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| Deal on Greek Debt Crisis Is Reached, but Long Road Remains | Deal on Greek Debt Crisis Is Reached, but Long Road Remains |
| (about 5 hours later) | |
| ATHENS — Forced by his nation’s creditors into broad new concessions to avert financial collapse, Prime Minister Alexis Tsipras of Greece returned home on Monday with just days to sell the deal to fractured lawmakers and a dazed electorate. | |
| The agreement he struck with other European leaders early Monday after a contentious all-night bargaining session would give Greece the chance to receive its third international bailout in five years, a package of as much as 86 billion euros, or $96 billion, as well as easier repayment terms on some of its existing debt of more than €300 billion and a short-term economic stimulus plan. | |
| But it would require Greece to swallow a wide array of measures, including pension cuts and tax increases, and effectively subject itself to intensive international oversight in order to qualify for the aid. | But it would require Greece to swallow a wide array of measures, including pension cuts and tax increases, and effectively subject itself to intensive international oversight in order to qualify for the aid. |
| The agreement gave Mr. Tsipras only through Wednesday to win legislative approval for central elements of the agreement, most of which he and his left-wing Syriza party had adamantly opposed for months. And he flew back from Brussels into a political landscape in upheaval, with portions of his party in revolt, his coalition partner rejecting the deal and his own role in the long-running drama completely changed. He also returned to ordinary citizens who fear sweeping economic changes that would upend traditions and long-established ways of life. | |
| In signing on to the deal, however reluctantly, Mr. Tsipras suddenly found himself the champion of policies he was elected to oppose and the best hope for de-escalating a crisis he had helped create. Should he succeed in carrying out the policies set out in the agreement, he would oversee just the kind of market-based changes that creditors have been demanding and successive Greek governments have been failing to deliver for years. | |
| As the talks ended in Brussels, Mr. Tsipras, who had once vowed to overturn the austerity policies he says have undercut the Greek economy and left its people suffering, was no longer talking of “blackmail” by creditors or “hostage taking.” Instead, he said the new package of proposals would “maintain Greece’s financial stability and provide recovery potential.” | As the talks ended in Brussels, Mr. Tsipras, who had once vowed to overturn the austerity policies he says have undercut the Greek economy and left its people suffering, was no longer talking of “blackmail” by creditors or “hostage taking.” Instead, he said the new package of proposals would “maintain Greece’s financial stability and provide recovery potential.” |
| To Germany and other nations that went into the negotiations fed up with Greece’s inability to stabilize its economy, 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 cutting 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 maintain its credit line to Greece at its current level, leaving the banks, which have been closed for two weeks, in severe distress but with a chance to muddle through until a bailout deal can be completed. | |
| Across Europe, there was relief that a deeper crisis had been averted, but continued debate about whether Germany and its allies in taking a hard line with Greece had pushed Mr. Tsipras into an untenable and volatile political situation that could lead to further trouble down the line. | Across Europe, there was relief that a deeper crisis had been averted, but continued debate about whether Germany and its allies in taking a hard line with Greece had pushed Mr. Tsipras into an untenable and volatile political situation that could lead to further trouble down the line. |
| “The advantages far outweigh the disadvantages,” Chancellor Angela Merkel of Germany said at a news conference Monday morning, explaining her decision to accept the deal and recommend that the German Parliament also grant its approval. | “The advantages far outweigh the disadvantages,” Chancellor Angela Merkel of Germany said at a news conference Monday morning, 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 country which we help has shown a willingness and readiness to carry out reforms,” Ms. Merkel said, referring to Greece. |
| Mr. Tsipras came to that willingness very late in the game, but some critics as well as supporters said that his turnabout was pragmatic in the face of shuttered banks and a collapsing economy. | Mr. Tsipras came to that willingness very late in the game, but some critics as well as supporters said that his turnabout was pragmatic in the face of shuttered banks and a collapsing economy. |
| “At a certain point he realized that he had been given very bad advice,” said Aristos Doxiadis, an economist and venture capitalist who writes about politics and has been critical of Mr. Tsipras in the past. “It wasn’t whether it was a good or a bad deal, but whether there was any feasible alternative.” | “At a certain point he realized that he had been given very bad advice,” said Aristos Doxiadis, an economist and venture capitalist who writes about politics and has been critical of Mr. Tsipras in the past. “It wasn’t whether it was a good or a bad deal, but whether there was any feasible alternative.” |
| Mr. Doxiadis said that Mr. Tsipras would probably emerge from the crisis remaining a major force in Greek politics, taking the place of the marginalized center-left party, Pasok. | Mr. Doxiadis said that Mr. Tsipras would probably emerge from the crisis remaining a major force in Greek politics, taking the place of the marginalized center-left party, Pasok. |
| “Some will surely feel betrayed by what has happened,” he said. “But most Greeks will say this man tried very hard and if he was convinced there is no better way, then there is no better way.” | “Some will surely feel betrayed by what has happened,” he said. “But most Greeks will say this man tried very hard and if he was convinced there is no better way, then there is no better way.” |
| Ippolitos Papantoniou, 55, a businessman, said he was depressed by the prospect of more austerity, after having gone through five years of tough measures with rising unemployment and poverty. | Ippolitos Papantoniou, 55, a businessman, said he was depressed by the prospect of more austerity, after having gone through five years of tough measures with rising unemployment and poverty. |
| “I feel very bad, because fundamentally we’ve been humiliated, and we are going somewhere that is not sustainable,” Mr. Papantoniou said. “The austerity will begin again. I don’t know the details of the deal, but of what I have seen, I see that we have a dead end in front of us.” | “I feel very bad, because fundamentally we’ve been humiliated, and we are going somewhere that is not sustainable,” Mr. Papantoniou said. “The austerity will begin again. I don’t know the details of the deal, but of what I have seen, I see that we have a dead end in front of us.” |
| In Athens, Mr. Tsipras spent most of the day behind closed doors meeting with party officials. | In Athens, Mr. Tsipras spent most of the day behind closed doors meeting with party officials. |
| By the early evening, some repercussions from the deal were beginning to take shape. The far-left faction of his party announced that it would vote no on the new proposals, while his right-wing coalition partners said the deal was “unacceptable.” | By the early evening, some repercussions from the deal were beginning to take shape. The far-left faction of his party announced that it would vote no on the new proposals, while his right-wing coalition partners said the deal was “unacceptable.” |
| But with many other parties willing to vote for the package, his most pressing problem was more likely the speaker of Parliament, Zoi Konstantopoulou, also a member of Mr. Tsipras’s Syriza party, who objected to Mr. Tsipras’s attempts to pass narrower proposals last Friday. | But with many other parties willing to vote for the package, his most pressing problem was more likely the speaker of Parliament, Zoi Konstantopoulou, also a member of Mr. Tsipras’s Syriza party, who objected to Mr. Tsipras’s attempts to pass narrower proposals last Friday. |
| Some analysts said that Ms. Konstantopoulou, a stickler for rules, could prevent him from using the fast-track procedures that would be necessary to get the job done in time to satisfy European leaders. Portions of the plan must be passed by Wednesday, and more a week from Wednesday. | Some analysts said that Ms. Konstantopoulou, a stickler for rules, could prevent him from using the fast-track procedures that would be necessary to get the job done in time to satisfy European leaders. Portions of the plan must be passed by Wednesday, and more a week from Wednesday. |
| Among the elements that must be dealt with this week are increases in the value added tax, including the end of a special tax status for the Greek islands; a makeover of the pension system; and the imposition of automatic spending cuts if the government misses budget targets. | Among the elements that must be dealt with this week are increases in the value added tax, including the end of a special tax status for the Greek islands; a makeover of the pension system; and the imposition of automatic spending cuts if the government misses budget targets. |
| Ms. Konstantopoulou issued a statement saying she had no intention of resigning, even as Mr. Tsipras’s allies talked of impeaching her. | Ms. Konstantopoulou issued a statement saying she had no intention of resigning, even as Mr. Tsipras’s allies talked of impeaching her. |
| If the deal is a political earthquake for Greece, it also puts the country on course for a major economic shake-up. It aims to force Greece once again to tackle many issues it has kicked aside for years, from simple ones like getting reliable economic statistics to more complex ones like opening up product and service markets, further streamlining the pension system, improving tax collection and moving ahead on privatization. | If the deal is a political earthquake for Greece, it also puts the country on course for a major economic shake-up. It aims to force Greece once again to tackle many issues it has kicked aside for years, from simple ones like getting reliable economic statistics to more complex ones like opening up product and service markets, further streamlining the pension system, improving tax collection and moving ahead on privatization. |
| Yet even if the Greek Parliament passes a spate of reforms this week, Athens has a spotty track record at carrying out tough changes. As a result, Mr. Tsipras has now agreed to have the International Monetary Fund survey every move he and his government make. | Yet even if the Greek Parliament passes a spate of reforms this week, Athens has a spotty track record at carrying out tough changes. As a result, Mr. Tsipras has now agreed to have the International Monetary Fund survey every move he and his government make. |
| Many of the changes demanded by creditors are political hot potatoes, including increasing the consumption tax to 23 percent for a range of goods and services, raising the retirement age to 67 and reducing more pension benefits in an aging population. Many of the changes could have the effect of further slowing the economy in the short run and reducing standards of living for some Greeks. | |
| “It will be extremely difficult for the Greek people to accept such an adjustment off the back of five years of economic depression,” Megan Greene, a managing director at the financial firm Manulife who has been monitoring the Greek situation, said in a report. | |
| The creditors’ insistence on tough terms reflects years of pent-up frustration with Greece’s slow progress in modernizing the economy. Many claim that austerity is harder than it would have otherwise been had Athens moved swiftly to promote change. | |
| Mr. Tsipras and most Greeks say that austerity is what killed the economy, especially after previous governments slashed state spending 20 percent since 2010 under previous bailouts, mainly by cutting pensions, wages, health care and social services, impoverishing many Greeks | Mr. Tsipras and most Greeks say that austerity is what killed the economy, especially after previous governments slashed state spending 20 percent since 2010 under previous bailouts, mainly by cutting pensions, wages, health care and social services, impoverishing many Greeks |
| One of the more contentious new demands from creditors — one that is likely to prompt an outcry among Greeks — is that Greece transfer €50 billion worth of state assets to a fund that would have international monitors. The fund would oversee sales to pay down Greece’s debt and help recapitalize its teetering banks. | |
| While many Greeks are bewildered at the situation, some see a silver lining. | While many Greeks are bewildered at the situation, some see a silver lining. |
| “You could say that this is actually a good moment,” said Dimitris Zouzoukis, 43, a banker who is involved in trade finance. “Change has to happen somehow in Greece. We need structural reforms.” | “You could say that this is actually a good moment,” said Dimitris Zouzoukis, 43, a banker who is involved in trade finance. “Change has to happen somehow in Greece. We need structural reforms.” |