CFR Update: Markets Jump After Eurozone Deal on Greek Aid

Top of the Agenda: Markets Jump After Eurozone Deal on Greek Aid

International lenders reached a deal (BBC)

on Tuesday to overhaul Greece's faltering bailout program after weeks of wrangling, shooting the euro to a three-week high against the dollar and finally releasing a long-delayed 34.4 billion euro aid payment to the debt-ridden country. The package of measures is intended to reduce Greek debt by more than 40 billion euros, cutting it by 124 percent of economic output by 2020. Meanwhile, German Finance Minister Wolfgang Schäuble said on Tuesday he asked German lawmakers (Reuters) to grant approval this week to the release of the aid tranches, and the European Court of Justice ruled that Europe's new permanent rescue fund doesn't violate EU law (FT), removing the legal threat overshadowing the European Stability Mechanism, a 500 billion euro bailout fund.

Analysis

"Europe needs a Paris Club for European debt. Call it a consultative group if needed; hold it in Berlin, Amsterdam or Brussels (though it would be a shame not to take advantage of the French existing expertise and infrastructure). But the sooner these rules are established

, the sooner we can see a return to voluntary capital flows," writes CFR's Robert Kahn on his blog Macro and Markets.

"The euro rescuers in Brussels, however, should not be taking taxpayers for fools. Saving the bankrupt state of Greece will cost a lot of money. Finance ministers need to stop hiding this fact, even if they only barely managed

to scrape together a compromise. It is absolutely illusory that Greece will ever be in a position to pay back even a portion of its debts on its own," writes Bernd Riegert for Deutsche Welle.

"The government – and its supporters – are immensely relieved. The prime minister had laid his survival on the line. Securing the money and more time to cut Greece's debt will be seen as a vital vote of confidence from its lenders

– a commitment to its continuing membership of the euro," writes Mark Lowen for the BBC.

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