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Greeks angered at salary and pension cuts being imposed on their country burned a German flag on Tuesday as Prime Minister Lucas Papademos pushed ahead of a make or break talks on a bailout.
With the country in the grips of a general strike, scuffles broke out on Syntagma Square in central Athens where thousands of protesters braved rain to vent their anger at the EU and International Monetary Fund and at what they saw as a hard line spearheaded by Germany.
A group of nationalist protesters burned a German flag and began to set fire to one that showed the Nazi swastika, before riot police swooped in.
The country is rapidly running out of time to agree new budget action and to conclude a debt write-off with banks needed to secure a second rescue package and avoid default in about six weeks' time.
Papademos, caught between conflicting pressures for the soul and solvency of the nation, was to resume key meetings later in the day that could see a deal done by as soon as Wednesday.
The prime minister was set to meet Charles Dallara, head of the Institute of International Finance and chief representative in the debt write-off negotiations that aim to cut 100 billion euros (ê130 billion) off Greece's debt, at 1630 GMT, his office said.
Then Papademos was set for another round of talks with heads of the Greek socialist, conservative and far-right parties that form his unwieldy coalition and reach agreement on the tough conditions attached to a bailout loan package worth 130 billion euros.
"The final text of the memorandum negotiated between the government and the troika is being finalised and sent to the chiefs of the three (coalition) parties," an official in Papademos' office said.
"After meeting with the heads of the parties, we hope to be able to publish a document" listing the measures the Greek government pledges to undertake and which the party chiefs support, the official added.
Athens is under intense pressure from European Union leaders, with talk of an exit by Greece from the eurozone no longer taboo.
Earlier on Tuesday, European Commission Vice President Neelie Kroes was quoted as saying that it was "not a train crash if someone leaves the eurozone".
But EU Commission President Jose Manuel Barroso stressed that Greece's place was in the eurozone.
"We want Greece in the euro," Barroso told reporters in Brussels.
Greece must pay back 14.5 billion euros in bonds due March 20 or default, which could roil the 17-nation eurozone and undercut a global economic recovery.
An EU diplomatic source suggested all was not lost and that negotiators hoped talks would be wrapped up by Wednesday.
The EU source said that eurozone finance ministers had been asked to be on standby for talks, probably via teleconference, late on Wednesday or Thursday.
Before the scuffles in Athens, demonstrators marched under banners that read: "No to public sector layoffs!", "No to cutting the minimum wage!"
"We're here because we'll be among the first in the next batch of 15,000 to be laid off," said Vassilis Bakalis, 34, a curator at the Byzantine and Christian Museum in Athens.
Schools, ministries, hospitals and banks operated with skeleton services. Commuters using buses and metros faced major delays in Athens. Air travel was expected to be unaffected however.
Yiannis Panagopoulos, leader of the GSEE union, has described the measures, aimed at slashing salaries further by 20-30 percent, as a "death sentence" for the country.
Greek media also gave voice to the anguish.
"Sacrifices with salary and pension cuts," the daily Ethnos said. Daily Kathimerini wrote the country was being choked by "Merkel and Sarkozy", referring to the German and French leaders who have talked tough towards Athens in recent days.
In Paris on Monday, German Chancellor Angela Merkel and French President Nicolas Sarkozy ramped up the pressure on Athens.
Merkel warned that Greece would receive no more EU aid until Athens reaches a deal with the EU, European Central Bank (ECB) and IMF on more spending cuts and reforms.
Banks, insurance companies and private institutional investors are first being asked to write off about half of the 200 billion euros' worth of Greek government debt they hold to cut the country's total debt burden down to what is seen as a sustainable level of 120 percent of GDP in 2020 from 160 percent at present.
Eurogroup chief Jean-Claude Juncker lent support on Tuesday to a French-German proposal to set aside part of bailout funds for Greece in a special account in order to repay its bonds.
He said in remarks to Berlin's RBB Inforadio that "the idea to try to ensure that our Greek friends also pay back their debts by means of a special account is not an absurd one."
Greece, which has been shut out from raising long-term debt on the markets, raised 812.5 million euros in six-month debt paying 4.86-percent interest, a slightly lower rate than in a similar auction a month before.
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