Eurozone agrees on third bailout
After marathon meetings throughout the weekend, Eurozone leaders reached an agreement on a third bailout to save Greece from bankruptcy on Monday, but a final deal is “still weeks ahead”.
The standoff also means that Alexis Tsipras stays on as Prime Minister and will probably spearhead a loose ‘national unity’ government to implement the rescue plan, which some of his own ran-and-file leftists oppose.
European Council President Donald Tusk said that Finance ministers will as a matter of urgency discuss how to help Greece meet her financial needs in the short term, primarily through bridge financing.
Following national procedures, the Eurogroup will now work with the Institutions (formerly the Troika of international lenders) to swiftly take forward the negotiations.
Turks said that the EuroSummit had unanimously reached agreement, but the reportedly talks stall on two points, one being IMF involvement in a new 3-year bailout.
All is ready to go for the ESM programme for Greece that will include serious reforms and financial support, he said.
Eurozone leaders warned that a final deal is still weeks away and will require ratification in several national parliaments.
Back in Greece, the main opposition centre-right New Democracy party, an unlikely ally to leftist Tsipras, said that it was satisfied with a deal reached between Syriza-led government and Greece’s international lenders. New Democracy MP Kyriakos Mitsotakis, tweeted that Greece had a great chance now to become a normal European country.
“We have 3 years to become a normal European country. I hope we have learnt from the mistakes of the past. Let’s make a new beginning!”
Adonis Georgiadis, also a member of New Democracy who has strongly criticised the Greek premier in recent months, said that Tsipras finally chose to follow Greece’s interests.
“Despite the mistakes and the damage he provoked, at the end [Tsipras], between Greece and Syriza, he picked Greece. History will credit that to him.”
However, there were also harsh words of criticism towards the EU’s main paymaster.
Anti-austerity economist Jeffrey Sachs said that Eurozone “was right to avoid suicide but the real tests are opening the banks, implementing measures and debt relief.
Chancellor Angela Merkel said that the German parliament will only be called once the Greek parliament agrees on the package.
Prominent economist and Nobel laureate Joseph Stiglitz accused Germany earlier on Sunday of displaying a “lack of solidarity” with debt-laden Greece that has badly undermined the vision of Europe.
“What has been demonstrated is a lack of solidarity by Germany. You cannot run a eurozone without a basic modicum of solidarity,” Stiglitz said.
The Eurosummit may have ended with agreement, but analysts say anything can go wrong as approval of national parliaments is still needed for the ESM programme to begin.
Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem said he hoped that by the end of the week there will be formal mandate to negotiate the Greek bailout, but a final deal is still weeks ahead.
Dijsselbloem said that EUR 25 bln will be used to recapitalise Greek banks and confirmed that the Eurogroup will discuss bridge financing for Greece.
He added that the Eurogroup of Eurozone finance ministers could have a conference call Wednesday, and then the national parliaments could approve the deal.