Q&A: What now for troubled nation and the eurozone?
Published 13/07/2015 | 02:30
Q: We've been hearing about this so-called Greek crisis for ages. What's the latest?
A: Eurozone leaders say they are prepared to open formal negotiations with Greece on a third bailout package, which could be worth up to €75bn.
But there's a serious catch.
Leaders such as Angela Merkel say the talks will only open if Greece immediately passes a series of tough reform measures through parliament. And they must begin this process immediately. That will not be easy for Prime Minister Alexis Tsipras to sell back home.
Q: But what about the referendum result. Didn't the Greek people say a big fat no to further austerity?
A: That may be so, but the economy needs salvaging fast. The European Central Bank (ECB) may decide to cut off an emergency line of credit, which would cause chaos in the banking system. So any bailout must come with strict conditions.
Q: So will the Greeks be hit with the same type of austerity measures that we faced?
A: They are likely to go much deeper, given the size of Greek debts. Significant tax hikes are on the cards, there will be cuts to people's pensions and widespread privatisation of the country's assets. And that's only the beginning. The most difficult days are ahead for the Greek people.
The jubilant scenes in Athens when Greece voted No are now distant memories.
Q: But you said there's the making of a deal. So what was all the fuss about in Brussels at the weekend?
A: A series of splits among ministers made for long, tense and heated negotiations. Italy and France wanted a deal but Germany and Finland were prepared to allow Greece to exit the eurozone. At several junctures the talks nearly collapsed.
Q: But surely it is in the interests of no member state for Greece to leave the euro?
A: That was once the widely-held perception, but it has changed as the painstaking negotiation process with Greece failed to result in a solution.
In fact, Germany even proposed that Greece should leave the euro for five years if it does not accept what's on offer.
Other member states, such as Spain, Finland and Slovakia, have also come round to the idea that a 'Grexit' could be managed.
France and Italy are desperate to keep Greece in.
Q: Where does Ireland stand in all this?
A: Ireland had two red-line issues during the negotiations. Finance Minister Michael Noonan said the Government wanted Greece to remain in the EU but would not accept the prospect of a debt write-down.
Q: But hold on, how much are we going to have to pay to bail out the Greeks?
A: That's still unclear but some experts believe it could be as much as €1bn. This will come in the form of contributions to the European Stability Mechanism (ESM). Mr Noonan insisted yesterday that our contribution would not have a budgetary impact, ie there is still €1.5bn to splash out in October, regardless of what happens in Greece.
Q: So that's it then. 'Grexit' averted?
A: If only it was that simple. EU leaders were still locked in negotiations last night, which focused on the contents of the text agreed at the earlier meeting of finance ministers.
But even if the text is agreed, the Greeks still face several hurdles. If Mr Tsipras cannot implement harsh austerity measures immediately, then the deal could be off.
Such a scenario would prove catastrophic and could mean a 'Grexit' is inevitable.
With talks set to continue, the result is anybody's guess.