Euro leaders, Greece strike a deal

By Stephen Brown

Athens promises to implement tough reforms in next 72 hours before talks can start on a third bailout.

Greece struck a deal Monday morning for a third bailout from its European creditors, averting for now the collapse of its banking system and possible expulsion from the single-currency eurozone.

After almost 17 hours of heated negotiations that ended just before 9 a.m. in Brussels, the 19 eurozone leaders agreed on a series of measures that would provide Greece with up to €86 billion over three years.

“There will be no Grexit so, in form and substance, we are satisfied with the solution we have found,” said European Commission President Jean-Claude Juncker.

But first, the Greek Parliament will have to adopt the kinds of reforms that Greek voters rejected in a referendum a week ago, and which many in Prime Minister Alexis Tsipras’ party have already denounced as a humiliating capitulation forced mainly by Germany.

The bitter end

“We succeeded in getting the restructuring of the debt and certain refinancing in the future,” Tspiras said after the summit. “We succeeded in setting the base for change in Europe and we are going to continue fighting and we will keep fighting to regain our lost sovereignty.”

“I think the vast majority of the Greek people will support this…because they understand that we have given our best to the bitter end,” he said, hinting at how hard the political fight in Athens will be.

Tsipras bowed to the tough demands of the eurozone leaders after Berlin proposed its temporary suspension from the currency union. He must now get much of the necessary legislation through Parliament by Wednesday to start talks on a bailout.
Finance ministers for the eurozone are scheduled to meet at 3 p.m. on Monday in Brussels to hammer out short-term, emergency financing.
The release of the funds would relieve the financial squeeze that has gripped Greece for the past two weeks, forcing the country to close it banks and limit cash withdrawals to €60 a day.
Greece must convince its creditors that it will abide by its agreements, something successive governments over the years have failed to do.
The document that framed eurozone leaders’ discussion — full of brackets denoting controversy — tasked Tsipras with about half a dozen points that have to be legislated “without delay” by July 15. They were:

• Raising VAT and broadening the tax base.
• Pension reforms.
• Making the Greek statistics office independent.
• Automatic spending cuts in case Greece misses primary surplus targets.

Greece also has to commit to these reforms by July 22:

• Implement EU rules on handling bank failures.
• Overhaul the justice system.

In addition, Greece must agree to the following within a “satisfactory clear” period of time:

• Privatize the electricity transmission grid.
• Take decisive action on non-performing loans.
• Ensure independence of the privatization body.
• De-politicize Greek administration.
• Deregulate service sector.
• Review labor market regulation such as collective bargaining.
• Strengthen independence of Greek privatization agency or place €50 billon in Greek assets into an escrow account abroad.
• Reverse laws adopted by Syriza since coming to power in February that the Eurogroup considers in breach of prior agreements with creditors.

Athens would also have to allow the return of inspectors from the European Commission, European Central Bank and the IMF, whose participation in the latest rescue attempt is unpopular among Tsipras’ leftist supporters.

Europe breaks ranks

For months, eurozone leaders presented a united front on Greece, insisting that it stick to its previous commitments and endure deep spending cuts and sweeping reforms in exchange for aid.
But the events of the past few weeks, a series of crisis meetings and the No vote in Greece’s July 5 referendum shifted the landscape.


The Greeks’ resounding repudiation of Europe’s reform agenda sent shock waves across southern Europe, where many countries face similar, if less severe, pressures.
France was the first to break ranks with Germany, followed by Italy, reopening the continent’s north-south divide.
French President François Hollande said it was “a new time for the European construction,” insisting the monetary union needed to “better protect itself and experience more growth.”
However, in the end, it was Germany’s insistence that Athens prove its commitment as a pre-condition for more aid that forged consensus.
“The responsibility of [Greece] itself must be pushed to the front…confidence in the currency union that we can all depend on has been seriously shaken,” said German Chancellor Angela Merkel.

#ThisIsACoup

Greece’s track record of living up to its promises over the years has been poor. But some worry that the eurozone’s treatment of Athens in recent days bordered on punitive and violated core European ideals of sovereignty and solidarity. In Germany, there was concern that Berlin’s harsh stance could trigger a backlash against Germans.
Initial reactions to the German-sponsored plan for Greece were marked by disbelief and anger. On Twitter, #ThisIsACoup quickly became the most-used hashtag in Europe, as users vented their frustration and blamed Germany.
Leaders got bogged down in discussions of whether a new rescue deal should involve relief of its public debt — which all sides agree is unsustainable at about 180 percent of economic output — and on whether Greece could privatize €50 billion worth of its industries and services, or should deposit that amount of assets in an account abroad to be privatized on its behalf.
“There’s no such thing as €50 billion in Greek property,” said one Greek official, citing a study by the International Monetary Fund that put the annual potential proceeds from privatization at €500 million per year. “The figure is on another planet,”said the official, who requested anonymity.
However, with trust destroyed between Athens and its eurozone partners after five years of false starts and two failed bailouts worth about €240 billion, the eurozone leaders wanted to ensure Greece will act on its promises.
Leaders will hold Greece to commitments to reform its tax and pension system, overhaul its judicial system and ensure the independence of its statistics office — to ensure accurate reporting of economic performance — and of the agency in charge of privatizations.
Greece also agreed to the establishment of an independent fund that will set aside assets for privatization and manage their sale.