Greece, creditors fine-tune third bailout


ATHENS: Athens and its creditors were set on Wednesday to put the finishing touches to a third international bailout agreement aimed at saving Greece’s stricken economy from collapse.

The 400-page text has already been submitted to the Greek parliament for a crucial vote on ratifying the deal, which sets out the fiscal and other policy measures that Athens must take in exchange for the 85-billion-euro ($94 billion) lifeline.

Greek Prime Minister Alexis Tsipras called for MPs to vote on the accord Thursday, although the parliament website did not indicate when examination of the text would start.

The Greek government and the European Commission said Tuesday that they had reached the outlines of the rescue package, which calls for a gas market overhaul, ends most early retirement schemes, eliminates fuel price benefits for farmers and raises some taxes, among other measures.

The government said Greek banks—which were forced to shut down for three weeks as panicked customers withdrew billions of euros, fearing for the safety of their deposits—would immediately receive 10 billion euros from the package, and will be fully recapitalized by the end of the year.

Greece and its creditors—the EU, the European Central Bank, and the International Monetary Fund—are under pressure to finalize the deal by next Thursday when Athens must repay some 3.4 billion euros to the ECB.

The European Commission said Athens and its creditors had reached a technical agreement “in principle” on what will be the debt-crippled country’s third bailout since 2010.

But hours after Athens suggested the deal was all but done after marathon negotiations ended early Tuesday, Commission spokeswoman Annika Breidthardt said: “What we don’t have is a political agreement.”

The draft deal comes after months of acrimonious negotiations between the creditors and Greece’s left-wing government, which came to power in January promising an end to years of painful austerity demanded in exchange for the cash.

Investor relief
Investors reacted with relief to news of the outline deal, with shares in Athens closing Tuesday 2.14 percent higher four a fourth straight day of gains.

But in early trading on Wednesday the ATHEX index was down 1.68 percent.

Both sides said details remained to be hammered out, and an EU source stressed it was still not certain that it would be finalized by next Thursday’s ECB payment deadline—leaving open the possibility that Athens might need emergency funding.

“We might need a few days’ bridging [funding],” the source said on condition of anonymity.

“In that case, we need all the member states” to approve such a loan, the source added, in a potential fresh headache for negotiators.

And the deal still lacks official endorsement at the top political level, with eurozone finance ministers likely to meet at the weekend.

Finnish Finance Minister Alexander Stubb—one of the hardliners on the accord—stressed there was more work to be done, telling reporters: “Agreement is a big word.”

But a Greek government source said Tsipras had late Tuesday evening and requested an emergency session of parliament for Thursday—with all lawmakers required to attend—for the crucial vote on ratifying the deal.

Tsipras is under pressure from many hardliners in his radical left Syriza party who say the new accord will pile further austerity on a weakened economy and goes against the party’s campaign pledges. He suffered major rebellions by Syriza members in two previous votes on the bailout.

The embattled prime minister has warned that he may be forced to call early elections if the mutiny continues.

An analyst at Capital Economics urged caution over the deal, saying: “While Greece appears finally to be on the verge of receiving a third bailout, the extremely optimistic economic and fiscal projections underlying the plan suggest that it might not last for very long.” AFP


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