Greece’s new deal: From austerity to ‘austerity squared’

After months of negotiations, a national referendum, widespread bank closures and missing a crucial loan payment to the International Monetary Fund, the cash-strapped Greek government finally has its new rescue package. But the $96 billion, three-year bailout deal comes with some familiar-looking strings attached.

Greece will need to swallow new public-sector cuts, a tax overhaul and unspecified changes to collective bargaining laws if it hopes to access the money needed to avoid financial collapse, according to a seven-page outline of the bailout agreement published Monday morning. For a citizenry that has endured the pain of austerity for years, the new concord between Prime Minister Alexis Tsipras and his nation’s international creditors looks as if it will bring a worrying repeat of prior cuts.

“This is from austerity to austerity squared,” Oxford University professor David Stuckler, a co-author of “The Body Economic: Why Austerity Kills,” told Al Jazeera by email.

Monday’s bailout framework — released after Greek and other European officials spent the entire night in tense negotiations, struggling to avert a rupture of the European monetary union — is short on specifics. The broad contours of the plan include many familiar elements from prior deals: measures designed to open Greek borders to European imports, significant pension reform and the privatization of state assets.

Prior cuts have triggered a mass outcry in Greece, where many citizens blame rising unemployment and poverty on the austerity measures imposed over the past five years by the European Commission, European Central Bank and International Monetary Fund. The nation’s unemployment rate has long hovered around 25 percent, and child hunger remains at elevated levels.

“Families are destroyed. People are completely destroyed here,” Athens native Vaso Logothetis, 67, told Al Jazeera. "And now with these last five months of negotiations, it’s all over for us. The banks are now closed. We’re in a catastrophe.”

She and her husband, Nick Logothetis, are struggling to raise their two grandchildren on a pension and other benefits that add up to $824 per month. That income could shrink further, depending on the specifics of the bailout agreement.

Greek banks remained shuttered on Monday, two weeks after Tsipras imposed capital controls in order to avoid a run on the nation’s financial system. Now that a deal has been struck, the country's banks could open as early as Thursday.

He conceded in a Monday statement that the new bailout deal “calls for tough measures,” but he declared victory when it came to preventing “the financial asphyxiation and the collapse of the financial system.” Greece’s creditors have also agreed to restructure the country’s debt, he said, although they did not agree to reduce the amount owed.

Still, the outcome of negotiations was less than optimal for Tsipras’ Syriza party, which rose to power in January on a platform of reversing Greek austerity. Months of tense negotiations with international lenders have resulted in a deal that is largely “more of the same, with the emphasis on ‘more,’” said Joshua Mason, an economist at John Jay College of Criminal Justice.

“There’s no reason to expect the outcome of these policies can be any different than what it’s been over the past five years,” Mason said.