The EU bailout of around £61bn is conditional on Greece passing agreed reforms by tomorrow and those reforms are by no way insignificant. Before any money changes hands, the Greeks must agree to cut pensions, raise tax revenue and liberalise the labour market. That means details like shops staying open longer, people retiring later and even changing restrictive practices around some very big industries.
There is no reduction in the amount Greece has to pay back, not a single euro has been forgiven. All there is is an offer to reschedule Greek debt repayments “if necessary”.
So the Greek prime minister, Alexis Tsipras, who was elected on a promise to the electorate to end austerity, reinforced by the referendum verdict, is about to recommend to the country’s parliament a package of even greater austerity.
He said that Greece had secured debt restructuring and a “growth package”. It is a fact of life in economics that it is impossible to cut your way to growth.
And he may have ended the threat to move Greek assets abroad, but the proposal includes setting up a fund in Greece and managed by the Greek authorities, but under the ultimate control of the European authorities, meaning it could be forced to sell off Greek assets in order to repay the country’s debts.
It is little wonder that anger in Greece is widespread and there is talk of surrender and humiliation. It is hard to see how the problems in Greece all end here.
Greece’s economy has shrunk 25 per cent in just five years. If Greece receives its third bailout, it, and Europe, will be out of the woods for a while, but has anything fundamental changed? The country is still in recession and being forced to make domestic political reforms – a conjunction that has repeatedly failed to improve its lot.
Mr Tsipras said the possibility of “Grexit” is in the past. It will probably not stay there.
And at this stage in the proceedings we have a European Union that is riven with discord, more divided now than at probably any time in its past – and the UK is about to enter in to a referendum as to whether it wants to remain in it or not.
French President Francois Hollande said the agreement showed that Europe is capable of solving a crisis that has menaced the eurozone for several years, There is no agreement, and even if the Greek parliament pass the laws needed for one to exist, the crisis will be a long way from being solved.
Elections in Greece are probably now inevitable. It is hard to believe that they will not again re-ignite this crisis.