a "voluntary" 50 percent loss on the face value of their Greek debt, euphemistically called a "haircut," Sarkozy said. The governments had wanted a 60 percent loss. The banks originally agreed to a 21 percent loss. Bank representative Charles Dallara of the Institute of International Finance, an international bank lobby group based in Washington, had said that too radical a deal couldn't be called "voluntary" and would spread Greece's economic problems like a disease to relatively healthy economies across the eurozone. But Sarkozy at one point warned Dallara that if he didn't make a deal, Greece would likely default and the private creditors would lose 100 percent of their investments, The Wall Street Journal reported. Dallara relented, issuing a statement later saying his group supported a "voluntary agreement" to "a nominal discount of 50 percent on national Greek debt held by private investors." He called the deal "a comprehensive package of measures to stabilize Europe, to strengthen the European banking system and to support Greece's reform effort." The deal will be supported by $42 billion of "official funding" from the bailout fund to provide guarantees for bondholders who accept the deal, he said. Greece's debt, currently at 160 percent of its gross domestic product and projected to peak at 186 percent, would be reduced to 120 percent of GDP by 2020, officials said. Sarkozy said the leaders agreed to expand the size of the eurozone's bailout vehicle, known as the European Financial Stability Facility, to about $1.4 trillion from the $350 billion remaining in it so it could guarantee bonds issued by financially struggling countries such as Spain and Italy. Cash-rich nations such as China will be asked to help fund the EFSF, officials said. EFSF Chief Executive Officer Klaus Regling was due in China Friday to discuss how Beijing might contribute to the fund's finances. Sarkozy planned to call Chinese President Hu Jintao later Thursday to discuss the matter. German Chancellor Angela Merkel -- who brokered the bank deal with Sarkozy and International Monetary Fund Managing Director Christine Lagarde -- said she was "very satisfied" with the outcome. The deal includes requiring Europe's 70 biggest banks to raise about $150 billion by June 2012 to protect themselves against losses on loans to shaky countries like Greece and Portugal. A statement issued after the summit said the deal reflected the leaders' "strong determination to do whatever is required to overcome the present difficulties and take the necessary steps for the completion of our economic and monetary union." U.S. President Barack Obama and other world leaders are to arrive in Cannes, France, Nov. 3 for a two-day Group of 20 summit meeting, expecting Europe will no longer be a drag on the global economy, The New York Times reported.
