Euro zone clinches deal with Greece after all-night haggle

REUTERS: Euro zone leaders clinched a deal with Greece yesterday to negotiate a third bailout to keep the near-bankrupt country in the euro zone after a whole night of haggling at an emergency summit.

“Euro summit has unanimously reached agreement. All ready to go for ESM programme for Greece with serious reforms and financial support,” European Council President Donald Tusk announced on Twitter, referring to the European Stability Mechanism bailout fund.

However, the tough conditions imposed by international lenders led by Germany could bring down Prime Minister Alexis Tsipras’ leftist government and cause an outcry in Greece. Even before the final terms were known, his Labour Minister went on state television to denounce the terms.

“We were able to keep the unity on keeping Greece inside the euro zone,” Slovenian Prime Minister Miro Cerar said on his Twitter account.

EU officials said Tsipras finally accepted a compromise on German-led demands for the sequestration of Greek state assets to be sold off to pay down debt. The terms of the agreement were not immediately known.

The Greek leader also dropped resistance to a full role for the International Monetary Fund in a proposed 86 billion euro (US $ 95.78 billion) bailout, which German Chancellor Angela Merkel has declared essential to win parliamentary backing in Berlin.

However, in a sign of how hard it may be for Tsipras to convince his own Syriza party to accept the deal, Labour Minister Panos Skourletis said the terms were unviable and would lead to new elections this year.

As the hours ticked away overnight, most of the leaders were forced to cool their heels, playing computer games or taking a nap in their delegation offices while Tusk and the leaders of Germany, France and Greece met several times privately to try to cut through the final knots.

Tsipras will now have to rush swathes of legislation through parliament this week to convince his 18 partners to release bridging funds to avert a state bankruptcy and just to begin negotiations on a three-year loan.

If the summit had failed, Greece would have be staring into an economic abyss with its shuttered banks on the brink of collapse and the prospect of having to print a parallel currency and in time exit the European monetary union.

Six sweeping measures including spending cuts, tax hikes and pension reforms must be enacted by Wednesday night and the entire package endorsed by parliament before talks can start, the leaders decided.

In almost the only concession after imposing a tough set of terms on Tsipras, Germany dropped a proposal to make Greece take a “time-out” from the euro zone that many said resembled a forced ejection if it failed to meet the conditions.

Tsipras said on arrival in Brussels on Sunday he wanted “another honest compromise” to keep Europe united. Instead, he was subjected to a 15-hour humiliation by leaders furious that he had spurned their previous bailout offer on more favourable terms in June and held a referendum last week to reject it. One senior EU official calculated the cost to the Greek state of the last two weeks of political and economic turmoil at 25 to 30 billion euros.