Greece 'capitulates' to EU creditors

Greek Prime Minister Alexis Tsipras speaking at a press conference after the Eurozone leader summit in Brussels.
Greek Prime Minister Alexis Tsipras speaking at a press conference after the Eurozone leader summit in Brussels. PHOTO: EPA

Greek negotiators seemed to have capitulated to European Union creditors after an all-night stand-off in Brussels that threatened to end with the country ejected from the euro zone.

Financial markets in Asia and Europe cheered the news of a tentative deal yesterday after weeks of wild gyrations over the looming prospect of a Grexit.

But while the compromise deal throws Greece a lifeline, the drama now shifts to the Greek Parliament, which must pass emergency legislation tomorrow before any more bailout funds are freed up. That is far from a foregone conclusion with many MPs threatening mutiny over what they see as a huge backdown by Prime Minister Alexis Tsipras.

The deal thrashed out after marathon negotiations over the weekend is widely being seen as a humiliating "surrender" following the Greeks' resounding "no" vote to further austerity just a week earlier.

This deal for up to €86 billion (S$130 billion) in bailout cash carries far more onerous conditions than the one rejected in the July 5 referendum, including a €50 billion privatisation fund.

Only after the reforms are passed - a move to prevent what many in Europe see as Greece's tendency to backslide on reform promises - will bridging loans be released that will enable the country to meet a €3.5 billion debt payment to the European Central Bank next Monday. If Greece fails to make that payment, its banking system faces collapse.

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A version of this article appeared in the print edition of The Straits Times on July 14, 2015, with the headline 'Greece 'capitulates' to EU creditors'. Print Edition | Subscribe