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Euro-area finance ministers reached an accord that would keep bailout funds flowing to Greece in return for a commitment to meet certain conditions, buying time to work out the detail of longer-term Greek financing.Talks in Brussels between officials from the 19 euro-area finance officials concluded Friday evening with an agreement to extend aid to Greece for four months. The 19 eurozone finance ministers reached the hard-won deal at tense talks pitting Greece against an angry Germany, suspicious that the new radical leftist government in Athens was looking to ditch its austerity obligations.
"The meeting was intense because it was about building trust between us," said Eurogroup head Jeroen Dijsselbloem, after the talks ended with a two-page statement setting out the tough conditions Athens will have to fulfil.
“We agreed on four months under conditions,” Joerg Schelling told reporters after the meeting. Greece must submit a list on Monday of measures it will undertake in return and “the institutions check whether the list is sufficient,” he said.
In exchange for the extension, Greece agreed it will submit a list of economic and other reforms by Monday which its eurozone partners will then review to see if they go far enough.
On Tuesday, they will report back to Greece and decide whether to proceed with Friday's agreement, with the chance that the compromise be scrapped if officials are left unsatisfied.
Greek Finance Minister Yanis Varoufakis said the deal marked a new era for Athens and its relationship with the European Union, after two painful bailouts put together at the height of the debt crisis to save the euro. Breakthrough in the standoff between Greece and its creditors eases the immediate risk of Prime Minister Alexis Tsipras’s government running out of cash as early as next month. It might also go some way to help repair the ties between Greece and Germany, the biggest European contributor to Greece’s 240 billion-euro ($274 billion) twin bailouts and the chief proponent of economic reforms in return.
U.S. stocks rose and the euro advanced with European equity futures amid optimism over the prospects for an accord.
Greek Finance Minister Yanis Varoufakis said the deal marked a new era for Athens and its relationship with the European Union, after two painful bailouts put together at the height of the debt crisis to save the euro.
Athens claimed the rescues and the austerity measures it had to follow since its first 2010 bailout had wrecked the Greek economy, making it impossible to manage its mountain of debt.
"Today was a pivotal moment because Greece for five years now has been lonely, isolated in the Eurogroup. Today that isolation has broken," Varoufakis said.
However, he warned: "If the list of reforms is not agreed, this agreement is dead."
Markets reacted positively to the deal, with the Dow and S&P 500 surging to fresh records on Wall Street as fears of a catastrophic exit by Greece from the euro receded. With distrust for Greece widespread among ministers, it was a lengthy phone call between Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel late Thursday which appeared to make Friday's breakthrough possible.
European officials said the stand-off had come down to a clash of personalities with Schaeuble furious at the negotiating style of the casual Varoufakis, who, in a change, remained markedly sombre on Friday. Analysts in Athens are already describing the concessions made by the Greek government as "politically poisonous."
Any reforms will have to be endorsed by the Greek parliament.
The talk of an apparent breakthrough has helped the euro rally and U.S. stock markets to turn positive. The Greek government was effectively just a week away from having to fend for itself, as its debt deal with the EU expires Feb. 28. Friday's emergency Eurogroup meeting, which included International Monetary Fund managing director Christine Lagarde and European Central Bank president Mario Draghi, is the third in just over a week. Financial markets have been gripped by the precarious negotiations.
"It has been a laborious but eventually constructive process," Lagarde said after the meeting.
Without any further support, Greece faced defaulting on its debts and an exit from the euro, a scenario that would likely devastate the Greek economy, at least in the short-term, and generate renewed uncertainty for the global economy.
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