Published November 27, 2012
ATHENS – Prime Minister Antonis Samaras welcomed a debt deal agreed by lenders to unlock aid, promising skeptical Greeks a new dawn after months of haggling under the threat of bankruptcy.
Worn down by political squabbling and repeated austerity cuts, many Greeks reacted to the deal with disdain while the Syriza opposition party called it a "half-baked compromise" that would not solve the country's problems.
"A very grey, a very dark period for Greece officially ended yesterday and it has ended for good," Samaras said in a televised statement. "We Greeks were made for tough times, and when the going gets tough, it brings out the best in us."
After 12 hours of talks at their third meeting in as many weeks, euro zone finance ministers and the International Monetary Fund agreed to reduce Greek debt by 40 billion euros ($52 billion), opening the way for 43.7 billion euros of loans to be disbursed by early 2013.
Only a 10 percent of that sum is destined to paying interest on loans and the government plans to spend about 7 billion euros paying off arrears to suppliers, Samaras said.
Greeks inured to years of bitter talks over the country's fate and repeated rounds of spending cuts that have driven up unemployment and slashed living standards were not impressed.
"So what?" asked Nikos Kamoudis, 60, a shoe repairman in central Athens whose business has suffered from the recession.
"At the end of the day if you have no money in your pocket to feed your family and pay your bills, it doesn't matter what decisions they take up there."
A poll published on Monday before the deal showed 84 percent of Greeks felt uncertainty would persist even with the disbursal of money and only 10 percent thought it would save the country.
Greece's main stock market index closed up 0.3 percent but bank stocks tumbled nearly 10 percent on fears that a debt buyback plan might further erode their battered capital.
"The positive side is that we've been given some oxygen to continue breathing for a period of time and finally see a stop to this haggling on getting and not getting the tranche," said Takis Zamanis, chief trader at Beta Securities.
"On the other hand, concerns remain on how the buyback will proceed and under what terms. It seems the banks are worse off."
A senior government official played down those concerns, saying the banks held Greek debt at their actual rather than nominal value, shielding them from losses from the buyback.
Athens also appointed a banker, Stelios Papadopoulos, to fill the vacant post of the chief of its debt agency that will manage the buyback.
Ratings agency Fitch said the deal eased the immediate threat of a Greek default or euro zone exit. But it warned that risks remained and it was unclear whether the deal could sufficiently boost consumer and investor confidence.
As part of the deal, ministers committed to taking further steps to lower Greece's debt to "significantly below 110 percent" in 2022 - a veiled acknowledgement that some write-off of loans may be necessary in 2016.
EU Economic and Monetary Affairs commissioner Olli Rehn also reiterated that pledge as a sign of the euro zone's commitment to resolving Greece's debt crisis definitively.
"Euro area member states are ready to consider further measures of debt reduction" to get Greek debt to less than 110 percent of GDP if the country fulfilled its commitments, he told the Kathimerini newspaper.
"These are very important decisions and they are as clear as they can be from the euro zone point of view," he said.
After months of infighting over unpopular austerity measures that the government was forced to pass to appease lenders, all three parties in Samaras's coalition government cheered the deal.
"This is the new start the country needs after nine months of waiting," said Evangelos Venizelos, leader of the co-ruling PASOK Socialists. "Now it's up to us to make it work."
The other junior coalition partner, the Democratic Left, called the deal "a decisive step" to keep Greece in the euro.
Greece's anti-bailout opposition dismissed the agreement altogether, saying it fell short of what was needed.
"It's a half-baked compromise, a band aid on the gaping wound of (Greece's) debt," said Dimitris Papadimoulis, senior lawmaker of the radical leftist Syriza, the biggest opposition party, which is leading in the polls.
Papadimoulis said German Chancellor Angela Merkel was standing in the way of a 50 percent write-off of Greece's 340-billion-euro debt, saying that was what Athens needed.
"(The deal happened) under pressure from the narrow-minded, egotistical, short-sighted economic policies of Merkel, who stingily watches over her money," he said.
($1 = 0.7713 euros)
(Additional reporting by Renee Maltezou; Writing by Deepa Babington; Editing by Alison Williams)