What’s next for Greece after the ‘aGreekment’…alternative ways out? ESM negotiations cannot begin without many parliaments OK
There will be no eurozone exit for Greece after eurozone leaders Monday morning agreed on a third bailout deal for the country in exchange for strict reform measures.
Speaking after a marathon weekend summit, President of the European Council Donald Tusk said the leaders had reached an agreement in principle to start negotiations on financial aid through the eurozone’s bailout fund, the European Stability Mechanism, or the ESM.
“Today we had only one objective — to reach an agreement. After 17 hours of negotiations we have finally reached it. Someone can say we have an ‘aGreekment,’” he said.
“The decision gives Greece the chance to get back on the track for support from European partners. It also avoids the social, economical and political consequences that a negative outcome would have brought,” he added.
The deal will now have to be approved by national parliaments, including the Greek parliament, before the formal ESM negotiations can begin. The formal decision is expected by the end of the week.
To help Greece meet its short-term financing needs, eurozone finance ministers will discuss so-called bridge financing, Tusk said.
Eurogroup head Jeroen Dijsselbloem also touched on the issue of Greece’s future financing needs, saying a fund will be set up to tackle the debt and recapitalization of the country’s banks. The total size of the fund would be around 50 billion euros ($55.32 billion) and be made up of state-owned assets slated to be privatized or wound down in coming years, according to The Wall Street Journal.
“Once approximately €25 billion needed to recapitalize the banks have been used, 50% of the remaining funds will be used to bring down debt even more, and 50% can be invested in Greece by the Greek government,” he said. “This is one of the key elements on both debt sustainability and to let growth return to Greece.”
Greek Prime Minister Alexis Tsipras defended the deal after the all-night meeting, saying it allows his country to stand on its own feet again.