Greece agrees to a punishing ultimatum

ATHENS, Greece - Greek Prime Minister Alexis Tsipras capitulated in Brussels to keep his country part of the euro. He returned home hours later Monday to find a nation split apart with the difficult task ahead of uniting lawmakers behind a deal they once denounced.

After a 17-hour summit that turned into one of the most contentious diplomatic standoffs in European Union history, Tsipras acquiesced to a punishing ultimatum from European leaders.

In exchange for a $96 billion rescue - Greece's third in five years - he agreed to lightning-fast passage of reforms starting Wednesday, and a pledge to strap his nation into a fiscal straitjacket to save its banks and stay in the euro common currency.

He agreed to far more than simple austerity, pledging even to stage what may amount to a fire sale of Greek utilities, even plots of land on its islands, to help pay back its huge debt.

For a man once seen as a leftist maverick who had pledged to free Greece from the shackles of financial injustice, his decision to surrender to European demands immediately sparked an insurrection within his unlikely ruling coalition of the far-left and the far-right.

The one thing his allies had in common was a joint enemy - Greece's creditor nations in Europe. And now he faces a tough and humbling battle to rush it through parliament.

Every point is a potential political fight. They include creditor-demanded overhauls to the Greek tax and pensions systems.

He may have to expel renegades from his Syriza party and look to make other political alliances of convenience to get the package through the 300-seat parliament.

Without an official blessing from the parliament, the promised financial lifelines could be pulled back and Greece would be pitched back into full-scale crisis.

"The champagne bottles should still remain in the fridge for a while," wrote Carsten Brzeski, chief economist at ING-DiBa in Frankfurt, Germany.

Financial markets welcomed the news after wild swings over the last few weeks. Main stock exchanges in Asia and Europe were higher. Wall Street also jumped. The euro exchange rate against the U.S. dollar dropped slightly.

Speaking to reporters in Brussels after the summit, Tsipras sounded strangely at times like his nemesis - German Chancellor Angela Merkel - whose nation led a bloc of euro zone countries that forced a tough deal.

Tsipras offered a stark assessment of the pain to come, while promising that after the suffering, there would be light.

"There are strict conditions to be met," said an exhausted-looking Donald Tusk, president of the European Council. But, he added, "it gives Greece a chance to get back on track with the support of European partners."

Successful passage, however, would not guarantee that Greece will be saved. Rather, it would merely open the door to a final agreement this week for a bailout carrying far more onerous conditions than a deal rejected in a Greek referendum on July 5.

The strict pact was portrayed by hard-line nations including Germany and Finland as essential to restoring trust in the unpredictable government in Athens.

But it was also a financial gun to the head: If Greece rejects the proposal or fails to fully comply, its banking system could collapse within days.

Merkel on Monday offered cold comfort for the Greeks.

"All and all, I think you can say the advantages outweigh the disadvantages," Merkel said. If the program is strictly followed, she said, "I think there is a possibility to return to the growth path, but it is going to take a long time, and it is going to be an arduous road."

European leaders had seriously clashed over the deal to rescue Greece, with Germany and Finland taking a hard line and the leaders of France and Italy expressing a distinct sense of unease over the German position - worried that it was undermining the European ideal.

"Today's agreement maintains liquidity and gives hope of recovery," Tsipras said as he left the summit in Brussels.

Greece has reached a deal with creditors to avoid a euro exit. Before it can receive 85 billion euros ($96 billion) in loans and support for its banks to reopen, the Greek government will have to pass a raft of austerity measures that include sales-tax increases and reforms to pensions and the labor market.

Tax Reform

Tax increase of 23 percent on restaurants and catering.

Scrapping 30 percent tax break for Greece's wealthiest islands. Only the most remote islands will get to keep the breaks.

Fiscal Reform

Military spending will be slashed by 100 million euros this year and double that in 2016.

Corporate tax will increase from 26 to 28 percent.

Shipping industry will have tonnage tax increase.

A luxury tax of 13 percent for yachts over 5 meters.

Pension Reform

Standardizing the retirement age to 67 by 2022 - except for those performing "arduous jobs" and mothers raising children with a disability.

Supplementary pension funds will be financed by employees' own contributions.

Phase out solitary grant for pensioners by 2019.

SOURCE: Associated Press, BBCEndText