A Greek exit from the European Union has been avoided thanks to an agreement made at an emergency Eurozone summit on Tuesday.
Greece and its eurozone creditors reached an agreement on a third bailout worth around 86 billion euros ($94.7 billion).
“The agreement was laborious, but it has been concluded. There is no Grexit,” said European Commission President Jean-Claude Juncker at a news conference.
“In this compromise, there are no winners and no losers,” Juncker said. “I don’t think the Greek people have been humiliated, nor that the other Europeans have lost face. It is a typical European arrangement.”
EU creditors agreed to bailout Greece for a third time as long as austerity measures are implemented.
Greek Prime Minister Alexis Tsipras commented:
“Alternatives during summit were: agreement or disorderly bankruptcy”
Mr Tsipras said in an interview on Greek TV ERT that he tried his best to maintain wages and pensions and that the fiscal adjustments that he agreed to were milder than those in the past.
Despite there being harsh reforms they are necessary to solve the country’s debt issues – both mid-term and short-term.
“I am fully assuming my responsibilities, for mistakes and for oversights, and for the responsibility of signing a text that I do not believe in, but that I am obliged to implement”, the prime minister said.
The European Central Bank decided to keep its emergency liquidity lifeline to Greek banks, ensuring that the country’s banking system does not collapse. However, Greek banks (which have been closed since June 29) won’t open for a while, as capital controls remain in place.
The next move for Tsipras is to win parliamentary approval
Now that there is a deal on the table Mr Tsipras must pass legislation to cut pensions, increase value added tax, implement automatic spending constraints, and transfer €50 billion worth of state assets into a fund that will help pay down debt and recapitalize the banks.
It is imperative that Mr Tsipras wins parliamentary approval of these austerity measures for the EU to move ahead with the bailout package it has offered.