News Daily Spot: EUROZONE CRISIS!! Greece and lenders agree new bailout deal, finance minister says

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EUROZONE CRISIS!! Greece and lenders agree new bailout deal, finance minister says

Source: TheGuardian

Athens hails €86bn bailout but Brussels is keen stress the deal is a technical, not political, agreement  

The Greek government announced it has struck an ambitious bailout deal with creditors aimed at securing around €86bn (£61bn) over three years in return for radical economic reforms to be pushed through parliament as early as this week.
News of the agreement following a marathon 24-hour negotiating session at Athens’ Hilton hotel was not immediately confirmed by the eurozone creditors and promptly triggered scepticism in Berlin, where the deputy finance minister said the talks were not yet concluded and that fundamental questions on greece remained to be answered.
The European commission in Brussels, a party to the negotiations, said a “technical” agreement was struck in the middle of the night and that the officials reaching the deal had passed the results for review to their political bosses.
“We have a technical-level agreement, but we don’t have a political agreement. That is what we would need,” said Annika Breidthardt, a commission spokeswoman.
Eurozone leaders interrupted their summer holidays to discuss the bailout worth, said EU diplomats, €82-86 billion over three years. Jean-Claude Juncker, president of the European Commission, was contacted in the middle of the night over the news from Athens. He spoke to the German and French leaders, Angela Merkel and Francois Hollande, on Tuesday after previously speaking to Alexis Tsipras, the Greek prime minister, and Wolfgang Schäuble, the hawkish German finance minister.
“There is no done deal yet,” said sources in Brussels anticipating German resistance to a quick agreement.
The leftist government of Tsipras, which has made a U-tun on bailout policy ever since capitulating to eurozone leaders at an all-night summit in Brussels last month, hopes to push a raft of reforms through parliament on Thursday, paving the way for eurozone finance ministers to bless the deal and unlock rescue funds by 20 August, when Athens has to pay €3.2bn to the European Central Bank.
“Finally, we have white smoke,” a Greek finance ministry official told Reuters in Athens as the negotiating teams emerged bleary-eyed from the hotel after all-night talks. “An agreement has been reached. Some minor details are being discussed right now.”
The Greek finance minister, Euclid Tsakalotos, confirmed that “two or three small issues” were still open.
Kathimerini newspaper published a list of 35 “prior actions” that the Greeks committed to legislating on before any funds could be disbursed. They included raising the retirement age, phasing out preferential tax treatment for many Greek islands, scrapping fuel subsidies for farmers, and raising taxes for shippers.
It was not clear when Athens could tap the first funds. Nor was the size of the first disbursement revealed. The Greeks are hoping for €25bn, around half of which would go to recapitalising banks sinking under the weight of bad debt in an attempt to get ruinous capital controls lifted.
Given the dire state of the Greek economy and new figures predicting a slump of up to 2.3% this year, the creditors from the ECB, the European commission, the International Monetary Fund and the Luxembourg-based bailout fund, the European Stability Mechanism, appeared to have backed down on setting a key metric for the deal: the level of the primary budget surplus – the balance of revenue over spending when debt servicing costs are left out.
The Greeks said the primary surplus target was set at 0.25% of GDP for this year, rising to 3.5% by the end of the three-year bailout. In earlier failed negotiations the creditors insisted on 1% for this year.
Tsipras has been keen to wrap up the talks on Greece’s third bailout in five years as quickly as possible, with the Greek team said to have been unusually helpful and co-operative given the rancour and recrimination that have characterised relations.
It is believed that Tsipras is pushing for a quick deal not least for political purposes, with his popularity likely to wane the longer the situation remains unresolved and capital controls remain in place. A quick deal may also enable him to risk early elections to secure his base and rid himself of far-left rebels in his Syriza movement who reject the rescue terms and would prefer Greece to quit the euro.
Whether Berlin accedes to Tsipras’ game plan is another question. Angela Merkel’s government has consistently stressed that the fine print of a three-year programme is too important to be rushed and that it would prefer to drag the negotiations out while granting Athens €5bn in bridging finance to meet the 20 August payment.
Chancellor Merkel was said to re-emphasise these points in a telephone conversation with Tsipras on Monday. Schäuble is likely to query the deal when the Eurogroup committee of eurozone finance ministers meet to review it, probably on Friday.
His deputy, Jens Spahn, contradicted the news from Athens. “There are negotiations still going on in Athens,” he told German television. “A three-year programme has to be thoroughly negotiated.”
He stressed that the terms of the new bailout went beyond Greek budgetary arithmetic and had to explain how “Greece would earn its money” in the years ahead.
If Tsipras’ political agenda favours speed, Merkel’s political problems dictate prudence and patience. Scepticism runs deep among her Christian Democrats about the Greek bailout which has to be endorsed by the Bundestag. She faces a possible backbench revolt after a major row erupted when her whips threatened to punish any rebels by turfing them off key parliamentary committees.

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