BERLIN: Greece clinched a three-year bailout worth €86bn (£60bn) after parliamentarians in Athens backed the deal, and Germany backed down on its opposition to the third rescue of the bankrupt country in five years.
A meeting of eurozone finance ministers in Brussels representing the country’s main creditors agreed to launch the new bailout with €26bn being disbursed next week following six months of bitter recrimination that almost saw the country, under the leftwing government of Alexis Tsipras, becoming the first to exit the single currency.
The meeting was upbeat about finalising the bailout terms after Tsipras, secured approval from MPs for a huge package of legislation on Friday morning. The vote committed the indebted country to radical economic and fiscal reforms needed to secure the rescue money.
Wolfgang Schäuble, the German finance minister and critic of the proposed new deal, toned down his reservations at a meeting of his eurozone peers in Brussels several hours after the Athens vote.
Over the past week, Berlin has consistently argued against being rushed into a new bailout, preferring to award Greece a new bridging loan to pay off a debt payment of €3.2bn due to the European Central Bank next week. But the temporary loans scenario was barely mentioned by finance ministers.
The past six months have been difficult. We have looked into the abyss,” said Jean-Claude Juncker, the president of the European commission. “But today the message of today’s Eurogroup is loud and clear: on this basis, Greece is and will irreversibly remain a member of the Euro area.”
In an abrupt change of tone, the leaders paid tribute to Tsipras, who could only win the vote on the new bailout with the support of the opposition and by splitting his leftwing Syriza movement. It is now likely that Tsipras will call early elections and trigger a realignment of Greek politics.
Instead of questioning the merits of the draft deal struck earlier this week between Greece and its troika of creditors – the European commission, European Central Bank and the International Monetary Fund – the main problems raised on Friday concerned the issue of debt relief for Greece and whether or not the IMF would take part in the rescue. The IMF is refusing to participate in a new bailout until there is an “explicit and concrete agreement” on debt relief from Greece’s eurozone creditors.
Christine Legarde, the IMF managing director, told the meeting that it hoped to take part in the bailout and that a decision would be made in October, but she could not commit.
Schäuble said IMF participation was “indispensable”.
Greece needs to pay €3.7bn to its creditors next Thursday. The first €26bn will be released on Thursday morning, eurozone leaders said, although Greece would only see half of that immediately, since €10bn would be reserved in Luxembourg for Greek bank recapitalisation while a further €3bn would be disbursed over the next two months subject to Athens delivering on its pledges.
