After finally defaulting on its payments to the IMF, reports are circulating that Greece has agreed to most of its creditors’s demands. So is the crisis over? Matthew Partridge investigates.
What’s going on?
Last night, the group of eurozone finance ministers emphatically rejected Greece’s demands for a month’s emergency loan, followed by a two-year bailout programme that would involve an explicit commitment to debt relief. The ministers called the plan “crazy”.
As a result, Greek went into default, becoming the first developed country in history to default (or technically go into arrears on) an IMF loan.
However, this morning the Greek PM shocked commentators by sending a letter to the “Eurogroup”, stating that Greece was prepared to accept the terms of the deal offered on Sunday, which itself was based on the offer on Friday, with only a few minor changes.
Are there any strings attached?
The only major concession would be that Greece would be allowed to keep a VAT discount on sales made on islands. There would also be brief delays to changes to labour and pensions reforms, though they would be quickly implemented.
Yesterday, the European Commission reportedly promised that a conference on debt relief (one of the key European demands) would be held in October, if Greece accepted the deal. It is not known whether this is still on the table, or if it was ever part of an offer, and it is not mentioned in the letter.
Recent events may also make it harder for the creditors to make significant concessions on this issue.
So, is everything settled then?
Europe’s finance ministers are meeting this afternoon to discuss this. However, it has met with a very cold reaction, with Germany’s finance minister saying that he had not even bothered to read it.
The main sticking point seems to be that they will not talk to Greece until the referendum has either been cancelled or resulted in a victory for the “Yes” camp.
While Germany has indicated a preference for the latter, cancelling the referendum may be the politically easiest option for him. Criticism from the Council of Europe that there isn’t enough time to properly consult Greek voters may also provide a smokescreen for a cancellation.
What about Tsipras’s own party?
Polls on the referendum have produced conflicting results, but a large number of Greek want Athens to take a tough line. Assuming that some sort of deal is agreed, many people will be angry with this U-turn. Already, members of parliament are starting to denounce the “surrender”.
While there is still a chance that parliament could reject the deal, Tsipras should be able to win enough support from the other parties. However, if he doesn’t win enough concessions on debt relief, or the economy doesn’t start to radically pick up, his position could become untenable.