Greece agrees on a third bail out deal

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Greek government sealed on Tuesday the country’s third bailout deal within five years with international lenders, it was announced in Athens.

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The much awaited 85-billion-euro worth cash for reforms agreement which came after innumerous rounds of – sometimes stormy – negotiations since the Leftist government of Prime Minister Alexis Tsipras took over in late January this year, was presented as the only way forward so that Greece overcomes the debt crisis.
In a press release issued on Tuesday outlining the framework of the new bailout the government stressed that the “honest compromise” it reached secures adequate funding to cover the country’s financing needs over the next three years and allows breathing room to revive businesses and avoid “extremely harsh” austerity measures.
Under the deal, according to the official statement, the fiscal target set for 2015 is a 0.25-percent-of-GDP primary deficit. For 2016 the goal is a primary surplus of 0.5 percent, for 2017 of 1.75 percent and for 2018 of 3.5 percent.
The previous conservative-led government was discussing higher targets with lenders, but the new agreement took into account the Greek economy’s decline this year and the estimated 3-billion-euro cost of the introduction of capital controls on June 29, as talks were dragging on and the ailing economy’s future seemed uncertain.
The government’s announcement on Tuesday also stressed that with the new deal and the new recapitalization of Greece’s banking sector there was no more risk of a “haircut” on deposits.
Furthermore, the government argued that the continuation of the 50-billion-euro worth privatization program, the liberalization of the energy market and other needed structural reforms, which were sticking points in talks with lenders’ envoys in Athens in the final stretch to the deal, were settled in a manner that benefits Greek people.
After the confirmation that a deal was reached, the Athens Stock Exchange general index rose by 1.49 percent, indicating that the market welcomed the development.
However, the first reactions of opposition parties, “rebels” within the ruling Radical Left SYRIZA party and media commentators, shortly before the draft bill on the deal is formally submitted to the Greek parliament, showed that the path ahead will not be easy.
The Leftist government will face more challenges domestically and beyond Greek borders was the common ground in the first comments made on Tuesday.
Within SYRIZA the Left Platform, a group of dissident MPs and party members, has already issued a strong worded statement denouncing the agreement as a new “noose around people’s neck.”
In the last two crucial votes in parliament this summer on the July 13 euro zone summit deal that paved the way for the final agreement and the prior actions requested by lenders for a bridging loan, about 40 out of a total of 149 SYRIZA lawmakers voted against party line, fuelling scenarios of an imminent rift, a possible government collapse and snap general elections.
Tsipras has so far avoided drastic measures against the dissidents who are now openly urge for a return to drachma.
As SYRIZA “rebels” warn that they will vote against the third bailout in the roll call vote expected to take place in the Greek assembly this Thursday, media commentators noted that it was high time for Tsipras to clear the picture and move forward with those willing to safeguard Greece’s membership in the European common currency zone. Uncertainty harms the country’s prospects, an editorial in Vima (Tribune) daily stressed.
“There is no doubt that the agreement will be painful socially and politically for the government. However, with the economy in the state that it is, it is obvious that any other choice would be absolutely catastrophic. The uncertainty experienced in society and the economy must finally come to an end,” the article read.
The focus turned on the pro-euro opposition parties which voted in favor of the previous deal and prior actions this summer.
Main opposition conservative New Democracy party and the socialists of PASOK commented that the new bailout was the “worst of all” so far and the result of the “tragic failure” of the negotiating stance of the government which initially pledged voters to tear up memorandums and put an outright end to austerity.
The anti-bailout Greek Communist Greek party called for a first protest on Thursday.
Abroad Athens still needs to secure the green light to the deal from Euro Group on Friday and from other European national parliaments in coming days before the disbursement of any aid, amid skepticism whether the promises will be kept and timetables and targets will be met this time.
European partners, such as Germany and Finland, have underlined even on Tuesday that more work remains to be done and that the achievement of the deal is not an end but a new start of cooperation.
The key challenge in coming weeks and months if everything runs smoothly in coming days and Athens receives international financing in time to repay a 3-billion-euro loan installment to the European Central Bank on Aug. 20, will be the final settlement of the debt relief issue, according to analysts.

by Maria Spiliopoulou

Source : Xinhua

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