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Greece Reaches Accord With European Officials to Extend Bailout Eurozone Officials Reach Accord With Greece to Extend Bailout
(35 minutes later)
BRUSSELS — European leaders agreed Friday to extend Greece’s bailout for four months after weeks of tense negotiations. BRUSSELS — European leaders agreed on Friday to extend Greece’s bailout for four months after weeks of tense negotiations.
The deal, reached at an emergency meeting of eurozone finance ministers here, paves the way for Greece to unlock further financial aid from a 240 billion euro, or $273 billion, bailout deal — provided the country meets certain commitments laid out by its creditors.The deal, reached at an emergency meeting of eurozone finance ministers here, paves the way for Greece to unlock further financial aid from a 240 billion euro, or $273 billion, bailout deal — provided the country meets certain commitments laid out by its creditors.
“I’m glad to report to you that the work has paid off,” Jeroen Dijsselbloem, the head of the Eurogroup of finance ministers, said at a news conference. “We have established common ground again.”“I’m glad to report to you that the work has paid off,” Jeroen Dijsselbloem, the head of the Eurogroup of finance ministers, said at a news conference. “We have established common ground again.”
The new agreement will require the two sides to continue to work through their differences. The deal is likely to give Greece breathing room. For one, it could help stem flights of deposits from the country’s banks, which have been bleeding money during the standoff between Greece and its creditors.
For one thing, Greece will not receive any of a €7 billion installment from the bailout until it has carried out all remaining reforms required by creditors, some of which Mr. Tsipras had pledged to roll back. Greece must also show that it is not abandoning austerity measures unilaterally.
That means that if Athens moves slowly, it might not get the money for months.
The deal is likely to give Greece breathing room. For one, it could help stem flights of deposits from the country's banks, which have been bleeding money amid the standoff between Greece and its creditors.
But it will hardly move the country past the worst of its economic and financial troubles. The economy has shrunk by a quarter in the last five years, and unemployment stands at more than 25 percent.But it will hardly move the country past the worst of its economic and financial troubles. The economy has shrunk by a quarter in the last five years, and unemployment stands at more than 25 percent.
The new agreement will also require the two sides to continue to work through their differences.
For one thing, Greece will not receive any of a €7 billion installment from the bailout until it has carried out all remaining reforms required by creditors, some of which Mr. Tsipras had pledged to roll back. Greece must also show that it is not abandoning austerity measures unilaterally.
That means that if Athens moves slowly, it may not get the money for months. Some also questioned whether the new left-leaning government, which rose to power last month on an anti-austerity platform, was actually capable of delivering the changes that Europe is demanding.
“You are asking a people to continue with a long hard grind when they want to do something else,” said Gabriel Sterne, an economist at Oxford Economics in London.
Still, the agreement represents a breakthrough in the impasse that rattled the markets and raised questions about the future of the common currency zone.Still, the agreement represents a breakthrough in the impasse that rattled the markets and raised questions about the future of the common currency zone.
The major sticking point has been how closely Greece is prepared to abide by the tough conditions underpinning its bailout loans. The major sticking point has been how closely Greece is prepared to abide by the tough conditions underpinning its bailout loans. For weeks, Greece has pushed to ease the more onerous terms of the bailout.
The new left-leaning government of the Greek prime minister, Alexis Tsipras, was voted into power last month on an anti-austerity platform. For weeks, Greece has pushed to ease the more onerous terms of the bailout.
But Germany and other major creditors have insisted that Greece stick with the commitments of its original bailout. Germany, as well as countries like Finland, have been reluctant to risk more taxpayer money by lending it to Greece. Other countries, including Ireland and Portugal, which have hewed to their own austerity-pegged bailout programs, insist that Greece do the same.But Germany and other major creditors have insisted that Greece stick with the commitments of its original bailout. Germany, as well as countries like Finland, have been reluctant to risk more taxpayer money by lending it to Greece. Other countries, including Ireland and Portugal, which have hewed to their own austerity-pegged bailout programs, insist that Greece do the same.
While the deal was hailed as a victory of sorts by the Europeans and the Greeks, analysts cautioned that what the agreement really does is postpone difficult issues for another time.
“When is a deal not really a deal? When it kicks the can down the road and when no one can agree on what was agreed,” said Peter Doyle, a former economist at the International Monetary Fund.
Mr. Doyle was speaking to the conflicting messages coming out of the two camps. European officials cast the pact as supportive of their view that money can be dispensed only if economic conditions are met. The Greeks, on the other hand, are claiming that the deal is symbolic of their new approach toward Europe, in which they are able to secure easier fiscal terms from Brussels and still get access to crucial funds.
Asked at a news conference whether the eurozone’s major powers ignored the wishes of the Greek electorate, Mr. Dijsselbloem said the collective needs of the region also needed to be taken in account. “In the Eurogroup we have to work with 19 ministers who have 19 mandates,” he said, and “we have to reach a joint decision.” Decisions “will always be about money and about conditions,” he added.
The next stage of negotiations may prove just as tricky.
Starting on Monday, Greece must present a list of overhaul measures that will represent a “starting point” for those talks for payments. The country’s bailout monitors — the European Commission, the European Central Bank and the International Monetary Fund — will then need to assess Greece’s progress before any money is paid out.