Sponsored by Navy Federal Credit Union
TRAFFIC ALERT The southbound lanes of the 3rd Street Tunnel are closed between New York and Massachusetts avenues.

On the brink, EU leaders clinched bailout deal _ with an SMS

Greek Prime Minister Alexis Tsipras speaks with the media after a meeting of eurozone heads of state at the EU Council building in Brussels on Monday, July 13, 2015. A summit of eurozone leaders reached a tentative agreement with Greece on Monday for a bailout program that includes "serious reforms" and aid, removing an immediate threat that Greece could collapse financially and leave the euro. (AP Photo/Geert Vanden Wijngaert)

BRUSSELS (AP) — As dawn broke in Brussels on Monday, Europe’s frazzled leaders gazed into an abyss: the looming exit of Greece from a common currency that symbolized European unity.

Hours past a midnight deadline to clinch a Greek bailout deal, German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras were about to walk away from the table — exhausted from all-night talks filled with threats, shouting and ultimatums.

A single text message rescued the talks — and possibly the euro. Dutch Premier Mark Rutte, a hard-liner on Greek reform waiting outside with other leaders, sent European Union President Donald Tusk an SMS proposing a compromise on the last sticking point keeping the two sides apart.

For three hours, Merkel, Tsipras, Tusk and French President Francois Hollande had been stuck in dead-end closed-door talks, and the message suddenly made something click. Within an hour, the deal was clinched.

This account of the dramatic events that led to a last-minute bailout agreement for Greece has been pieced together from interviews with a half-dozen officials from EU nations and institutions who attended the negotiations over the past months. They spoke on condition of anonymity because the talks were not public.

Announcing the deal later that morning, Tusk, the summit host — who had been instrumental in keeping the opposing sides together before the text message landed — tried to lighten the mood with corny humor. “We have an a-Greek-ment,” he declared.

It was not enough to sweep away the months of bitterness leading to that moment. The negotiations, watched with trepidation around the world, swung from despair to hope and back again as leaders groped for a pact that would keep Greece in the euro and keep global markets steady.

The Greek crisis, roiling Europe since the election in January of Tsipras — a radical leftist who vowed to free Greece from debilitating austerity — reached a terminal point at the end of June, when the bailout that was keeping Greece afloat was set to expire. Without a deal, Greece would effectively go bankrupt, likely forcing it out of the euro.

Markets were sanguine in the run-up to that deadline, amid signs that the two sides were close to an agreement. But no leader could vouch for what would happen in case of failure.

Deep into the night of June 26, after two promising days of summit talks, technical negotiators sat down at EU headquarters to fine-tune the details of what was expected to be the final breakthrough. So everyone was stunned when the Greek negotiators took cellphone calls, then simply got up and left.

They had been instructed of a bomb-shell dropped from Athens.

Tsipras returned to the Greek capital that night, and hastily convened his Cabinet. Hours later, he made a televised address that shocked Europe: He was calling a referendum for the following weekend on whether to accept the European bailout plan — and advocating a ‘No’ vote.

“From an economic, financial and social point of view it was an absolute disaster,” said Irish Finance Minister Michael Noonan.

Within hours, lines had formed at ATM machines across Greece. The bank run continued throughout the weekend, and the government was left with little choice by Sunday night but to declare that banks would be shuttered the following week. It imposed capital controls, restricting cash withdrawals to 60 euros ($67) per day.

The overwhelming “No” vote in the July 5 referendum was a triumph for Tsipras. Emboldened by what he saw as a strong mandate to bargain further with Greece’s creditors, he returned to the negotiating table — but not before asking for the resignation of Yanis Varoufakis, his brash finance minister.

A motorcycle-driving professor with the looks of “Die Hard” star Bruce Willis — and talk and attitude to match — Varoufakis had long been a thorn in the side of the other negotiators. It was not only his hectoring attitude but also his negotiating tactics that riled EU counterparts.

“He kept saying that he would bring something at the next meeting, but he never delivered,” said one EU diplomat, speaking on condition of anonymity because of the sensitivity of the talks. “This created a great deal of angst and frustration among the other ministers.”

Merkel — the uncontested leader of Europe’s tough stance on Greece — captured that sentiment when she arrived at last weekend’s decisive summit with just one statement: “The most important currency has been lost: That is trust.”

On Saturday, the eve of the summit, a German-inspired discussion paper called for the toughest-ever reform conditions for Greece to get money to pay off its immediate debt. Even allies said they came out of the blue.

The paper spoke of a euphemistic “time-out” from the eurozone for Greece. Although kept in brackets — diplomatic code for the fact that not everyone agreed on such a suspension — it set the tone for the high drama that was to come.

A summit participant, who spoke on condition of anonymity because he was not authorized to speak to the media, said that the extra demands were immediately seen as provocative. But this time, leaders needed to hammer out an agreement — or face a possible economic and political catastrophe. Tusk and 19 eurozone leaders were locked together for a marathon 17-hour summit that soon descended into cries of “humiliation” and betrayal.

In the end, the acrimony centered on a relatively minor point: How to allocate funds in the 50 billion euro privatization fund that was one of the key platforms of the bailout agreement. At first Tsipras wanted 25 billion euros of the package to be available for investments, while Merkel insisted on only 10 billion euros for that purpose.

Then came the text message to Tusk, cobbled together by Rutte, a close ally of Merkel and a leader from a nation that also had gone through the pain of a bailout. It proposed a split of 12.5 billion euros for investments and 37.5 billion euros to pay off debt. Leaders agreed that was the only compromise that would allow Europe to stave off disaster.

In the end, Tsipras was left with an agreement that was harsher than the one proposed before he called the referendum. It would keep his debt-ridden nation in the euro but leave his people laden with so many economic and financial impositions — and such a loss of sovereignty — that #ThisIsACoup soon began trending all over the Internet.

Now comes Tsipras’s bitter task: persuading Greece to accept an agreement that promises years of hardship.



Advertiser Content