Eurozone leaders have agreed an €86bn (£61bn) bailout that should see Greece remain in the euro – but the crisis appears to be far from over.The plan, agreed after seventeen hours of talks, means Greek Prime Minister Alexis Tsipras will have to abandon promises to end austerity.
The deal appears to impose even more stringent measures on the country than the bailout offered prior to Mr Tsipras leaving talks and calling a referendum two weeks ago.
These include unpopular reforms of pensions and value added tax, spending cuts and tax hikes.
European Commission President Jean-Claude Juncker insisted the country had not been “humiliated”.
“In this compromise, there are no winners and no losers,” Mr Juncker said.
“I don’t think the Greek people have been humiliated, nor that the other Europeans have lost face. It is a typical European arrangement.
“There will not be a Grexit.”
The country will have to identify €50bn of publicly owned assets, separate to the €86bn bailout, to be sold off to contribute to the rescue.
The Greek parliament must enact all of the above by Wednesday night for the €86bn bailout over three years to go through.
Mr Tsipras said the negotiations had been a “tough battle” but 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.
Many Greeks reacted furiously to the agreement.
“Clearly the Europe of austerity has won,” Greece’s reform minister George Katrougalos said.
Even before details of the deal were made public, labour minister Panos Skourletis said the terms were unviable and would lead to a new government.
There remains a lack of trust on the creditor side, with German Chancellor Angela Merkel among 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.
It is thought only France and Italy worked to try to soften the terms being imposed on Greece.
Crucially, the package will not result in an immediate cash injection for the country’s cash-starved banks, which remain closed until at least Thursday.
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.
Financial markets reacted positively to the deal, with Germany’s DAX 1.2% 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 eurozone had been averted.
However, the euro remained sluggish against a strong dollar.