What does the eurozone deal really mean for Greece?

The European Commission announced this week that it?s prepared to provide 95 percent of the funding for structural projects in Greece. Members of an EC task force are due to arrive in Athens later this month to oversee the implementation of reforms. Ministers, meanwhile, are trying to put together legislation that will convince Greece?s lenders that it is taking its role seriously.

In one way or another, these actions all stem from the deal agreed between the eurozone and Greece in Brussels last month. Even though the agreement has set in motion such a wide-ranging process, there is still great uncertainty about what the agreement on July 21 actually means for all those involved and how it will benefit Greeks. There is a sense that Greece and its eurozone partners are trying to navigate through a storm with a patchwork map and some untested instruments to help them.

?Greece mostly gains time because it has now been completely excluded from financial markets for the foreseeable future,? Costas Lapavitsas, a professor of economics at the University of London?s School of Oriental and African Studies, told Kathimerini English Edition. ?But time alone does not fix things.?

Despite all the conjecture, though, there were certain tangible aspects to the 159-billion-euro Brussels agreement. Firstly, the eurozone is willing to continue providing Greece with the loans it needs for as long as it is locked out of the markets. This, of course, means that Athens has to continue to meet the fiscal targets set by its lenders. Although there is no guarantee that this will happen between now and mid-2014, the give-and-take process was established by the first loan agreement, or Memorandum.

?Greece gains time, a somewhat eased debt burden and, perhaps most importantly, the political signal that other EU members recognize that too much was being asked of Greece,? says Iain Begg, a professorial Research Fellow at the European Institute of the London School of Economics and Political Science.

The positives for Greece are that the new loans, which amount to 109 billion euros, will come with lower interest. The first package began with a rate of about 6 percent but the new money will be borrowed with interest of 3.5 percent. The repayment period will also be longer: 15 to 30 years, rather than 7.5. But that?s round about where the givens end and the variables begin.

Seeing the crisis grip Spain and Italy, whose borrowing costs reach record level this week, European Commission President Jose Manuel Barroso suggested on Thursday that the July 21 package had been undermined by «undisciplined communication, complexity and incompleteness.» It seems Greece will find it difficult to dispel these shortcomings.

A number of question marks hang over the involvement of the private sector in the second rescue package for Greece. Finance Minister Evangelos Venizelos hopes to have ready by the middle of this month Athens?s proposals for private sector bondholders, who may be willing to contribute up to 50 billion euros. Banks are likely to be offered four options — three bond exchanges and a rollover into debt with maturities of up to 30 years — alongside a scheme to buy back Greek government bonds. The process is set to lead to banks taking a 21 percent loss on bonds maturing by 2020 but their participation will be on a voluntary basis.

?The Achilles heel [of the package] is the voluntary nature of the exchange options and the fact that it has to be negotiated,? says Jens Bastian, a senior economic research fellow at Athens-based think tank the Hellenic Foundation for European

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