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Tuesday 30 May 2023 Dublin: 8°C
Why have we not heard anything about Greece for a while?
The has been plenty going on behind closed doors.

Greece Bailout Yorgos Karahalis / AP/Press Association Images Yorgos Karahalis / AP/Press Association Images / AP/Press Association Images

IN THE LAST few week Greece seems to have slipped out of the headlines.

After the drama of the referendum on the country’s bailout terms last month, there has followed a period of relative calm.

The last major move was the backing of difficult economic measures by Greek MPs on 16 July, provisionally accepting a raft of new austerity measures in return for an €86 billion bailout deal from its creditors.

The deal was opposed by around a quarter of prime minister Alexis Tsipras’s Syriza party but backed by an overall majority of Greek MPs in Hellenic Parliament.

Despite this approval, the country is not out of the woods yet.

What is happening now?

While the deal has been provisionally agreed, negotiations on it are still ongoing, and in theory things could still fall apart.

The next big looming deadline is 20 August, when the country will be required to repay the European Central Bank €3.5 billion.

In the country, the situation is still looking pretty bleak.

On Monday, the Athens stock index reopened after five weeks, with its share price index falling by 23%.  The country’s top four lending banks all had their shares drop by 30% – the maximum allowed.

This has been described as “one of the worst stock market bloodbaths in decades”.

For ordinary Greeks capital controls remain in place and there are still limits on drawing money.

Greece Bailout Thanassis Stavrakis / AP/Press Association Images Thanassis Stavrakis / AP/Press Association Images / AP/Press Association Images

Have the Greeks gotten what they wanted?

If the deal is passed it will mean the Greeks will still have to shoulder a large amount of austerity.

The preliminary terms of the agreement were passed by the Greek government under much duress, with PM Tsipras having telling parliament during the 15 July vote that the measures were “irrational” and were only being imposed to avoid to the collapse of the banks and further hardship for the country.

Included in the new measures are:

  • The abolition of a 30% VAT discount for Greek islands,
  • An increase in corporation tax from 26% up to 29% for small companies,
  • Substantial cuts in pensions,
  • large-scale privatisation of public assets,
  • The introduction of a luxury tax, and, 
  • An end to early retirement and an increase in the retirement age to 67. 

Even with all of this, there are still a few things that need to fall into place if the Greeks are going to be able to repay the ECB later this month.

One potential stumbling block is German finance minister Wolfgang Schaeuble.

Germany Cabinet Michael Sohn / AP/Press Association Images German Finance Minister Wolfgang Schaeuble Michael Sohn / AP/Press Association Images / AP/Press Association Images

He has major input in the negotiations between the institutions and the Greek government. Earlier this week Forbes singled out his ideological insistence on austerity as something that could put a strain on any potential deal.

How is it all going to end? 

The ‘behind closed doors’ nature of negotiations has kept things pretty quiet, but any feedback has seemed to be generally positive.

One win for the Greek government is that these talks are taking place in Athens, rather than Paris or Brussels as they had been previously.

Speaking on Wednesday, Tsipras said that they were in “the final stretch” of reaching a new deal, and that he hoped it would end the uncertainty for Greece. 

According to MacroPolis, an independent Greek analytical website, the target date for the end of negotiations is 18 August. If a deal isn’t reached for the bigger €86 billion package, which would cover a period of three years, the country may be required to secure a second bridge loan.

Whatever happens, by the 20 August, you can be sure that the Hellenic Republic will be back in the news.

Read: The crisis in Greece has the people of Ireland shaking a bit

Also: Homeless in Athens: ‘Greece never dies. But the Greeks will die.’

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