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| Greek bailout terms to give eurozone vast powers over policymaking | Greek bailout terms to give eurozone vast powers over policymaking |
| (about 2 hours later) | |
| The Greek government is to surrender powers over vast areas of economic and social policymaking to its eurozone creditors under draconian terms agreed for a new three-year bailout. | The Greek government is to surrender powers over vast areas of economic and social policymaking to its eurozone creditors under draconian terms agreed for a new three-year bailout. |
| The 29 pages of conditions concede ultimate authority over much of Greek policymaking to the eurozone and establish a system of quarterly reviews of the reforms by the troika of institutions – the European commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) – representing the creditors. | The 29 pages of conditions concede ultimate authority over much of Greek policymaking to the eurozone and establish a system of quarterly reviews of the reforms by the troika of institutions – the European commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) – representing the creditors. |
| The document says: “The [Greek] government commits to consult and agree with the European commission, the European Central Bank and the International Monetary Fund on all actions relevant for the achievement of the objectives of the memorandum of understanding before these are finalised and legally adopted.” | The document says: “The [Greek] government commits to consult and agree with the European commission, the European Central Bank and the International Monetary Fund on all actions relevant for the achievement of the objectives of the memorandum of understanding before these are finalised and legally adopted.” |
| The terms for the bailout – worth €85bn (£61bn) according to a senior EU source – foresee a radical overhaul of the Greek economy, stipulating major reforms of health, welfare, pensions and taxation systems, alongside more ambitious privatisation schemes. It also awards the troika decisive influence over reforms of the struggling banking sector. | The terms for the bailout – worth €85bn (£61bn) according to a senior EU source – foresee a radical overhaul of the Greek economy, stipulating major reforms of health, welfare, pensions and taxation systems, alongside more ambitious privatisation schemes. It also awards the troika decisive influence over reforms of the struggling banking sector. |
| As the Greek parliament prepared to debate the package in an emergency session on Thursday – with a vote likely in the early hours of Friday – prime minister Alexis Tsipras said that despite “obstacles some are trying to put into our path” he remained optimistic a final agreement would be sealed on the country’s third financial rescue in five years. | |
| Related: The Guardian view on the Greek bailout: a deal that addresses nothing | Editorial | Related: The Guardian view on the Greek bailout: a deal that addresses nothing | Editorial |
| The government wants parliament to ratify the draft text of the new bailout law so it can be approved by eurozone finance ministers at a meeting tentatively planned for Friday. This would allow the first tranche of aid to be disbursed in time for a debt payment of more than €3bn that Athens is due to make to the European Central Bank on 20 August. | |
| Tsipras did not say who he thought was trying to derail the deal, but in a remark widely interpreted as a dig at Germany, Greece’s harshest critic and its most influential creditor, accused “certain EU states” of having a “hidden plan to reshape the eurozone using Greece as the excuse”. | |
| Germany said on Wednesday it needed more time to study the agreement laying out the raft of fiscal and other policy measures Greece must implement in exchange for the aid. Chancellor Angela Merkel’s spokesman, Steffen Seibert, said Berlin wanted to examine the deal with “the necessary thoroughness”. | |
| The finance ministry said Germany would “have a position by the end of the week”, adding it was still conceivable that the German parliament – which must also ratify the deal – would vote not to approve the bailout but instead sanction a bridging loan that would allow Athens to make its ECB payment. “Both options are still open,” the spokesman reportedly said. | |
| The Greek reform package will entail 57 separate measures, included in 40 pieces of legislation to be voted on by Greek parliamentarians. | |
| Thursday’s legislative blitz in Athens will be followed by further changes. By October, when the troika will review progress before agreeing to release more funds, Tsipras has to deliver next year’s budget, a supplementary budget for this year and a three-year fiscal strategy. | |
| The bailout agreement says: “The conditionality will be updated on a quarterly basis, taking into account the progress in reforms achieved over the previous quarter. In each review, the specific policy measures and other instruments to achieve these broad objectives outlined here will be fully specified in detail and timeline.” | The bailout agreement says: “The conditionality will be updated on a quarterly basis, taking into account the progress in reforms achieved over the previous quarter. In each review, the specific policy measures and other instruments to achieve these broad objectives outlined here will be fully specified in detail and timeline.” |
| Meeting the bailout terms will require more austerity for Greece. The three-year programme entails a “fiscal adjustment” of up to 5% of Greek GDP, while the economy is expected to slump by 2.3% this year and 1.3% next year, according to senior sources. | Meeting the bailout terms will require more austerity for Greece. The three-year programme entails a “fiscal adjustment” of up to 5% of Greek GDP, while the economy is expected to slump by 2.3% this year and 1.3% next year, according to senior sources. |
| Tsipras has also agreed to reverse some of the policy decisions he has enacted since being elected in January. The document states that privatisation in Greece “has come to a standstill” since he took power but the prime minister “has now committed to proceed with an ambitious privatisation programme”. | Tsipras has also agreed to reverse some of the policy decisions he has enacted since being elected in January. The document states that privatisation in Greece “has come to a standstill” since he took power but the prime minister “has now committed to proceed with an ambitious privatisation programme”. |
| With Greece suffocating under capital controls and the banks fighting for survival under a mountain of bad debt, a main focus of the bailout programme is saving and reviving the banking sector through the recapitalisation of ailing financial institutions. Under the terms of the bailout, the troika will have strong influence over a bank sector rescue. | With Greece suffocating under capital controls and the banks fighting for survival under a mountain of bad debt, a main focus of the bailout programme is saving and reviving the banking sector through the recapitalisation of ailing financial institutions. Under the terms of the bailout, the troika will have strong influence over a bank sector rescue. |
| The document states: “No unilateral fiscal or other policy actions will be taken by the [Greek] authorities. All measures, legislative or otherwise, taken during the programme period, which may have an impact on banks’ operations, solvency, liquidity or asset quality should be taken in close consultation [with the troika].” | The document states: “No unilateral fiscal or other policy actions will be taken by the [Greek] authorities. All measures, legislative or otherwise, taken during the programme period, which may have an impact on banks’ operations, solvency, liquidity or asset quality should be taken in close consultation [with the troika].” |
| According to the document, external consultants are to be sent in to advise Greece’s national bank on bad debts and asset management, while the board of the Greek authority dealing with banking revival is to be co-appointed by the troika to counter suspected cronyism and “political interference”. | According to the document, external consultants are to be sent in to advise Greece’s national bank on bad debts and asset management, while the board of the Greek authority dealing with banking revival is to be co-appointed by the troika to counter suspected cronyism and “political interference”. |
| It says: “A new procedure for the selection and appointment of members in the executive board and general council will be designed by the end of September 2015, which will imply a greater role for the [troika] institutions than in the past.” | It says: “A new procedure for the selection and appointment of members in the executive board and general council will be designed by the end of September 2015, which will imply a greater role for the [troika] institutions than in the past.” |
| Related: No wonder the Greek finance minister looks resigned over possible bailout deal | Related: No wonder the Greek finance minister looks resigned over possible bailout deal |
| The European commission, which negotiated the new deal over the past fortnight in Athens alongside the ECB, IMF and the European Stability Mechanism (ESM) – the EU bailout fund – is keen to combat German-led scepticism over the package and see it implemented swiftly for fear of a political backlash in Greece. | |
| Senior EU officials said: “The political momentum must now be seized. Waiting or prolonging discussion will not provide the opportunity for a better deal, but risk instead undermining the progress we have seen.” | Senior EU officials said: “The political momentum must now be seized. Waiting or prolonging discussion will not provide the opportunity for a better deal, but risk instead undermining the progress we have seen.” |
| But internal German government documents obtained by The Guardian contained a scathing critique of the bailout agreement, signalling major clashes over the next week. The government’s analysis said: “Implementation of many measures is foreseen not before October/November and some very important reforms will not be implemented yet and are not yet specified.” | But internal German government documents obtained by The Guardian contained a scathing critique of the bailout agreement, signalling major clashes over the next week. The government’s analysis said: “Implementation of many measures is foreseen not before October/November and some very important reforms will not be implemented yet and are not yet specified.” |
| It questioned whether the IMF supported the new deal, objected that the new rescue plan failed to address Greece’s debt sustainability and attacked a proposed delay in setting up a new privatisation trust fund that is supposed to hold Greek assets worth €50bn. | It questioned whether the IMF supported the new deal, objected that the new rescue plan failed to address Greece’s debt sustainability and attacked a proposed delay in setting up a new privatisation trust fund that is supposed to hold Greek assets worth €50bn. |
| Senior officials in Brussels familiar with the negotiations insist the agreement is comprehensive. Alluding to the German objections, one senior source said: “We have not cut corners. We have not gone for a quick fix.” | Senior officials in Brussels familiar with the negotiations insist the agreement is comprehensive. Alluding to the German objections, one senior source said: “We have not cut corners. We have not gone for a quick fix.” |