WATCH ABOVE: Marathon talks have ended with a bailout deal for Greece. Prime Minister Alexis Tsipras finally signed a deal, but it’s going to be a painful one for Greeks, who voted against bowing to creditors’ demands in a referendum a week earlier. Stuart Greer reports.
Greece tried to rail against austerity measures and wound up faced with more and even stricter conditions than the Eurogroup had originally planned to impose.
A deal reached between Greek Prime Minister Alexis Tsipras and the country’s creditors on Monday will see Greece get a US $95-billion bailout package to help get its economy out of crisis and prevent it from possibly being kicked out of the eurozone.
But, the International Monetary Fund (IMF), the European Central Bank (ECB) and the Eurogroup, collectively referred to as the “troika,” are imposing measures some Greeks see as “blackmail” and called the bailout deal “misery, humiliation and slavery.”
Even before talks ended early Monday, critics took to Twitter with messages bearing the hashtag #ThisIsACoup to voice their opposition to the terms.
READ MORE: Hey, Greece. Most Canadians say you’re to blame for your crisis.
With the conditions in hand, it’s now up to Tsipras to get his leftist Syriza-led government to sign on by Wednesday and enact the reforms into law. Without the austerity package added to the books, there will be no emergency cash to reopen the banks that have been closed since June 29.
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To get the bailout, Greece is going to have to open its doors to privatization, reform its pension system and make its workforce work longer.
Here’s a glimpse at some of the conditions Greece has to implement in order to save itself from itself. (The full statement on the commitment set out at the Euro Summit is at the bottom of this page.)
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Pensions
Greece is going to have to overhaul its pension system —the most expensive one in Europe.
Its lenders have given Greece until October to “carry out ambitious pension reforms and specify policies to fully compensate for the fiscal impact of the Constitutional Court ruling on the 2012 pension reform and to implement the zero deficit clause or mutually agreeable alternative measures.”
The Constitution Court ruled last month previous reforms to private sector pensions that were imposed as a condition of its last bailout The court ruled the reforms “deprived pensioners of the right to a decent life,” as Reuters reported, and ordered the reforms to be reversed.
Greece spends more on pensions than other European nations — the United Kingdom spent 16,036 euros per beneficiary in 2012 compared to Greece’s 10,785 euros, according to Sky News — it’s that the pensions are not proportionate to how much of its gross domestic product (GDP) goes towards the old-age benefit.
READ MORE: Canadian travellers worried about going to Greece amid financial unrest
Eurostat data from 2012 indicated 14.3 per cent of Greece’s GDP goes into the pension system, while the United Kingdom spends just 11 per cent of its GDP.
To put that into perspective, Greece’s debt accounts for 175 per cent of its GDP — which is far beyond what the IMF considers sustainable.
European leaders have given Greece a 2022-deadline to establish retirement age as 67 and put penalties in place for those who want to stop working earlier. It also plans for aid to poor pensioners to be cut by 2019.
Market reforms
Greece’s labour force may also have to get used to working not just years longer, but also hours and days.
Among the “ambitious” reforms to be implemented, are Sunday trade and the adjustment of sales periods in order to “liberalize” labour markets.
Greece will have to commit to reform its labour markets to bring them in line with “international and European best practices.”
The agreement stipulates the review “should not involve a return to past policy settings which are not compatible with the goals of promoting sustainable and inclusive growth.”
The Greek government will also have to “undertake rigorous reviews and modernization of collective bargaining, industrial action and… collective dismissal.”
READ MORE: 5 ways Greece can work off its massive debt load
Assets
The “troika” wants Greece to monetize 50 billion euros worth of “valuable” assets, essentially to serve as collateral on the new bailout package.
According to the Guardian, citing analysts, those assets could include banks, infrastructure, airports and airplanes.
“None of Greece’s previous bailouts have included such draconian terms,” TIME reported Monday.
The assets “will be transferred to an independent fund that will monetize the assets through privatizations and other means.”
And speaking of privatization, Greece must “proceed with the privatization of the electricity transmission network operator (ADMIE), unless replacement measures can be found that have equivalent effect on competition.”
Of the 50 billion euros the assets are expected to generate, 50 per cent will go to “repayment of recapitalization of banks.” Then, 50 per cent of “every remaining euro… will be used for decreasing the debt to GDP ratio” while the other half will be put towards investments.
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