Deal on Greek Debt Crisis Is Reached, but Long Road Remains

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from The New York Times,

Greece and its European creditors announced an agreement here on Monday that aims to resolve the country’s debt crisis and keep it in the eurozone, but that will require further budgetary belt-tightening that Prime Minister Alexis Tsipras could have trouble selling back in Athens.

The agreement does not guarantee that Greece will receive its third bailout in five years. But it does allow the start of detailed negotiations on a new assistance package for Greece.

One open question is whether the deal gives enough confidence to the European Central Bank to let it continue channeling sorely needed emergency funding to Greek banks, which have been hollowed out by a long economic slump and the withdrawal of billions of euros in recent months by account holders.

The tough terms, demanded by Germany and others, are meant to balance Greece’s demands for a loan repayment system that will not keep it mired in recession and austerity budgets, against creditors’ insistence that loans worth tens of billions of euros not be money wasted. Testy negotiations and Greece’s inability to live up to the promises made in its previous bailouts had cast a shadow of distrust over the weekend’s discussions.

The Greek Parliament will also be required to approve the terms of the agreement “without delay,” according to the document released on Monday morning.

The agreement will call for Greece to raise taxes in some cases, pare pension benefits and take various other measures meant to reduce what critics see as too much bureaucracy and too many market protections that keep the Greek economy from operating efficiently.

But any easing of Greece’s debt repayment obligations would not include something Greece had previously made a condition of any deal: a so-called haircut, or reduction of the overall debt, which is more than €300 billion. The document issued on Monday made its resistance to that demand clear in one sentence: “The Euro Summit stresses that nominal haircuts on the debt cannot be overtaken.”

Despite the agreement, Greek banks are expected to remain closed this week. The banks are acutely short of cash and Greek depositors may soon find it difficult to withdraw even small sums from A.T.M.s.

To reopen, the banks would need more emergency loans from the European Central Bank. But the central bank might be wary of providing additional emergency cash until the agreement receives approval from the Greek Parliament.

Miltiades Macrygiannis, proprietor of an antiques store in Athens, Art and Craft Interiors, said he was hopeful and relieved that a so-called Grexit — a Greek exit from the eurozone — appeared to have been avoided. But he was also disgusted.

“It’s simple: We wasted five months,” Mr. Macrygiannis said. In the end, he added, the austerity measures that had to be taken appeared to be worse than what the creditors had been willing to give five months ago, when the new Greek government took office.

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