The foundations of a new bailout deal for Greece have been agreed though
tough negotiations still lie ahead to end its financial crisis.
Sixteen hours of talks overnight between the leaders of eurozone nations
broke up with EUpresident Donald Tusk tweeting that there had been a
unanimous agreement on a programme that included "serious reforms"
and "financial support".
At a news conference, he described it as an "aGreekment" but
there was clearly a lack of trust on the creditor side, with German chancellor
Angela Merkelamong those saying the relationship had to be
"rebuilt" following months of tortuous talks.
She added that future funding was conditional on the continued involvement
of the International Monetary Fund - a scenario Greece had tried to block.
Many Greeks reacted furiously to the deal, particularlyGermany's role
in insisting on continued austerity in return for help.
Crucially, the package will not result in an immediate cash injection for
the country's cash-starved banks, which remain closed but it was understood
that the possibility of a bridging loan will be discussed later on Monday.
The European Central Bank did nothing on Monday to ease the squeeze on bank
cash - with withdrawals still limited at €60 per day - by maintaining its limit
on emergency funding available to banks..
The
plan
agreed in Brussels includes the creation
of a €50bn asset fund by Greece, based in Athens, which would be partly used to
recapitalisethe banks.
Should the Greek parliament - by a deadline of Wednesday night - agree the
fund and other reforms such as spending cuts, the prospect of a third bailout
totaling €86bnover three years will be up for discussion.
The Greek prime minister Alexis Tsiprassaid the negotiations had been
a "tough battle" but he insisted he had managed to avert "the
plan of a financial collapse and banking system collapse".
However, the tough conditions imposed by the international lenders still
have the potential to bring down the deal and the Greek government.
Even before the terms were known, Mr Tsipras' labour minister denounced the
deal on state television.
The asset fund will be made up of publicly-owned firms to be sold off - a
privatisation programme fiercely opposed by members of the governing
Syrizaparty.
Mr Tsipras said additional burdens placed on the Greek public would be
distributed "based on social justice" with the country's elite facing
the lion's share of the bill.
He said: "We took the responsibility of the decision to be able to
avert the harshest outcome.
"We managed to avert the demand to transfer Greek assets abroad, to
avert the collapse of the banking system."
Financial markets reacted positively to the deal, with Germany's
DAX1.2% higher in early deals while the CAC-40 in France rose 1.6% as
investors saw it as a positive sign that a Greek exit from the
eurozonehad been averted.
However, the euro remained sluggish against a strong dollar.
(Sky News)