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Greece, Eurozone leaders agree to new bailout deal

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July 12, 2015: Greek Finance Minister Euclid Tsakalotos, right, speaks with Managing Director of the International Monetary Fund Christine Lagarde during a round table meeting of eurogroup finance ministers at the EU Lex building in Brussels. (AP Photo/Michel Euler)

Marathon talks between Greece and its European creditors ended with a new bailout agreement early Monday, hours after negotiators in Brussels blew through a self-imposed deadline.

European Council President Donald Tusk tweeted shortly before 9 a.m. local time Monday that the so-called EuroSummit had "unanimously reached agreement" on a financial aid program that included what Tusk called "serious reforms" and "financial support" for the beleaguered Athens government.

Details of the agreement had yet to emerge early Monday, but the Euro had already jumped significantly against the dollar in early trading on the European financial markets.

The Greek government made a request last week for a three-year, 53.5 billion-euro ($59.5 billion) financial rescue from Europe's bailout fund. During negotiations that lasted for approximately 17 hours, Eurozone creditors indicated that Greece will need tens of billions more than that to stay solvent.

If the talks had broken down, Greece could have faced bankruptcy and a possible exit from the euro, the European single currency that the country has been a part of since 2002. No country has ever left the joint currency, which launched in 1999, and there is no mechanism in place for one to do so.

For three days of negotiations, Greek Prime Minister Alexis Tsipras had held out for a better deal to sell to his reluctant legislature in Athens this week, even though financial collapse is getting closer by the day. The apparent breakthrough came after the threat of expulsion from the euro put intense pressure on Tsipras to swallow politically unpalatable austerity measures because his people overwhelmingly want to stay in the eurozone.

Early Monday, a Greek official said the key sticking points were the involvement of the International Monetary Fund (IMF) in Greece's bailout program and a proposal that Greece set aside 50 billion euros ($56 billion) worth of state-owned assets in a fund for eventual privatization.

The deal on the table appeared to include commitments from Tsipras to push a drastic austerity program including pension, market and privatization reforms through parliament by Wednesday, and from the 18 other eurozone leaders to start talks on a new bailout program.

Sunday's four-page discussion paper put to eurozone leaders and obtained by The Associated Press spoke of a potential "time-out from the euro area" for Greece if no agreement could be found.

It highlighted the increasing frustration of European leaders during five months of fruitless talks with Greece.

"The most important currency has been lost: that is trust and reliability," German Chancellor Angela Merkel said.

Tsipras insisted his government was ready to clinch a deal.

"We owe that to the peoples of Europe who want Europe united and not divided," he said. "We can reach an agreement tonight if all parties want it."

French President Francois Hollande insisted it was vital to keep Greece in the euro and said in the event of a departure, "it's Europe that would go backward. And that I do not want."

Greece has received two previous bailouts, totaling 240 billion euros ($268 billion), in return for deep spending cuts, tax increases and reforms from successive governments. Although the country's annual budget deficit has come down dramatically, Greece's debt burden has increased as the economy has shrunk by a quarter.

The Greek government has made getting some form of debt relief a priority and hopes that a comprehensive solution will involve European creditors at least agreeing to delayed repayments or lower interest rates.

Greek debt stands at around 320 billion euros ($357 billion) -- a staggering 180 percent or so of the country's annual gross domestic product. Few economists think that debt will ever be fully repaid. Last week, the International Monetary Fund said Greece's debt will need to be restructured.

The Associated Press contributed to this report.