Eurozone leaders reached an agreement with Greece early on Monday morning after 16 hours of talks that saw Prime Minister Tsipras berated by his European colleagues in a display of behaviour that showed the underlying desperation of the northern countries to keep the big European experiment going.
A third bailout on unilateral terms is being shoved under Greece's nose with a range of austerity measures that have to be passed by the Greek parliament before the end of Wednesday.
Just over a week ago the Greek electorate voted for 'no more austerity' and the Tsipras government now faces a domestic reaction from its own Syriza party members as well as those that voted ‘no’ in the referendum. Syriza is unlikely to remain in government in the medium term.
Greece’s Employment Minister Panos Skourletis already has commented that the deal is not what the people had voted for and that new elections are inevitable later this year, "It's clear this deal does not represent us," said Skourletis whose head is now on the block alongside other ministers who failed to support the PM’s strategy.
Tsipras' main battle was with the Germans who wanted and may have succeeded in pressing Greece into an administrative sub-unit of Germany yet Tsipras claimed a victory of a sort, "It is an agreement which allows the country to stand and the Greek people continue to fight" referring to the liquidity agreement for the country's banks. "We won funding in the short-term and debt relief," said Tsipras.
"Today's agreement keeps Greece in a state of financial stability", added the head of the government back in Athens.
The Greek PM finally had finally been forced to bend to Germany’s insistence that Greek state assets will be sold off with the money going into a separate account outside the Greek banking system for the use of its creditors only.
The meeting was marked by bad tempered delegates whose resentment at Greece’s yes/no referendum and rejection of the June bailout offer exploded last night in waves of recrimination that left Greece agreeing a deal but with no credible government left to run the measures through its parliament and execute them in a spirit of national cooperation.
Tsipras also dropped his insistence that International Monetary Fund was fully involved in the new €86 billion bailout. Germany had made this another condition for aid and the Greek parliament shortly will be presented with austerity legislation that needs passing in full before Greece can have another cent.
The austerity measures agreed by Tsipras include state spending reductions, tax rises including VAT, pension changes and state asset sales alongside demands for a stronger commitment by Greece’s creditors to restructure the country’s debt - the same old stuff with the delay caused by the referendum costing the country an estimated €30 billion.
The option for a temporary exit from the eurozone, a Grexit Lite, was discussed and rejected as being a thinly disguised expulsion that will fool no one, especially the USA which has been watching this Greek drama unfold with increasing geo-political concerns.
The Greek team's pride and mandate lie around its ankles and any cries of "victory" from the northern states soon may be stifled, especially if the Greek parliament refuses to pass the austerity measures and an election is triggered.
The Greeks are past masters in the game of delay and thwart; a further delay would be caused if an election was called which would push Greece into a full blown crisis and might unmount Germany from its high horse.
Merkel this time has been more concerned with her domestic votes than with what is right for Greece as another €85 billion pushes Greece into a financial position where even her own brutish Finance Minister Wolfgang Schaubel (picured below) would agree that default is the sensible option.
As one observer noted on Twitter, "to cut off money and then try and take all a country's assets and replace the government confirms, this is a coup."
Josef Joffe, editor of Die Seit sums up the crisis well; "For the third time the Greeks have learned that weakness is strength because Europe dares not pull the trigger. Athens' foreign debt will continue to rise. So, 'haircut' next and a further bailout waiting in the wings.
Irreparable harm has been done to the grand European project. The self-interest of those in charge of running Europe while forcing austerity economics on southern countries has just been exposed.
