Exhausted eurozone leaders reach Greece deal
Greece’s Prime Minister has agreed to a harsh set of terms in a new deal with his country’s creditors. Amid tensions among European leaders, which values should Europe hold dearest?
The sun had long since risen in Brussels on Monday morning before President of the European Council Donald Tusk emerged to make the declaration the continent was awaiting: ‘We have an a-Greek-ment’. After a long and fractious night of talks, a deal had finally been reached to prevent the immediate threat of Greece leaving the euro.
For the first time since the Greek debt crisis began in 2009, Europe’s most powerful politicians had openly contemplated that possibility. Some finance ministers and leaders of eurozone countries, particularly from small states such as Finland and Slovakia, appeared willing to undermine the irreversibility of their currency union and, potentially, the integrity of the European Union itself.
Yesterday’s agreement puts the onus on the Greek government to take radical, rapid measures to restore its creditors‘ confidence. Greece must pass a raft of laws by tomorrow to cut government spending, reform its tax and pension systems, liberalise its labour market, deregulate industries and allow an investment fund to oversee the sale of €50bn of state assets.
A tough battle lies ahead in the Greek parliament. Prime Minister Alexis Tsipras’s Syriza party has consistently campaigned against austerity measures, saying that they have helped to create spiralling poverty, unemployment, homelessness and suicide. Tsipras has not secured any guarantees that his creditors will relieve any of Greece’s debt. And with many of his own MPs considering rebelling against him, he may need the help of the opposition to pass the laws he has agreed to.
But Greeks may feel they have no alternative. Ratifying the deal would allow them to open talks on a possible €86bn bailout over the next three years. Otherwise, the European Central Bank may cut off liquidity, meaning that Greek banks run out of money, forcing the country to withdraw from the euro with potentially catastrophic results.
But some, on the left and right of politics, go further. UKIP leader Nigel Farage says that ‘national democracy and membership of the eurozone are incompatible’. This deal is a sinister attack on Greece’s sovereignty, which is more precious than anything the euro or EU can offer.
The leaders of the two most powerful eurozone countries disagree on how to handle Greece. German Chancellor Angela Merkel stresses the importance of following eurozone rules. Creditors need to know that they will get their money back; the only alternative is the breakdown of global financial systems and extreme instability.
French President Francois Hollande, though, emphasises European ‘solidarity’. The strongest members of the euro must look after the weakest, not simply exploit them.
- Should Greece’s parliament accept this deal?
- Can the eurozone survive the Greek debt crisis?
- Write (and, if possible, perform) a radio broadcast from inside the room where negotiations were taking place, describing the scene, the issues that were being debated and the views of the different parties on them. You can use the Financial Times article in the links if you want extra detail.
- Write a letter to a Greek MP explaining how you think they should vote tomorrow and why.
Some People Say...
“The only thing that will redeem mankind is cooperation.”Bertrand Russell
What do you think?
Q & A
- How might this affect Britain?
- The British government is currently trying to secure reforms in the EU before a referendum on the country’s membership in the next two years. Those opposed to Britain’s position in the EU say the treatment of Greece shows the EU’s failings. Many of those in favour of membership are likely to argue that Britain needs more influence in Europe, so that the biggest decisions are not left to countries like Germany.
- Why does European unity matter?
- Older generations recall the two World Wars which started in Europe in the 20th century. Some argue that political and economic integration is the best way to avoid such horrors from being repeated. But others say that the current crisis shows that excessive integration has ended up harming Europe’s peace and security.
- Long and fractious night
- The summit of eurozone leaders on Sunday had been the longest in at least a decade. At one crucial point in discussions, Donald Tusk had intervened to prevent Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel from walking out of the room and, it would seem, accepting that talks had broken down and Greece would leave the euro. That came after a separate meeting between the countries’ finance ministers on Saturday which was, according to one participant, ‘extremely hard — violent, even’.
- These creditors are known as the ‘troika’ and are made up of the European Union, the European Central Bank and the International Monetary Fund.
- May need the help of the opposition
- It is now very possible that Tsipras will need to form a government of national unity, meaning that parties currently in opposition would join the government. This would severely weaken the influence of his left-wing Syriza party.
- A possible €86bn bailout
- This would be the third bailout since the debt crisis began, after similar deals were reached in 2010 and 2012.