The Greek government has taken another step towards agreeing to a third bailout deal with the European Commission following overnight talks in Athens. The deal, though to be worth around £60 billion, is needed by August 20th if Greece is to avoid another default on a debt repayment.
However, here are still several hurdles to cross before the deal is confirmed. Greek Finance Minister Euclid Tsakalotos said that there were still “two or three small issues” to be resolved, while the European Commission said a deal had been agreed only “in principle”.
Finland and Germany also sounded cautious, with Friday’s meeting of the Eurozone finance ministers now crucial. Finnish Finance Minister Alexander Stubb told Reuters that “agreement is a big word. There remains work to be done with details.”
Any deal must then be approved by national parliaments, with Greek Prime Minister Alexis Tsipras again likely to have to rely on votes of opposition parties to get the bill to pass.
BBC Economics Editor Robert Peston added to any feeling of pessimism, stating: “Without debt write-offs, prosperity will never return to Greece, and its future in the euro will never be assured.” He goes on to say that any Greek write-off would encourage other anti-austerity parties in southern Europe.
The measures likely to be included in the bail-out deal if it is agreed include the gradual raising of the Greek retirement age to 67, the scrapping of tax breaks for farmers, the privatisation of national assets such as ports and property, and agreements on targets for primary budget surpluses in the coming years.
According to the Guardian’s Brussels Correspondent Ian Traynor, Greece’s negotiators have been “unusually helpful and cooperative given the rancour and recrimination that have characterised relations all year.”
He goes on to suggest that this is for political reasons, with Tsipras hoping for a quick deal so he can capitalise on his current popularity and hold early elections. Traynor writes: “(Tsipras wants) to secure his base and rid himself of far left rebels in his Syriza movement who reject the rescue terms and would prefer Greece to quit the euro.”
Talk of an agreement has boosted the Greek stock market following its huge losses since it re-opened, but did little to raise confidence globally, with investors worried about the economic situation in China after their Central Bank devalued the Chinese yuan overnight in a bid to boost exports.