GREEK DEBT CRISIS DEAL IS REACHED, BUT LONG ROAD REMAINS

[To Germany and other nations that went into the negotiations fed up with Greece’s inability to get its financial act together, the outcome was fair and the new requirements necessary to assure that the Athens government lives up to its commitments. But to some Greeks, and to critics of the German-led policy of imposing deep budget austerity as a condition for aid, the deal amounted to an unwarranted violation of Greece’s sovereignty.]

By James Kanter  and Andrew Higgins

Prime Minister Alexis Tsipras of Greece after reaching an agreement with European 

leaders in Brussels on Monday. Credit Geert Vanden Wijngaert/Associated Press

BRUSSELS — Greece agreed to a deal with its European creditors on Monday after long and bitter negotiations, swallowing substantial new concessions in the face of imminent financial collapse and insistent demands from Germany and other countries that it prove it was worthy of a third bailout in five years.

The agreement, announced after a contentious all-night session among leaders of the 19 nations that use the European common currency, requires Greece to move quickly to adopt a host of economic policy changes and to allow close monitoring by Europe and the International Monetary Fund.

If Prime Minister Alexis Tsipras can push the central elements of the package through his Parliament in the coming days — a political challenge likely to prove difficult — the creditors said they would be willing to open negotiations on providing as much as 86 billion euros, or $96 billion, to keep Greece afloat for the next three years, and to consider proposals to ease repayment terms on much of Greece’s existing debt of more than €300 billion.

The creditors also agreed, once terms of the bailout are settled, to pull together a short-term stimulus program of up to €30 billion to help Greece’s ravaged economy.

To Germany and other nations that went into the negotiations fed up with Greece’s inability to get its financial act together, the outcome was fair and the new requirements necessary to assure that the Athens government lives up to its commitments. But to some Greeks, and to critics of the German-led policy of imposing deep budget austerity as a condition for aid, the deal amounted to an unwarranted violation of Greece’s sovereignty.

Either way, it appeared to remove the immediate threat of Greece’s financial crisis escalating to the point that the country might be forced to abandon the euro as its currency. By Monday afternoon, the European Central Bank had signaled that it would leave its credit line to Greece’s banks in place at its current level, leaving the banks, which have been closed for two weeks, in severe distress but likely to muddle through until a bailout deal can be finalized.

“The advantages far outweigh the disadvantages,” Chancellor Angela Merkel of Germany said at a news conference, explaining her decision to accept the deal and recommend that the German Parliament also grant its approval.

“The country which we help has shown a willingness and readiness to carry out reforms,” Ms. Merkel said, referring to Greece.

The agreement said Greece and its creditors should seek to “reduce that financing envelope,” if possible.

As part of Greece’s commitments, Ms. Merkel said, a fund will be created to take control of assets owned by the Greek government, with the idea of selling them to help pay down the country’s debt and finance investment programs within Greece. That fund would be “to the tune of” €50 billion, she said, a figure that seemed ambitious given the slow pace of previous privatization efforts.

Greece will also be required to seek assistance from the International Monetary Fund and to agree to let the organization continue to monitor the country’s adherence to its bailout commitments. The Greek government had resisted a continued role for the I.M.F., seeing the fund’s involvement as unwanted meddling.

The Greek Parliament will also be required to approve the terms of the agreement “without delay,” according to the document released on Monday morning. The agreement requires passage of many of the changes by Wednesday and others by next week.

The agreement will call for Greece to raise taxes in some cases, pare pension benefits and take various other measures meant to reduce what critics see as too much bureaucracy and too many market protections that keep the Greek economy from operating efficiently.

The agreement specifies that Greece must address a broad array of issues long pushed by the creditors, from requiring the government to produce more reliable economic statistics to overhauling the regulations for businesses including pharmacies, bakeries and ferries and changing the rules for labor unions and strikes.

A bleary-eyed Mr. Tsipras, speaking to reporters here on Monday, tried to put a positive spin on what might be seen as an almost total capitulation by Athens to creditors’ demands for tough austerity. He said that the threat of Greece being forced out of the eurozone had been avoided and a promise of debt relief and growth funds had been secured.

“We gave a tough battle for six months and fought until the end in order to achieve the best we could, a deal that would allow Greece to stand on its feet,” Mr. Tsipras said. “We faced hard decisions, tough dilemmas,” he said, adding that the Greek authorities finally “assumed the responsibility of averting the extremist ambitions of the most conservative circles in Europe.”

But any easing of Greece’s debt repayment obligations would not include something Greece had previously made a condition of any deal: a so-called haircut, or reduction of the overall debt, which is more than €300 billion. The document issued on Monday made its resistance to that demand clear in one sentence: “The Euro Summit stresses that nominal haircuts on the debt cannot be overtaken.”

In an acknowledgment by the other eurozone countries that Greece’s battered economy and high unemployment need some relief, the agreement provides for €30 billion in development funds being made available through various European Union programs, if a final bailout deal goes through.

Donald Tusk, the president of the European Council, who had convened the summit meeting, announced the agreement on his Twitter account shortly before 9 a.m. He later used his Twitter account to write that steps would be pursued “to swiftly take forward the negotiations” on the latest bailout.

He added that eurozone finance ministers would “as a matter of urgency discuss how to help” Greece meet its short-term financing needs. That appeared to be a reference to ensuring that Greece, which is nearly bankrupt, can make large payments to lenders including the European Central Bank that are due in the coming weeks.

Despite the agreement, Greek banks are expected to remain closed this week. The banks are acutely short of cash and Greek depositors may soon find it difficult to withdraw even small sums from A.T.M.s.

European stocks rose and the bond market calmed on Monday morning just moments after European leaders said they had reached a deal. There was no euphoria, however, as investors waited to see how the tough agreement would be put in place.

Reporting was contributed by Niki Kitsantonis from Athens, Alison Smale from Berlin, Jack Ewing from Frankfurt, Anemona Hartocollis from Athens and David Jolly from Paris.

@ The New York Times