In actuality, with Germany taking the lead, Greece was forced to accept extension of the original bailout deal that includes all the bailout conditions of the original memorandum of agreement. It did not receive a six-month loan period as it wanted but only four months. The loan period could not expire at a worse time since large debt repayments will be due shortly after. This will provide leverage for EU officials to press even more demands on the beleaguered Greek government. The Syriza government had insisted that it did not want an extension of the existing bailout agreement nor would it deal with the Troika
of the European Commission, European Central Bank or the International Monetary Fund. It has agreed to an extension of the original bailout and supervision by the Troika but under a new name. They are now called simply "institutions." There will be no debt write off, one of Syriza's key campaign promises. Greece agrees to honor all its debt obligations.
In spite of all this Alexis Tsipras, the Greek prime minister, said
in a TV interview: "Yesterday we took a decisive step, leaving austerity, the bailouts and the troika behind." Tsipras is wrong on every point. Even Reuters
notes the discrepancy between what Tsipras claims and the reality:
Tsipras declared Greece was "leaving austerity, the bailouts and the troika behind". Nevertheless, government plans must still be approved by the re-named troika, although Tsipras won election last month on a pledge to end the humiliation of foreigners dictating Greek economic policy.
The new loan is in effect a tranch of the old bailout and he has to present reforms the Greek government intends to implement — and these must be approved by his EU partners and the IMF, in effect the old Troika under a new description:
Finance Minister Yanis Varoufakis said the reform promises would be ready on Sunday and submitted to Greece's EU and IMF partners in good time. "We are very confident that the list is going to be approved by the institutions and therefore we are embarking upon a new phase of stabilization and growth,"
It will be interesting to see what these new reforms will be. I expect that some will deal with fighting corruption but there will also probably be tax reform of some sort. Greece has always had trouble with tax collection and both the government and the EU would like to see tax revenues increase. One thing is certain the type of reforms that Syriz demanded in its campaign for the recent elections will not be on the table. Only reforms acceptable to the Troika — sorry I meant "institutions" — will be on the table. These will not include rehiring laid off public workers, increasing minimum wages, or stopping key privatizations. Even Tsipras
remarked: "We won a battle, not the war.The difficulties, the real difficulties...are ahead of us."
The Irish finance minister, Michael Noonan
, noted that the deal simply gives the Greek government a short reprieve even after reversing their electoral position and gaining virtually nothing from the EU in return. However, it did avoid bankruptcy and having to leave the euro zone.
One promise that Tsipras and his finance minister Vourafakis did keep and that was to do whatever was necessary to achieve a deal. Even though Tsipras kept abandoning campaign promises during negotiations he at the same along with his finance minister often spouted radical rhetoric completely at odds with what he was doing. About 80 percent of Greeks
supported the tactics used by their government negotiators.
The vast majority of Greeks do not want to leave the euro zone and no doubt are relieved that at least a deal has been made to keep them in the zone for now. Tsipras
"I want to say a heartfelt thanks to the majority of Greeks who stood by the Greek government ... That was our most powerful negotiating weapon. Greece achieved an important negotiating success in Europe.".
One veteran leftist, Manolis Glezos
, was critical of the deal. Glezos is a Syriza member of the European parliament. On his blog he wrote:
"I apologize to the Greek people because I took part in this illusion. Syriza's friends and supporters ... should decide if they accept this situation."
In contrast, Finance Minister Varoufakis was confident even about the reforms he was forced to submit on Monday: "We are very confident that the list is going to be approved by the institutions and therefore we are embarking upon a new phase of stabilization and growth." An anonymous official said that the reforms included a crackdown on tax evasion and corruption. There is no mention of reforming austerity conditions since the Greek government has already agreed those will continue for at least four months. After the four months many predict that Greece will need another rescue program. As the Irish Finance Minister
Noonan put it: "Once you get them into the safe space for the next four months, there'll be another set of discussions which will effectively involve the negotiation of a third program for Greece."
Costa Panagopoulos, head of the polling firm Alco, said that the initial reaction to the deal was relief that Greece would remain in the euro zone. He thought that Greeks might even accept Tsipras' claim that the Troika was no more. After all, the term does not appear in documents. The appended video demonstrates Varoufakis' skill in portraying the reality as something completely different.
Perhaps, Varoufakis could be featured in a new Monty Python comedy skit.