Greece reached a last-minute compromise with the European Union and Central Bank in Brussels on Friday.
They have agreed to bankroll the country for another four months, in return for Greek assurances that it will undertake reforms and maintain a balanced budget. Greece must submit those reforms for a first appraisal by late Monday.
Greece’s newly installed leftwing government is declaring a new era for national sovereignty, the economy and relations with Europe.
"Today Greece has turned a page," a triumphant government statement declared. "Negotiations could have happened all these years. Greece is neither isolated, nor is it sailing for the rocks, nor is it continuing with memoranda [of austerity]."
The Greeks staved off new austerity terms and won time to renegotiate the existing ones. Crucially, they get to discuss the debt repayment schedule, which Greece cannot meet.
But they didn’t get a reprieve with no strings attached. The Germans ultimately forced them to pick up the reform programme where the previous government left off. Which means they still have to meet certain austerity and reform targets.
The crucial language the Greeks had hoped to avoid is in the statement's second paragraph. It states that the loan extension is "underpinned by a set of commitments. The purpose of the extension is the successful completion of the review on the basis of the conditions in the current arrangement." This effectively binds the leftwing Syriza government to the commitments of its conservative predecessors, even though they had fought for an interruption of the programme and a bridge loan separate from the existing arrangement.
Finance minister Yanis Varoufakis said he was happy with the arrangement. “The memorandum [of austerity[ is over,” he told journalists after talks. “We’re going to sit down and write a set of reforms we want to do in the next four months… we will be judged on this by the institutions on Monday or Tuesday… and at the end of four months we will be judged on the success of the implementation of these reforms… that is not a memorandum. And this is why you see me quite happy today. We are talking about the transformation of the Greek government, the Greek state, the Greek parliament, to co-authors of the reforms we have to finally pass in this country.”
Varoufakis said the deal “is a small step, but it is a step in a different direction."