A few key points from the deal struck this morning at the Eurosummit:
– More spending cuts and VAT hikes will have to be passed by the Greek parliament by Wednesday 15 July before Greece can start to negotiate the details of a loan from the European Stability Mechanism (ESM).
– Most controversial bit is 50bn Euros fund constituted by state assets: 50% sold off to repay for recapitalisation of banks; 25% towards repayment of ESM loan; the remaining 25% for ‘investments’. I guess this is the crux of the deal, Tsipras brings home a ‘stimulus’ package, although the money comes from sale of state assets, rather than loans.
– Another draconian measure would “automatically slash spending if Greece fails to meet its targets on primary surpluses (revenue minus expenditure excluding debt servicing costs)” [from Telegraph Greek Crisis live feed]
– For the rest, more liberalisations, structural reforms of justice system, and ‘austerity austerity austerity’
– Debt relief: no debt cancellation, only possible measures to help with repayments (i.e. more loans to repay loans, grace period for debt repayments).
The good thing is that the process will be so long that a lot of things can go wrong on the way – in the Greek Parliament, in future negotiations with the creditors, in the parliamentary votes required by Germany and other European states to release the ESM loan, etc.
From social media trends, it’s clear a lot of people are infuriated by the deal, so hopefully there will be enough pressures in Greece to break Tsipras’ ranks and start all over again.