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Greece, EU Reach Deal
World Economy

Greece, EU Reach Deal

European leaders in Brussels reached a third bailout deal for Greece on Monday morning, after more than 17 hours of talks on the thorny subject of reforms and more financial aid for the near-bankrupt country.
The president of the European Union, Donald Tusk, tweeted to confirm the news, Reuters reported.
Bond yields in Italy and Spain fell to session lows on the news and the euro reversed earlier losses to hit $1.117. The pan-European Stoxx 600 index opened around 1% higher.
In a press conference Monday, Tusk said "we have an agreekment" and that both sides had agreed in principle "to start negotiations on a European Stability Mechanism program, which, in other words, means continued financial support for Greece."
"The decision gives Greece the chance to get back on track with the support of European partners," he added, but said there would be "strict conditions."
European Commission President Jean-Claude Juncker added that there would be no "Grexit" (a Greek exit from the eurozone) as a result of the deal, while the head of the Euro group of finance ministers, Jeroen Dijsselbloem, said talks would continue over the details of the bailout.
Speaking to reporters after the deal, Greek Prime Minister Alexis Tsipras said the most extreme reform plans had been averted, and the country had endured a big struggle for the last six months.
He added that the deal's implementation would be difficult, but allowed Greece to return to growth.

Billion-Euro Fund
A key part of the agreement is that a €50 billion ($55 billion) fund will be set up using Greek government assets.
This will be used to help pay down the country's debts and refinance its banks. Dijsselbloem said a panel of experts would decide which assets will be used and how the funds will be monetized–either through privatization or reinvestment. Some €25 billion of the fund are expected to be used to recapitalize Greek banks, which have been operating under capital controls for over a week.
Although the apparent agreement helps quash fears that Greece could be heading for a eurozone exit, there is some skepticism that Tsipras can get the reform measures passed through parliament.
Reforms required of Greece include an overhaul of its pension system and widespread sales tax rises that could face opposition in the parliament, although there are reports that Tsipras could expel any rebels within his Syriza party that do not back the measures.
Despite the apparent capitulation of Greece to lender demands, Juncker was keen to point out that no side had been humiliated by the deal.
"There are no winners and no losers. I don't think the Greek people have been humiliated and the other European governments have not lost face. It is a typical European agreement," he said.
The leaders of the eurozone have reached an agreement on Greece’s economic crisis, Belgian Prime Minister Charles Michel said on his Twitter account Monday.

Avoiding Recession
Greece has secured debt restructuring and medium-term financing in a package worth €35 billion in a deal with its creditors that will allow the country to stay in the euro, Tsipras has said.
Speaking in Brussels after the agreement was reached, Tsipras said the deal could bring new investment to help the country pull itself out of recession and avoid the collapse of its banking system.
"The deal is difficult but we averted the pursuit to move state assets abroad. We averted the plan for a financial strangulation and for the collapse of the banking system," Tsipras told reporters after marathon talks.
"In this tough battle, we managed to win a debt restructuring," he said, and added, Greece fought "to the end" for the deal.

Prior to the Final Round
Earlier on Sunday, German Chancellor Angela Merkel, French President Francois Hollande, Tsipras and Tusk presented the compromise agreement on Greece's debt issue.
Merkel said "the most important currency has been lost ... trust and reliability" in the last few months of negotiations with Greece, and there would be "no agreement at any price".
"We have to make sure the pros outweigh the cons–for Greece's future, for the entire eurozone and the principles of our collaboration," she said.
The head of the European Parliament, Martin Schulz, said a deal was absolutely vital to the future of Europe.
"The alternative will be that over the next few years we are going to find ourselves in a catastrophic state of affairs as far as Greece is concerned," he said.
The Greek government earlier this week set out a new list of austerity measures to try to secure the bailout. They included many measures that had been rejected by the Greek people in a referendum a week ago.
Despite this, the proposals won the overwhelming backing of Greece's parliament in the early hours of Saturday morning.
Technical experts from Greece's creditors–the European Commission, the European Central Bank and the International Monetary Fund–also said the proposals were a basis for negotiations.

 

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