| New York Times | - |
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- Greece agreed to a deal with its European creditors on Monday after
long and bitter negotiations, swallowing substantial new concessions in
the face of imminent financial collapse and insistent demands from
Germany and other countries that ...
Greek Debt Crisis Deal Is Reached, but Long Road Remains
BRUSSELS — Greece
agreed to a deal with its European creditors on Monday after long and
bitter negotiations, swallowing substantial new concessions in the face
of imminent financial collapse and insistent demands from Germany and other countries that it prove it was worthy of a third bailout in five years.
The
agreement, announced after a contentious all-night session among
leaders of the 19 nations that use the European common currency,
requires Greece to move quickly to adopt a host of economic policy
changes and to allow close monitoring by Europe and the International Monetary Fund.
If Prime Minister Alexis Tsipras
can push the central elements of the package through his Parliament in
the coming days — a political challenge likely to prove difficult — the
creditors said they would be willing to open negotiations on providing
as much as 86 billion euros, or $96 billion, to keep Greece afloat for
the next three years, and to consider proposals to ease repayment terms
on much of Greece’s existing debt of more than €300 billion.
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The
creditors also agreed, once terms of the bailout are settled, to pull
together a short-term stimulus program of up to €30 billion to help
Greece’s ravaged economy.
To
Germany and other nations that went gone into the negotiations fed up
with Greece’s inability to get its financial act together, the outcome
was fair and the new requirements necessary to assure that the Athens
government lives up to its commitments. But to some Greeks, and to
critics of the German-led policy of imposing deep budget austerity as a
condition for aid, the deal amounted to an unwarranted violation of
Greece’s sovereignty.
Either
way, it appeared to remove the immediate threat of Greece’s financial
crisis escalating to the point that the country might be forced to
abandon the euro as its currency. By Monday afternoon, the European Central Bank
had signaled that it would leave its credit line to Greece’s banks in
place at its current level, leaving the banks, which have been closed
for two weeks, in severe distress but likely to muddle through until a
bailout deal can be finalized.
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“The
advantages far outweigh the disadvantages,” Chancellor Angela Merkel of
Germany said at a news conference, explaining her decision to accept
the deal and recommend that the German Parliament also grant its
approval.
“The country which we help has shown a willingness and readiness to carry out reforms,” Ms. Merkel said, referring to Greece.
The agreement said Greece and its creditors should seek to “reduce that financing envelope,” if possible.
Merkel Outlines Next Steps on Greece
Chancellor Angela Merkel of Germany said
the deal on Greece’s debt announced on Monday would be debated in the
German Parliament.
By Reuters on Publish Date July 13, 2015.
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As
part of Greece’s commitments, Ms. Merkel said, a fund will be created
to take control of assets owned by the Greek government, with the idea
of selling them to help pay down the country’s debt and finance
investment programs within Greece. That fund would be “to the tune of”
€50 billion, she said, a figure that seemed ambitious given the slow
pace of previous privatization efforts.
Greece
will also be required to seek assistance from the International
Monetary Fund and to agree to let the organization continue to monitor
the country’s adherence to its bailout commitments. The Greek government
had resisted a continued role for the I.M.F., seeing the fund’s
involvement as unwanted meddling.
The Greek Parliament will also be required to approve the terms of the agreement “without delay,” according to the document released on Monday morning. The agreement requires passage of many of the changes by Wednesday and others by next week.
The
agreement will call for Greece to raise taxes in some cases, pare
pension benefits and take various other measures meant to reduce what
critics see as too much bureaucracy and too many market protections that
keep the Greek economy from operating efficiently.
The
agreement specifies that Greece must address a broad array of issues
long pushed by the creditors, from requiring the government to produce
more reliable economic statistics to overhauling the regulations for
businesses including pharmacies, bakeries and ferries and changing the
rules for labor unions and strikes.
A
bleary-eyed Mr. Tsipras, speaking to reporters here on Monday, tried to
put a positive spin on what might be seen as an almost total
capitulation by Athens to creditors’ demands for tough austerity. He
said that the threat of Greece being forced out of the eurozone had been
avoided and a promise of debt relief and growth funds had been secured.
Document: Text of the Euro Summit Statement on Greece
“We
gave a tough battle for six months and fought until the end in order to
achieve the best we could, a deal that would allow Greece to stand on
its feet,” Mr. Tsipras said. “We faced hard decisions, tough dilemmas,”
he said, adding that the Greek authorities finally “assumed the
responsibility of averting the extremist ambitions of the most
conservative circles in Europe.”
But
any easing of Greece’s debt repayment obligations would not include
something Greece had previously made a condition of any deal: a
so-called haircut, or reduction of the overall debt, which is more than
€300 billion. The document issued on Monday made its resistance to that
demand clear in one sentence: “The Euro Summit stresses that nominal
haircuts on the debt cannot be overtaken.”
In
an acknowledgment by the other eurozone countries that Greece’s
battered economy and high unemployment need some relief, the agreement
provides for €30 billion in development funds being made available
through various European Union programs, if a final bailout deal goes through.
I.M.F Chief Announces Greece Agreement
Donald Tusk, the president of the European Council, who had convened the summit meeting, announced the agreement on his Twitter account shortly before 9 a.m. He later used his Twitter account to write that steps would be pursued “to swiftly take forward the negotiations” on the latest bailout.
He added that eurozone finance ministers would “as a matter of urgency discuss how to help”
Greece meet its short-term financing needs. That appeared to be a
reference to ensuring that Greece, which is nearly bankrupt, can make
large payments to lenders including the European Central Bank that are
due in the coming weeks.
Despite
the agreement, Greek banks are expected to remain closed this week. The
banks are acutely short of cash and Greek depositors may soon find it
difficult to withdraw even small sums from A.T.M.s.
European
stocks rose and the bond market calmed on Monday morning just moments
after European leaders said they had reached a deal. There was no
euphoria, however, as investors waited to see how the tough agreement
would be put in place.
Correction: July 13, 2015
An earlier version of this article referred incorrectly to a provision of Greece’s agreement with its creditors, obliging the country to enact certain legislation by Wednesday. That requirement was not relaxed.
An earlier version of this article referred incorrectly to a provision of Greece’s agreement with its creditors, obliging the country to enact certain legislation by Wednesday. That requirement was not relaxed.
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