Back From the Brink in Europe?

Last night European leaders decided to set a final, no-kidding deadline for sorting out its future relations with Greece. It’s on Sunday, July 12, when all 28 national leaders of EU countries (not just those in the Eurozone) will meet in an “emergency summit” to figure out next steps. That means, however, some sort of deal with Greece would need to happen first (within 48 hours, some are saying); absent that, the Sunday meeting will be about spinning Grexit.

The noises coming out of Brussels and Berlin suggest that if Greece bends on its past refusal to accept further strictures on its pensioners, its creditors may bend on their past adamant refusal to accept permanent cancellation of any portion of Greek debt.

And lo and behold, today the Greek government has submitted a formal aid request that hints at flexibility on pensions, per this report from the Guardian‘s Ian Traynor and Garry Elliot:

While the European Parliament debate was raging, Greece quietly submitted its formal request for a new aid package in an attempt to avoid crashing out of the eurozone.

Finance minister Euclid Tsakalotos has asked for a three-year programme, from the bailout fund (the European Stability Mechanism). And in return, Greece would commit to:

“to a comprehensive set of reforms and measures to be implemented in the areas of fiscal sustainability, financial stability, and long-term economic growth.”

Importantly, Tsakalotos’s said that Greece is proposing to “immediately” implement measures, starting next week.

That would include “Tax reform related measures” and “Pension related measures” — two of the “red lines” that proved so hard to tackle in recent months.

Tsakalotos also promises to flesh out these proposals on Thursday, with “a comprehensive and specific reform agenda” which can be assessed by the IMF, ECB and European Commission.

And there’s no ducking the debt relief question: Tsakalotos says:

“Greece welcomes an opportunity to explore potential measures to be taken so that its official sector related debt becomes both sustainable and viable over the long term.”

So there you have the bare bones of an agreement, and a couple of days to reach it. Either way Greece should get at least some relief from its current agony by next week.

Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.