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This entry was posted on July 13, 2015 at 8:52.
The last change is the July 13, 2015 at 11:07.
BRUSSELS – After 17 hours of dramatic negotiations, from 16 on Sunday afternoon at 9 this morning , the Heads of State and Government of the euro area have agreed last second to avoid the collapse of Greece and a catastrophic release of the country from the monetary union. The agreement is all to be confirmed. Not only it depends on the approval of many unpopular measures in Greece, but also requires the approval of some national parliaments, still uncertain.
The leaders discussed all night a statement tuning between Saturday afternoon and Sunday morning by the Ministers of Finance, who had not received the support of all governments. Negotiations have been tesissime because the parties have sought desperately to save face: on the one hand that creditors have to deal with public opinion critical of Athens; other government Tsipras who campaigned against domestic measures too restrictive economic policy.
The package, which could have a value of EUR 82 to 86 billion over three years, comes after severe financial crisis in the country has asked for a new three-year memorandum to the European Stability Mechanism (known as the ‘ acronym ESM). The creditors – who have lent to Greece about 240 billion euro – have decided to impose strict conditions to ensure the help. In particular, the government Tsipras will approve by Wednesday, July 15 before a series of economic reforms.
Among the required reforms: measures on VAT; new measures early to ensure the sustainability of the pension system; dell’Elstat full independence, namely the Office of Statistics greek; full respect of the Fiscal Compact and the birth of an independent fiscal council. By Wednesday, July 22, creditors expect also the adoption of a code of civil procedure and the adoption of new European rules on the management of banking crises.
After the approval of the first package, the government will give the mandate to the three institutions – the European Central Bank, the International Monetary Fund and the European Commission – to negotiate the actual memorandum. The three-year program will be then approved by the governments. Meanwhile, the Eurogroup should discuss a bridging loan, the more urgent that the Greek financial needs are estimated at 7.0 billion by July 20, and the other 5.0 billion by mid-August.
In the desire to rebuild confidence undermined by inconclusive negotiations and questionable choices on both fronts, lenders have imposed on Greece the creation of a fund that will be made active for 50 billion euro. The money, said the president of the Eurogroup Jeroen Dijsselbloem, will be used for new investments, reduce public debt, repay bank recapitalization, in severe liquidity crisis. Credit institutions will be 25 billion euro loan from the ESM.
In terms of debt, currently at 180% of gross domestic product, Chancellor Angela Merkel said at a press conference here in Brussels that creditors will be prepared to discuss his relief, with an increase in bond maturities and cut interest rates after the first positive assessment of the program that will be carried out by the three banks. Debt restructuring, with a cut of its face value, is however out of the question.
The agreement reduces the risk of a Grexit, an exit of the country from the euro zone. However, as said Ms. Merkel, “the road will be long and difficult.” Various approvals policies, in Athens and other European capitals, could hide surprises. Prime Minister Alexis Tsipras had campaigned against a new memorandum, against conditions too stringent, against the role of credit institutions in the Greek crisis. All aspects that Tsipras had to renege today.
There is therefore the risk of a split in his party Syriza and its majority, which includes the radical left and Greek nationalists. However, in a statement to the press before leaving the Belgian capital, Tsipras defended the outcome of the negotiations: “We won on debt relief and on the medium term.” He admitted that the country needs deep reforms to erase “the old oligarchy.”
Once approved the first economic policy measures in Athens, Mrs. Merkel has confirmed that he will ask “to the satisfaction” to his parliament in Berlin to give the green light to the negotiations in view of a memorandum, the third in five years. To many observers, the agreement is likely to be seen as an imposition of creditors. Twitter on the night between yesterday and today, had great success the keyword Thisisacoup, this is a coup.
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