We know a bit more about the deal reached on Sunday night.
First of all, the “deal” is, in fact, an agreement to start negotiations on a deal. This is underlined by the Euro Summit Statement, published after the euro-zone leaders’ all-night meeting, which refers to “a possible future agreement on a new ESM programme”.
Secondly, there are a number of substantial steps to be taken before those negotiations can be completed.
To start, the creditors have to agree very quickly on some form of “bridge” financing to allow the country to meet its short-term obligations. These include forthcoming bond payments to the ECB and outstanding debts to the IMF and are estimated at €12bn by mid-August.
On the Greek side, Alexis Tsipras has to get the overall agreement approved by the Greek Parliament by the end of Wednesday 15th July. With an angry public opinion waking up, things could be more complicated than expected. Also, the “deal for a deal” also requires Greece to legislate a range of actual policy changes by the end of tomorrow. These include the streamlining of the VAT system and broadening of the tax base; upfront measures to improve the pension system; safeguarding the independence of the national statistics agency, and enacting outstanding measures under the Fiscal Compact to strengthen fiscal oversight. Additional measures are required by July 22nd.
Assuming that the Greek Parliament approves the agreement and the policy changes are made, several other euro-zone parliaments have to approve it. While the German parliament is expected to pass it comfortably, approval in some other countries – such as Slovakia – is less certain.
Finally, even if we want through all these details, how long the population is going to take such pain? How would the measures be effectively implemented in the economy?