But first a rundown of Tsipras' capitulation. From the lede story by James Kanter and Andrew Higgins in The New York Times this morning, "European Leaders Reach Agreement to Resolve Greek Debt Crisis":
The total commitment of money has not been disclosed. But a document by the eurozone leaders noted that experts had estimated that Greece might need from 82 billion to 86 billion euros more — $91 billion to $96 billion — to shore up its economy, rebuild its banks and meet its debt obligations over the next three years. The document said Greece and its creditors should seek to “reduce that financing envelope,” if possible.
As part of Greece’s commitments, Ms. Merkel said, a fund will be created to use the proceeds from selling off assets owned by the Greek government to help pay down the country’s debt. That fund would be “to the tune of” €50 billion, she said.
Greece will also be required to seek assistance from the International Monetary Fund and to agree to let the organization continue to monitor the country’s adherence to its bailout commitments. The Greek government had resisted a continued role for the I.M.F., seeing the fund’s involvement as unwanted meddling.
The Greek Parliament will also be required to approve the terms of the agreement “without delay,” according to the document released on Monday morning. One of the sticking points in the negotiations over the weekend had been a demand that the Parliament sign off on any deal by Wednesday, but that requirement appears to have been relaxed.Yves Smith in a post this morning, "Tentative Deal Strips Greece of Sovereignty, Makes Debt Relief Dependent on Compliance," on Naked Capitalism where she quotes extensively from a Financial Times story provides a more detailed reckoning of Tsipras' failure:
Mr Tsipras has promised to pass tough new reform laws, including on tax and pensions, by Wednesday and prepare further rapid reforms, such as labour market liberalisation, opening up closed professions, deregulating Sunday trading and reinforcing the financial sector. In a particularly humbling move, the government has to reverse some of the extra spending measures it introduced earlier this year, when it trumpeted its ambitions to end five years of EU-imposed austerity.
The major terms include:
Increasing and simplify VATCutting pensions. More on that shortly. The terms here look to be vastly worse than the cuts Greece fought a few weeks ago“Requesting” continued IMF “support” (monitoring as well as financing)“Introducing quasi-automatic spending cuts in case of deviations from ambitious primary surplus targets after seeking advice from the Fiscal Council and subject to prior approval of the Institutions”Sequestering €50 billion of assets, nominally supervised by Greece but under strict oversight of the creditors. Half will go to recapitalizing the banking systemImplementing labor market “reforms” along the lines sought by the creditors
Not only is there no debt relief, there is no prospect of any debt relief unless Greece meets targets. And forget about principal reduction. From the letter:
…the Eurogroup stands ready to consider, if necessary, possible additional measures (possible longer grace and payment periods) aiming at ensuring that gross financing needs remain at a sustainable level. These measures will be conditional upon full implementation of the measures to be agreed in a possible new programme and will be considered after the first positive completion of a review.
This is not just failure. To sign off on this agreement is an act of collaboration with a hostile power.The Euro Summit stresses that nominal haircuts on the debt cannot be undertaken.
All Syriza's red lines have been crossed, not to mention the 11th-hour addition of the €50 billion privatization to be administered by the creditors.
On top of it all, the ECB will not release additional funds to Greek banks until Parliament approves all the measures contained in the agreement.
By signing this agreement Tsipras validates the European hardliner mantra about Syriza -- that the party was a collection of jejune poseurs more style than substance who had no business being in government and were just wasting everyone's time. This certainly appears to be the case.
The Wednesday in the run up to the "Oxi" referendum Tsipras forwarded a proposal that basically accepted bulk of the troika's austerity demands. The proposal was declined by Merkel in favor of letting the referendum play out. At the time I thought that was foolish of Merkel et al. because what better outcome for the Syriza-hostile troika than to have Tsipras administer the very policies he was elected to overturn. What better way to make the point to a recalcitrant public that "There Is No Alternative" to neoliberal austerity than by having the only anti-austerity party in power in Europe accept and oversee austerity?
The answer to the question of what is better is Syriza implementing even more austere fiscal policies after the public voted overwhelming against austerity. Merkel knew what she was doing. I assumed Tsipras meant what he said when rallied Greeks to vote No.
Syriza is now crippled. It will split, but Tsipras should be able to push the agreement, at least most of it, through Parliament with the help of To Potami, New Democracy and other parties in the opposition.
I don't see how Syriza can survive. Its rise to electoral power was based on a promise that it would not accept further austerity. Now that it has done so it has no rationale.
Nothing more than a youthful Pasok, Syriza will be remembered for its bluffing, its open collars and untucked shirts. What a disappointment. Syriza's spectacular failure will be a blow to the legitimacy of all non-centrist parties -- to Podemos in particular.