European leaders and Greece claimed “victory” in arriving at an accord on Friday that many find difficult to understand.
In a typical European fashion, leaders meet, talk and talk, and follow the grand old political tradition to kick the issue for another meeting and call it a success.
At least for now, tensions are lowered and negotiators are avoiding acrimonious tone, European leaders agreed to a broader framework to extend third bailout to Greece under a revised of set of conditions that Greece has to submit by Friday.
Eurogroup of finance ministers will gather on Tuesday and review the set of Greek conditions and if approved will recommend various authorities to approve the release of funds.
Greece is looking for at least 8 billion euros of loans, third bailout from the three international lending groups who have come to be known as troika.
The deal is tentative and could easily fall apart if Greece’s list of revised conditions are not acceptable to finance ministers.
At least for now, Greece has agreed to work under the supervision of much derided the International Monetary Fund and the European Central Bank and implement plans to root out corruption and accelerate tax collection.
Eurogroup finance ministers also “agreed” to lower primary budget surplus target for Greece to 1.5% of Gross Domestic Product, down from the 4.5% and at least for now delay the increase in pension payments and income taxes. But the government is still required to increase labor markets flexible.
Greece’s economy has shrunk 25% since 2010, when the struggling nation requested its first bailout. Unemployment is the highest in the euro zone and the jobless rate is hovering around 25% and youth unemployment is near 50%.
Greek citizens may not see any direct benefit of the third bailout as all the monies will be used to repay maturing loans in the next few months and none of the funding will be tender the real economy.
So Greece will be in headlines for months and may be years and markets will be volatile and at times tense and the euro will have Greek halo casting its dark shadow.