Sunday

21st Oct 2018

Greece capitulates at EU summit

  • Merkel 'did not have the impression' the EU is now a 'German Europe' (Photo: The Council of the European Union)

A Greek exit from the eurozone has been avoided after a weekend of tough talks, but the political cost of arriving at a deal is likely to be felt for years to come.

After 18 hours of negotiations, culimnating six months of wider talks, euro leaders emerged bleary-eyed on Monday morning (13 July) to announce a deal that will, eventually, see Greece get a new bailout if it takes painful reforms and if it agrees to intense scrutiny at every step of the way.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • It is unclear if Tsipras will be able to get the terms of the agreement through the Greek parliament (Photo: The Council of the European Union)

The immediate result was summed up by European Commission president Jean-Claude Juncker.

"There will be no Grexit”, he said.

He noted that he’s happy with the "form and substance" of the deal, adding: "I don’t think the Greek people have been humiliated and I don't think the other European leaders lost face".

But despite his assessment, the deal represents capitulation on nearly all points for the left-wing Greek government, which was elected on a platform to stop austerity and which, just one week ago, held a referendum in which Greek people rejected creditors' demands.

With trust between Athens and creditors almost non-existent, Greece is being told it must take “prior actions” by Wednesday, including new laws on VAT hikes, pension cuts, and statistical office reforms, as well as ratification of the summit’s entire, seven-page austerity blueprint.

The creditors and the Eurogroup will formally scrutinise compliance before other eurozone parliaments vote on the summit terms.

Another proviso in the summit deal includes the return of the creditor institutions’ officials, the widely-hated, formerly called “troika”, to Athens.

Since February, at Athens' insistence, negotiations only took place in Brussels. In addition all "draft legislation in relevant areas" must first be shown to creditors before being put before Greek MPs.

Greek PM Alexis Tsipras also received next-to-no concessions on debt relief, which had - along with pensions and VAT - been one of his red lines.

"Nominal haircuts” were, once again, explicitly ruled out. Debt reprofiling will only be considered down the road "if necessary".

The deal saw Germany - Greece's biggest and most hardline eurozone creditor - receive flak on social media for pushing for such tough terms including a temporary eurozone exit, even after it was clear that Athens had backed down.

Berlin's hardline stance is popular at home, where public opinion has hardened against Greece. But it split the eurozone.

A rift emerged between those who supported a more conciliatory and political line towards Greece (including France and Italy), and those who sided with Germany (such as Finland and the Netherlands) for a more rules-based approach.

"There was in Germany rather strong pressure for a Grexit. I refused that solution," French president Hollande said after the meeting.

French experts had been instrumental in bringing a Greek deal back to the table ahead of the summit.

The entire weekend exposed the limits of the eurozone architecture, which is monetary union without a political union to back it up.

This meant the negotiations boiled down to whose democratic mandate counted for more: that of Tsipras, who pledged to end austerity, or that of Angela Merkel, the German chancellor?

It also meant talks had to take into account that the Finnish government might collapse if the Greek terms were too soft, or that other bailed-out states, such as Ireland or Portugal, did not want debt relief for Greece after having failed to get it for their own people.

Asked whether she felt the EU is now a “German Europe” in light of the summit deal, Merkel said: "I did not have that impression this morning".

Dutch PM Mark Rutte, for his part, noted that sending more money to Greece will mean that he’s breaking his electoral promise to the Dutch people.

Ireland's Enda Kenny said the summit was a "pretty bruising experience".

For his part, Juha Sipila, the Finnish PM, noted that Helsinki had been in favour of Berlin's proposal to eject Greece from the euro for five years.

He said he cannot guarantee that his parliament will accept to open negotiations on a third bailout.

It is also not sure whether Tsipras will be able to get the terms of the agreement through his parliament. Or that Merkel will get it through hers.

Tsipras, on his way out of the summit, said the deal "gives hope of recovery" but acknowledged it will be "difficult to implement".

Meanwhile, for ordinary Greeks, the austerity measures will continue and the answer to the question of when they can start withdrawing more than €60 a day from their bank accounts remains unclear.

Opinion

The EU's darkest day

Monday July 13 will go down in history as the day Greece lost its independence, the day democracy died in the country that invented it and the day the EU took a decisive step towards self-destruction.

News in Brief

  1. Germany leads EU criticism of Saudi Arabia
  2. Huge pro-EU march takes place in London
  3. Macedonia MPs back name deal in initial vote
  4. EU to open trade talks with US on beef
  5. EU court orders Poland to suspend firing judges
  6. Japan to focus on circular economy at G20
  7. Italian budget 'significant deviation' from rules, says EU
  8. Podemos initiates debate on legalising marijuana in Spain

Russian activist warns on 'fake news' as EU backs action

In 2015, internet activist Lyudmila Savchuk went under cover to expose a troll factory in St Petersburg. As the EU summit endorses anti-disinformation action, she told EUobserver the Russian government is bankrolling many more.

Stakeholders' Highlights

  1. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  2. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  3. NORDIC COUNCIL OF MINISTERSState of the Nordic Region presented in Brussels
  4. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  5. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  6. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  7. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  8. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  9. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  10. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  11. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  12. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All

Latest News

  1. What Italy's budget row is actually about
  2. EU preparing 'concentration camps' for migrants in Africa
  3. Poland to respect EU injunction on judicial purge
  4. EU votes on Facebook and plastic This WEEK
  5. Top EU banks guilty of multi-billion tax fraud
  6. Polish left a glimmer of hope in fight against illiberal democracy
  7. Europe and Asia seek stable relations in troubled times
  8. Asylum reforms derailed, as EU looks to north Africa

Stakeholders' Highlights

  1. International Partnership for Human RightsCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  2. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  3. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  4. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  5. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  6. Mission of China to the EUChina: Work Together for a Better Globalisation
  7. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  8. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  9. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  10. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  11. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  12. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs

Join EUobserver

Support quality EU news

Join us