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13Jul15


European Leaders Reach Agreement to Resolve Greek Debt Crisis


European leaders said Monday morning that they had reached a deal meant to resolve Greece's debt crisis and avert a historic fracture in the Continent's common currency project.

"EuroSummit has unanimously reached agreement," Donald Tusk, the president of the European Council, wrote on his Twitter account shortly before 9 a.m. on Monday. The new bailout for Greece would involve "serious reforms" and "financial support," he wrote.

The deal announced early Monday allows only the start of detailed negotiations on a new assistance package for Greece. But the prospect of a new bailout program was expected to give the European Central Bank the leeway to continue channeling sorely needed emergency funding to Greek banks hollowed out by a long economic slump and the withdrawal of billions of euros in recent months by account holders as the country's financial crisis worsened.

The agreement aims to provide Greece with its third bailout package in five years. Tough terms, demanded by Germany and others, are meant to balance Greece's demands for a loan repayment system that will not keep it mired in recession and austerity budgets, against creditors' insistence that loans worth tens of billions of euros not be money wasted. Months of testy negotiations, and Greece's inability to live up to the promises made in its previous bailouts, had put a cloud of distrust over the weekend's discussions.

An accord would end five months of bitter negotiations that raised concerns that Greece would be the first country to be forced out of the euro currency union -- a development that proponents of European unity had sought desperately to avoid.

"The advantages far outweigh the disadvantages," Chancellor Angela Merkel of Germany told 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," said Ms. Merkel, referring to Greece.

The total commitment of money has not been disclosed. But a document by the eurozone leaders noted that experts had estimated that Greece might need from 82 billion to 86 billion euros more -- $91 billion to $96 billion -- to shore up its economy, rebuild its banks and meet its debt obligations over the next three years. The document said Greece and its creditors should seek to "reduce that financing envelope," if possible.

As part of Greece's commitments, Ms. Merkel said, a fund will be created to use the proceeds from selling off assets owned by the Greek government to help pay down the country's debt. That fund would be "to the tune of" 50 billion, she said.

Greece will be required to also seek assistance from the International Monetary Fund and 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 document released on Monday morning. One of the sticking points in the weekend negotiations had been a demand that the Parliament sign off on any deal by Wednesday, but that requirement appears to have been relaxed.

During the marathon negotiation session, Alexis Tsipras, the Greek prime minister, struggled to reach compromises on economic overhauls that were demanded by the creditors but that his left-wing government may find difficult to sell at home -- just a week after Greek voters overwhelmingly rejected softer terms in a referendum.

The agreement will call for Greece to raises taxes in some cases, reduce 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.

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 noted that the threat of Greece's being forced out of the eurozone had been avoided and a promise of debt relief and growth funds secured.

"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."

Mr. Tusk, the European Council president, later used his Twitter account to write that steps would be pursued "to swiftly take forward the negotiations" on the latest bailout.

[Source: By James Kanter and Andrew Higgins, The New York Times, Brussels, 13Jul15]

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