After talks that lasted more than 17 hours, European leaders unanimously agreed on the terms for a third a bailout plan for Greece worth €86 billion. Greek Prime Minister Alexis Tsipras finally capitulated to the full demands of the his eurozone creditors announced this weekend, which went well beyond the pension cuts and tax increases discussed as recently as two weeks ago. The most striking provision was that Greece be forced to sell some €50 billion in state assets to set up a trust fund outside of Athens’ reach to be used for bank recapitalization and debt repayment. Tsipras also accepted intrusive economic oversight from bailout monitors and a far-reaching public administration reform program to be overseen by the European Commission. Though markets breathed a sigh of relief and the euro rallied, there is still ample room for crisis to return. The deal must be officially approved by the Greek parliament this week in order for negotiations on bailout implementation to continue.
Greece has had to accept, or at least swear an oath of mickle might that it accepts, the euro status quo, but it isn’t clear if that can or will work. The deal is a terrible humiliation for Tsipras and a strong lesson for all small country leaders who want to buck the European consensus: you will be nibbled to death by sheep. The likeliest next steps: the Greeks won’t fully comply with the new conditions, either because they refuse to or simply lack the capacity to enforce them; the pain won’t end. The real future of the euro now depends on what happens in Italy and Spain. If those economies continue to mend, the outlook brightens.