EU deal averts Greek economic crisis for now

Greece received a four-month bailout aid extension deal, easing some worries about the global economy after tense negotiations over austerity measures and giving the Greek economy some temporary breathing room. Judy Woodruff speaks with David Wessel of the Brookings Institution about the terms of the agreement and which side has more leverage.

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  • JUDY WOODRUFF:

    European countries struck a crucial deal today that will extend a bailout for Greece. It would buy four more months of aid after tense negotiations over austerity measures, and, for now, it eases some worries for the global economy about a rift in the Eurozone. But, in turn, the Greek government faces tough questions.

    David Wessel of the Brookings Institution and a contributing correspondent for The Wall Street Journal fills us in.

    Welcome back to the program, David.

    So explain in terms we will understand what happened today.

  • DAVID WESSEL, Brookings Institution:

    If you think of Greece and the Germans and the other Europeans, they're like cars in an Indianapolis 500 race. And they were headed towards a collision.

    And, today, they diverted just shy of a collision, but they're going to keep going around the track. So what happened today was, the Greek finance minister called it constructive ambiguity. They agreed on some terms that give the Greeks four more months to figure out what they're going to do, provided the Greeks by Monday can come up with a list of belt-tightening measures that the European Union, the Germans and the IMF agree to.

  • JUDY WOODRUFF:

    So, does this represent some kind of, on the part of the Eurozone, easing up of austerity, which is what the Greek people were complaining about in this recent election?

  • DAVID WESSEL:

    It looks like it's a slight easing up of austerity, that they can run a smaller budget surplus. That's what the Greek finance minister told us. That's what the wordings say.

    But in return for that, the Greek government, the new Greek government has to come up with a list of spending cuts or tax increases that they will stick to that add up to enough money to make good the promises that the last government made to the European Union.

  • JUDY WOODRUFF:

    So now with this four-month deadline, does one side or another have leverage here?

  • DAVID WESSEL:

    I think the European Unions and the Germans have leverage here. The reason they picked four months — you know the Greeks wanted six months — was because they have a big bill due on some loans over the summer.

    And this keeps the pressure on the Greeks: You have to behave for the next four months. Otherwise, we will be right back to the confrontation again.

  • JUDY WOODRUFF:

    And we may need some more explaining of all this next week as they continue to work through it.

  • DAVID WESSEL:

    Well, I have a feeling the story's not going to end by Monday, so there will be plenty of time to talk later.

  • JUDY WOODRUFF:

    David Wessel of the Brookings Institute, thank you.

  • DAVID WESSEL:

    You're welcome.

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