Despite Deal, Grexit and European Unity Hang in Balance

After a grueling 17-hour negotiating session in Brussels, a last-minute deal was finally reached between Greek Prime Minister Alexis Tsipras and his euro zone creditors. At least for now, it averts a Greek exit from the euro and halts the European Union's most serious existential crisis. However, the agreement marks only the end of one chapter in this unfolding saga.
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After a grueling 17-hour negotiating session in Brussels, a last-minute deal was finally reached between Greek Prime Minister Alexis Tsipras and his euro zone creditors. At least for now, it averts a Greek exit from the euro and halts the European Union's most serious existential crisis. However, the agreement marks only the end of one chapter in this unfolding saga. The possibility of Grexit lingers, European unity still hangs in the balance, and elements of Tsipras' Syriza party are already openly rebelling. Furthermore, time is of the essence as pressure mounts. By Wednesday, July 15th, the Greek parliament must approve and begin implementing its creditors demands. Immediately afterwards, euro zone member states must also ratify new agreement. Thereafter, tough negotiations begin in earnest for Greece's third bailout since 2010. According to Dutch finance minister, Jeroen Dijsselbloem, who chairs the euro zone group of finance ministers, negotiating a final bailout could take up to four weeks. Furthermore, by July 20th, Greece has to meet another payment deadline of 3 billion euros to the European Central Bank. It will not be smooth sailing. The road ahead will be littered with continuing political divisions, economic obstacles and diplomatic hurdles on all sides and at all levels. The deal's unanimous approval by all 19 euro zone members provided a rare moment of unity in a troubled Europe. However, it still risks dividing Europe according to ideological fault lines with Germany leading a fiscally-hawkish bloc of euro zone members. On the other hand, economies more vulnerable to Grexit, such as France and Italy, have taken a more conciliatory line. As Greece's second largest creditor, France's shift toward greater leniency for Greece began to imply the need for compromise at any cost. However, just before the start of the marathon session, Merkel publicly reaffirmed that Grexit would be determined by the merits of any final deal. In other words, no agreement at any cost. Aware of her limits and simmering German public opinion against more assistance to Greece, Merkel's cautious but firm approach prevailed for now. Upon emerging from the final negotiations, she publicly outlined what's expected of Greece. On the other hand, a clearly relieved President Francois Hollande of France stressed the importance of European unity and need for Greece to remain in the euro zone. Since the end of the Second World War, the Franco-German axis has served as the engine of European unity. What began as a partnership of equals has gradually evolved since the Cold War's end. A united Germany has clearly emerged as the senior partner through its sheer economic prowess. Despite its demotion to junior status, France plays a critical role in Germany's ability to lead. Without this indispensable partnership intact, Europe will struggle to survive as a stable and united continent. Largely backing Germany, the smaller states of central and eastern Europe assumed a much tougher approach toward Greece. Their transitions from outdated Communist systems to modern European states has proven painful but is gradually bearing fruit. Furthermore, some states such as Bulgaria and Romania remain technically poorer than Greece. Justifying more aid to Greek pensioners as opposed to their own citizens strikes a bitter chord. Other euro zone members and bailout recipients, such as Spain and Portugal, who underwent harsh austerity measures are starting to see some light at tunnel's end. They proved equally determined to deprive Greece of any preferential status at the negotiating table. With its economy expected to grow by more than 3 percent in 2015 and facing national elections before year's end, Spain's center-right government has no interest in giving Tsipras any breaks. To do so would incentivize and fuel the fires of Syriza's acolytes in Podemos, Spain's far-left populist party. It clearly poses a political threat to mainstream centrist parties as demonstrated by its growing numbers in two elections during the first half of 2015.

Attention now focuses on the votes in the national parliaments of Greece and other euro zone member states. The next chapter in Europe's contemporary Greek tragedy begins to unfold.

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