The strategy unveiled after all-night talks in Brussels includes a provision to cut Greece's debt burden by asking private investors to take a steep loss of 50% on their holdings of Greek bonds. That would bring down Greece's projected debt level in 2020 from 180% of gross domestic product to 120%, still high but perhaps more sustainable.
But the reputational damage to Greece, cast as a deadbeat nation, will be considerable, some say.
"The fact that it affords a debt reduction is positive," said Stefanos Manos, a former Greek finance minister. "But from there on, I feel sorry and ashamed as a Greek to be signing up to something like this because it will stigmatize the country and everything Greek for years to come."
The debt write-down could spell major trouble for Greek banks, which are major holders of Greek bonds. Still, Greek stocks opened sharply higher Thursday morning.
The deal reached at the summit of European leaders also includes an extra $140 billion in emergency loans to Greece, a second bailout on top of one it was granted last year.
"We have avoided a mortal national danger," Greek Prime Minister George Papandreou told reporters in Brussels. "A burden from the past has gone, so that we can start a new era of development, on our own steam."
-- Anthee Carassava
Photo: Greek Prime Minister George Papandreou speaks to reporters Thursday after marathon talks in Brussels on a plan to combat the euro debt crisis. Credit: Georges Gobet / Agence France Presse