Greece's Tsipras risks red lines in eurozone deal
Just over a month ago, six out of 10 Greeks voted against accepting the terms on offer from the country's lenders for a new bailout.
It was a resounding "No" that the Greek government this week turned into an emphatic "Yes" by agreeing to a wide range of measures to receive about €85bn (£61bn; $95bn) more in loans from the eurozone and the International Monetary Fund (IMF).
There has been surprise throughout Europe and in Greece that Prime Minister Alexis Tsipras was able to go from six months of fraught and fractious negotiations with creditors, which culminated in an agreement with bleary-eyed eurozone leaders on the morning of 13 July, to four weeks of talks with visiting technical teams in Athens that were free of disagreement and drama.
Perhaps the key factor in the swiftness of the agreement was that, having stared into the abyss of a Greek euro exit last month and knowing that German Finance Minister Wolfgang Schaeuble headed a group of eurozone decision makers keen to make this happen, it became clear to Mr Tsipras that he was left with no more room for manoeuvre.
The result is that the Greek government has reached an agreement that goes against much of what it preached over the last months.
More austerity looms
The prime minister's office argued this week that the lower budget targets agreed by the lenders, starting with a 0.25% deficit this year, mean Athens will not have to continue the sharp fiscal adjustment that was demanded before Mr Tsipras and his Syriza party came to power in January.
The reality, though, is that any benefit from the relaxation in austerity measures has been cancelled out by the return of a deep recession following the first signs of growth in half a decade last year.
The Greek economy was forecast to grow by 2.9% this year and 3.7% in 2016; instead it is now expected to contract by 2.3% this year and more than 1% in 2016.
This downturn is a result of the recent uncertainty and the capital controls Greece had to impose on 29 June, a couple of days after Mr Tsipras announced the referendum.
Also, the reduction in primary surplus targets does not mean an end to spending cuts or tax rises.
In fact, Greece has to produce more than €4.5bn in savings and extra revenue on an annual basis as part of its new agreement.
This is a far cry from the €12bn in extra spending the prime minister pledged as part of his economic manifesto, the Thessaloniki Programme, before the January elections.
More big concessions
The prime minister also had to cross a number of other so-called "red lines".
He had promised, for instance, to halt and review Greece's privatisation programme. Instead, he has now agreed to progress with it at full pace and to set up a new asset fund that will raise €50bn over 30 years, with €6.5bn of that coming in the next three years.
Mr Tsipras has also made concessions on other big issues:
- A hated property tax introduced as an emergency measure in 2011 was to be scrapped but now seems destined to become a permanent fixture
- A temporary "solidarity levy" on incomes has become permanent
- His government has already approved broad value-added tax (VAT) rises that, according to one survey, will lead to the average Greek household paying €650 extra a year
- The coalition will also pass legislation that will lead to reductions in pensions, even though Syriza had promised to increase the amounts received by low-income retirees
More political risk
The current coalition has also accepted a myriad of structural reforms that previous administrations shied away from.
These include changing regulations for milk, making it easier to open a pharmacy and altering the taxation of farmers.
All of these are designed to make the Greek economy more competitive, but they all bring PM Tsipras into conflict with specific interest groups.
Mr Tsipras's predecessors backed down when they encountered such resistance. They decided it was easier politically to spread the cost of adjustment among the whole of Greece's population through broader measures rather than pick off these groups one by one.
The domestic political consequences, though, will be vital in deciding whether this third bailout has a chance to work or not.
It is clear Mr Tsipras has lost Syriza's left wing and that his party is heading for a split.
This may prompt him to call snap elections in the autumn rather than seeking new coalition partners.
Early polls would give him a chance to capitalise on his popularity, which has so far weathered the impact of the last few months' tumultuous developments.
But this strategy carries a risk as it is not clear how Greeks will react to the latest agreement, especially if the new measures start to bite.
Nick Malkoutzis is editor of analysis website MacroPolis and deputy editor of Kathimerini English Edition newspaper