It has been a dispiriting period for Greece. Last 11th of July Greek Parliament voted to give the prime minister, Alexis Tsipras, the authority to negotiate a financial deal harsher than the one Greek voters rejected in a referendum on July 5th. Tsipras returned to the negotiation, and on July 13th he secured the framework of a deal whith Greece’s European creditors. It is a hard one, which would force the Greek government to swallow a list of policy changes directly counter to the platform on which they won election early this year.
In returns to this hard deal, Greece remains in the euro (€) area, and if all the things go right it also receives the right to start talks with European creditors on a new bail – out programme, which could be worth between €82 billion and €86 billion overt three years.
On July 5th the Greek prliament voted on a bill containing a first set of reforms, for example, e value-added tax, cut pensions, ensure that ELSTAT remains legally independent, introduce automatic spending restraints,… Necessaary changes to maintain the country. Of course, Tsipras assembled a new government. The day after, the European Central Bank moved to increase its emergency lending to Greek Banks. This, hopefullly was enough to allow Banks to re-open the last Monday, but with capital control.
Last Monday, July 20th, Greece repayd the ECB €4.2 billion. Greece could finally scrounging up the money. The next step comes in July 22nd, when a second set of laws must be passed by the Greek parliament. Those would overhaul the civil-justice system to make it more efficient and move forward on adoption of the European Union’s BBRD (Bnak Resolution and Recovery Directive), which makes it easier to impose losses on senior creditors and depositors when banks go insolvent. Greece’s parliamentt also commit to a whole raft of other policy measures. To keep to the new programme Greece must enact further pension reforms, open up closed professions, loosen trading rules, privatise its electricity network, reform its labour market and strengthen its Banks. It must produce plans for de-politicising the Greek administration, It must accept complete oversight from the institutions who will return to Athens to oversee the work of Greek officials and roll back any legislation it has passed sinc etaking office that violates previous bail-out agreements. It will have to deposithe seven-page Summit statement calls “valuable Greek assets” into an independent privatisation fund whith the aim of raising €50 billion over the course of the bail-out.
If Greece manages to pass the necessary legislation, the deal agreed on July 13th will then go to several euro-area parliaments for approval, a set which includes Germany, Estonia, Finland, Netherlands, Slovakia and Austria. Then, if all of those steps are successfully vaulted, the Eurogroup will task the ECB, European Commission and IMF with the task of negotiating the new bail-out deal with Greece.
Meanwhile, in Greece, if a stable government cannot be roped together, Tsipras may need to call new elections. We’ll see what ends up happening.
Firmado: Julio Bermúdez Madrigal.
Imagen | DiarioYa.