Greece has reached a badly needed bailout deal with its creditors that could prevent the debt-wracked country from crashing out of the eurozone. But the Greek parliament must sign off before any funds are released.
Even before the final terms of the deal were known, there were already fears of a public backlash against Greek Prime Minister Alexis Tsipras, who flouted a previous bailout offer with more favorable terms and called a snap referendum to reject it.
During overnight talks in Brussels that began Sunday night and dragged into Monday morning, Tsipras relented on a number of points, agreeing to push through sweeping measures including spending cuts, tax hikes and pension reforms.
The Greek leader also pledged to enact wide-sweeping reforms to the country's labor market and to begin selling off state-owned assets to raise money to pay off debts.
One major concession from Tsipras included finally pledging to put 50 billion euros ($55 billion) in escrow, just out of Athens' reach, to pay down debt. That money would come from the sale of Greek state assets that are to eventually be auctioned off.
The Greek leader also said he would accept a greater role for the International Monetary Fund (IMF) in a prospective 86 billion-euro bailout. That concession was a key demand of Germany, which called it necessary to secure backing in the German parliament.
A closer look
Eurozone finance ministers are looking to bring Greece's labor market "in line with the relevant EU directive and best practice," according to the text of a statement released after the summit. This will include changes to collective bargaining rights for workers and collective dismissal flexibility for employers.
As for the pension system, European leaders also want to the retirement age in Greece be raised to 67 by the year 2022. Relief for poor pensioners will also be gradually eliminated by the end of 2019.
Greece must also streamline its system for charging value-added tax and impose a "broadening of the tax base to increase revenue," according to the statement. More companies will be required to charge 23 percent VAT tax and a tax on corporations will also be increased, to 28 percent.
Another stipulation was for Greece to strengthen its financial sector by boosting banking governance and decouple finance from politics.
European officials said those measures must be enacted by Wednesday night for Greece to regain trust - a tall order as dissenters were already criticizing Tsipras for bowing to Greece's paymasters as the prime minister was still busy negotiating.
The entire package must also be ratified by a number of national eurozone parliaments. Bridging funds for Greece will only be released if Tsipras can manage to muscle through the various legislations required by the other 18 nations in the euro area. After that, negotiations on a three-year loan for Athens can begin.
The past months were marked by heated debate that brought the debt-wrecked country to the brink of crashing out of the eurozone.
Finance officials have said Greece needs 7 billion euros in emergency funding by July 20 to pay back money it owes the European Central Bank for maturing bonds. Another 12 billion-euro payment to the ECB is due in mid-August.
cjc/br (Reuters, AFP)