After marathon talks to secure third bailout, Greek prime minister prepares for showdown with MPs opposed to deal described as harsher than Versailles treaty

This article is more than 5 years old

This article is more than 5 years old

Greece bailout agreement: key points Read more

Alexis Tsipras is heading for a showdown with his own party and opposition MPs after the Greek prime minister accepted a third bailout programme that will bring further austerity to the debt-stricken country.

Tsipras, who was locked in fraught negotiations with EU leaders in Brussels throughout Sunday and Monday morning, convened a meeting of government officials in Athens to thrash out a way to convince his radical-leftist Syriza party and its coalition partner to vote through the package by Wednesday.



Determined to keep his party together ahead of an expected onslaught by MPs opposing the outline deal, Tsipras summoned his finance minister, Euclid Tsakalotos, and Nikos Filis, representative of the Syriza parliamentary group, to the Athens meeting, before a gathering of his parliamentary party on Tuesday.

Efforts to win the vote in the national parliament came after Tsipras and Greece’s creditors agreed on the basis for talks on a bailout that will keep the country in the eurozone.

After the marathon talks, spread over a tense weekend, a breakthrough came early on Monday morning. Donald Tusk, president of the European council, announced that the 19 leaders of the eurozone had unanimously reached agreement.

He said they were “all ready to go” on a new programme for Greece under the eurozone bailout fund, the European Stability Mechanism, adding that Athens had signed up to “serious reforms”.

European council president Donald Tusk announces the new austerity deal with Greece

But the hard-fought political deal is only the start of yet another round of talks to hammer out the technical details of a bailout plan that could be worth up to €86bn (£62bn) for Greece.

To get these desperately needed funds, Tsipras had to submit to draconian economic reforms that the Greek people rejected in a referendum barely a week before.

Greece promised to pass laws introducing controversial economic reforms by Wednesday. These include reforming the VAT system, overhauling pensions and signing up to plans that ensure immediate spending cuts in the event of breaching creditor-mandated budget targets.

Athens has agreed to sell off state assets worth €50bn, with the proceeds earmarked for a trust fund supervised by its creditors. Half the fund will be used to recapitalise Greek banks, while the remaining €25bn will pay down Greek debts.

Facebook Twitter Pinterest Three-minute analysis with Jonathan Freedland and Larry Elliott

Tsipras did manage to win a concession that the fund should be managed from Greece, not Luxembourg, as envisaged in a German plan, but the rules will be drawn up by Greece’s creditors – the troika that Tsipras vowed to throw off, but only succeeded in renaming as “the institutions”.



These institutions – the European commission, International Monetary Fund and European Central Bank – have asked Athens to come up with a plan to “de-politicise” its civil service by next Monday.

In another humiliating climbdown, Athens could be forced to reverse measures it passed upon assuming power that are deemed to run counter to the bailout philosophy. Potentially, this could mean firing the government cleaners that Syriza rehired with such fanfare.

Paul Krugman, the Nobel prize-winning economist and prominent critic of austerity in Greece, said the creditors’ demands on Greece “went beyond harsh into pure vindictiveness, [leading to the] complete destruction of national sovereignty [with] no hope of relief”.

“It’s a grotesque betrayal of everything the European project was supposed to stand for,” he wrote several hours before the final deal emerged. As the talks dragged on through Monday night, #ThisIsaCoup became the top trending topic on Twitter in Greece, Germany, the UK and Ireland.

Echoing a widespread view on social media, one financial analyst claimed the deal was worse than the 1919 Treaty of Versailles that crushed Weimar Germany with debt and paved the way for the second world war.

Marc Ostwald, of ADM Investor Services, argued that the eurozone creditor countries wanted “to completely destroy Greece”.

Asked about the Versailles analogy, the German chancellor, Angela Merkel, said: “I never make historical comparisons.” She said that the Greek programme was “nothing special”, apart from the sums of money involved, and in line with other bailout schemes devised for Spain and Portugal.

Jean-Claude Juncker, the president of the European commission, rejected criticism that Greece’s creditors had been too harsh. “I don’t think that the Greek people have been humiliated and I don’t think the other Europeans were losing their face. It’s a typical European arrangement.”

While recriminations continue to swirl, Greece urgently needs cash to stave off bankruptcy. Athens has to find €12bn by the end of the month.

Eurozone finance ministers, who have been stuck on a loop of emergency meetings for three and a half weeks, reconvened in Brussels on Monday afternoon to discuss emergency bridge finance to tide over the Greek government while further talks on the €86bn bailout grind on.

Although EU leaders trumpeted the avoidance of Grexit, in the communique they made it clear that the deal could still unravel. “The risks of not concluding swiftly the negotiations remain fully with Greece,” it said.

Greece’s parliament is still expected to push through the controversial reform package by Wednesday, despite internal pressure on Tsipras, which will pave the way for parliaments in other eurozone members to ratify the agreement. The Bundestag and Finnish parliament are among several legislatures that must approve eurozone bailout programmes.

Finland is expected to reject any further bailout for Greece to avoid a schism that could topple its two-month-old government.