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November 27, 2012

Debt Deal Marks 'New Day' for Greece

by Selah Hennessy

The eurozone has agreed on a deal that will reduce Greek debt and help the nation avoid bankruptcy. Greek Prime Minister Antonis Samaras says the deal marks a “new day” for the debt-laden country.

Following protracted negotiations, Eurozone finance ministers finally reached the agreement early Tuesday in the Belgian capital, Brussels. In the end, the ministers and the International Monetary Fund (IMF) agreed to lend Greece about $57 billion, part of its second bailout in two years.

Luxembourg Prime Minister Jean-Claude Juncker, head of the eurozone finance ministers’ group, said making the deal was difficult, but the outcome was right.

“Let me first say that this is not just about money," Juncker said. "This is the promise of a better future for the Greek people and for the euro area as a whole, a break from the era of missed targets and loose implementation towards a new paradigm of steadfast reform momentum, declining debt ratios and a return to growth.”

In addition to the rescue package, the eurozone ministers said Tuesday they will also take further steps to lower Greece’s debt to below 120 percent by 2022, a possible hint that in the future, some Greek loans may be written off.

On a continent faced with economic problems, Greece is proportionately the eurozone’s most indebted country. Eurozone leaders have long been negotiating ways to keep Greek debt at bay and avoid a possible collapse of the 17-nation monetary union.  

Analsysts say the new deal suggests eurozone leaders are determined to keep Greece within the eurozone.

But not all of Greece welcomed the news. International bailouts for Greece, and for other European countries, are tied to strictly monitored budgets.

Greece has been forced to make major spending cuts and tax hikes, which many say have only weakened the country's economy, which has shrunk by almost 25 percent in the past five years.

Alexis Tsipras, leader of the main leftist opposition party Syriza, accused German leader Angela Merkel and IMF head Christine Lagarde of reaching a deal with little regard for what is right for Greece.

"The solution does not include Greece, or a viable plan for Greece," Tsipras says, "and that is why it is not a solution."

On the streets of Athens, the response is mixed.

Greek businessman Stephanos Tenmenis believes the decision is significant but that it doesn't help remedy immediate problems of recession because it does not help bring growth to the Greek economy.

Greek resident Kostas likewise feels little relief saying whatever happens, "Greece is done for anyway."

Greece is to receive the bailout funds in four installments, once it has met all the conditions. The first installment is due next month.