Greece and its creditor countries must run obstacle course before deal is sealed

Markets Associated Press

Greece's bailout deal isn't a deal — yet.

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It only becomes one if Greece meets tough conditions, like quickly passing a slew of far-reaching economic reforms, cuts and privatizations.

After the Greek government dismayed creditors by repealing some economic measures and dragging its feet in negotiations, key lender states led by Germany took a hard line: Reforms first. Money afterward.

Whether the deal will then steer the Greek economy back to health and help it lower its debt remains uncertain.

"Doubts and concerns in our view outweigh optimism and euphoria," wrote Carsten Brzeski, chief economist at ING-DiBa in Frankfurt. "It starts with the fact that there actually is no deal, yet. It's a declaration of intent."

He recommended "that the champagne bottles should still remain in the fridge for a while."

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Here's a look at Greece's situation.

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WHAT'S THE NEXT STEP FOR GREECE?

Under the deal struck with creditors during an all-night meeting in Brussels, the Greek parliament must approve by Wednesday key reforms. They include VAT tax increases and pension cuts, and safeguarding the full independence of Greece's statistics service, which at the start of the crisis in 2009 was found to have woefully misstated the country's finances for years.

More reforms have to be passed by July 20, including a new civil code that should streamline legal proceedings and lower business costs.

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WILL THAT HELP GREEK BANKS REOPEN?

That's the intent.

Greece's banks have been closed since the European Central Bank refused two weeks ago to allow them to draw more emergency credit. Once the legislation passes and Greece gets closer to financial rescue, the ECB may decide to permit more credit. It could do that anytime it can say a bailout deal is in the offing, but may wait until Thursday's meeting of its governing council — the day after the first Greek vote.

An increase in credit could enable the Greek banks to reopen and perhaps increase their withdrawal limit of 60 euros per day.

But analysts say some kind of limit on cash withdrawals and transfers will likely stay in place for months.

The closed banks have made normal commerce impossible and worsened the recession. Getting them open again is a top priority if the Greece economy is to recover.

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AFTER THAT, WILL GREECE GET ITS BAILOUT?

Not yet. Germany's parliament must also approve the start of negotiations, which officials said could happen Friday. Austria and France will also hold votes on the preliminary agreement.

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WHAT HAPPENS WHEN NEGOTIATIONS START?

Once Greece passes the reform laws, the institutions monitoring its finances — the European Union's executive Commission, the International Monetary Fund and the European Central Bank — will get a mandate to start talks. The Greeks will have to make more reforms, such as opening up closed professions, easing worker protections in labor law, and privatizing the national electricity grid.

They will also have to transfer government-owned businesses and assets into an independent privatization fund that will sell them off.

And the eurozone says that's just to get the talks started. At the end of the process, national parliaments have to sign off in Germany, Estonia, the Netherland, Finland, Austria and Slovakia. Only then can Greece tap the money from the bailout fund, the European Stability Mechanism.

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HOW FAST CAN GREECE GET THE MONEY?

The creditors acknowledge that time is short and that a full bailout deal worth between 82 billion euros and 86 billion euros over three years must be struck quickly.

Greece needs 7 billion euros by July 20 to cover its bills and debt repayments, and an additional 5 billion euros by mid-August. It's already in arrears on a 1.5 billion euro payment to another important creditor, the IMF, and needs to clear that before it can get more IMF loan money.

Eurozone countries were discussing whether to help Greece meet these obligations with a short-term bridge loan.

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WILL THAT STABILIZE GREECE?

Even after it gets any loans, the country faces more uncertainty as its economy will be in bad shape. Whether the reforms will help get the economy going, and how fast, is not clear. Some economists think Greece's debts are too big to repay.

Meanwhile, the tough reforms attached to the loans could force the current left-wing Greek government from office.

The bailout deal will face opposition in the ranks of deputies belonging to Prime Minister Alexis Tspiras' Syriza group. Tsipras will likely have to resort to opposition votes to get the painful spending cuts and economic changes through. That could cost him his government majority in Greece's parliamentary system, and a new coalition and prime minister could soon be in place, analysts say.

The country's labor minister said Monday that the country could see new elections by the end of the year.

So hold on. It's not a deal until it's a deal.