World stocks soar as Greece agrees on European bailout
World stock markets soared Monday in the hours after debt-wracked Greece and its European neighbors agreed on a path for a third bailout deal for Athens.
U.S. stocks advanced more than 1 percent in Monday’s trading after similar advances in European and Asian markets.
President Barack Obama welcomed the deal, which he said “reflects a commitment by Greece’s creditors to provide financial support” that helps Athens “return to growth and achieve debt sustainability.” He also voiced hope that European leaders and Greece “follow through on the important work that needs to get done.”
Global finance leaders applauded the deal Athens struck to stay in Europe’s 19-nation currency bloc by agreeing to stringent new austerity measures even though they upend Greek Prime Minister Alexis Tsipras’ vow to end an era of severe economic restrictions imposed on Greece by its international lenders.
The International Monetary Fund, one of Greece’s creditors, said it “stands ready to work with the Greek authorities” to put the country’s moribund economy back on track.
On his return to Athens after the marathon negotiations, Greek Prime Minister Alexis Tsipras faced a mutiny of his leftist governing coalition as he seeks parliamentary approval for spending and pension cuts and tax increases.
Some lawmakers said they would not support the deal, which Labor Minister Panos Skouyrletis called unworkable. He predicted the steep budget cuts, set as a starting point for new bailout talks, would lead to new elections this year.
The junior partner in Greece’s ruling coalition called the agreement a German-led “coup.”
U.S. Treasury Secretary Jacob Lew called Greece’s agreement with the lenders “an important step forward.”
Back in Athens after 17 hours of negotiations in Brussels, Tsipras faced a mutiny of his leftist Syriza-led governing coalition as he seeks parliamentary approval of spending and pension cuts and tax increases. Some lawmakers said they would not support the deal, with the leader of the Greek government’s junior partner, the Independent Greeks, calling the agreement a German-led “coup.”
Under terms of the Brussels pact, the Greek parliament must approve the austerity measures by Wednesday before Greece’s creditors will start talks on handing Athens a new $95-billion bailout, which would be its third in the last five years.
Eurozone chief Jeroen Dijsselbloem said he thinks it will take about four weeks for a new bailout program to be worked out with Greece.
European Union President Donald Tusk said the new pact has “strict conditions,” but it also brings Greece “back on track with its European partners.” He said the new deal “brings back trust among European partners.”
German Chancellor Angela Merkel said “tough conditions have been put in place” with the agreement, but its “advantages outweighed its disadvantages.”
The German leader said “capacity building” for the Greek government was also needed, adding it was “important to strengthen the [Greek] government through modernization of its administration.”
Eight European parliaments must approve the deal, which could prove difficult in countries where lawmakers have voiced opposition to handing Greece another bailout, no matter how much austerity it adopts.
Lisa Bryant in Paris contributed to this report.
(Photo: EC Audiovisual Service)