EU deal ends austerity but real difficulties ahead: Greek PM

ATHENS (REUTERS) - Greek Prime Minister Alexis Tsipras said on Saturday that a funding agreement struck with euro zone ministers cancelled austerity commitments made by a previous conservative-led government to international creditors.  

After often ill-tempered negotiations, Greece secured late on Friday a four-month extension to euro zone funding, which will avert bankruptcy and a euro exit, provided it comes up with promises of economic reforms by Monday.

“Yesterday we took a decisive step, leaving austerity, the bailouts and the troika,” Mr Tsipras said in a televised statement. “We won a battle, not the war. The difficulties, the real difficulties ...are ahead of us.”

Mr Tsipras and his Syriza party won power last month on promises to end Greece’s EU/IMF bailout programme and end cooperation with the hated “troika” – inspectors from the European Commission, European Central Bank and IMF who have monitored Greece’s compliance with its austerity and reform commitments.  

Instead Athens was forced to accept the conditional extension of the bailout and still deal with the troika, renamed in the deal as “the three institutions”.

Nevertheless, he said: “Yesterday’s agreement with the Eurogroup ... cancels the commitments of the previous government for cuts to wages and pensions, for firings in the public sector, for VAT rises on food, medicine.”

Mr Tsipras, a radical left-winger, had been under heavy pressure to secure a deal as Greeks have been pulling huge sums out of the country’s banks, fearing the talks with euro zone finance ministers would fail and Greece would be cast adrift as the bailout had been due to expire on Feb. 28.  

Without naming names, he attacked conservatives at home and in the euro zone.

“Yesterday we averted plans by blind conservative powers, within and outside the country, to asphyxiate Greece on Feb. 28,” he said.  

About 1 billion euros fled Greek bank accounts on Friday, a senior banker told Reuters, due to savers’ fears that Athens might have to halt such withdrawals or prepare to reintroduce a national currency. Greece says Friday’s extension should calm such fears.

“Greece achieved an important negotiating success in Europe. We showed determination and flexibility and in the end, we achieved our basic goal,” said Mr Tsipras.