Euro ministers OK Greece bailout

Deal comes as crowds of migrants flock to Greek islands

German Chancellor Angela Merkel (center), casts her vote Wednesday on a bailout package for Greece in the German parliament Bundestag in Berlin.
German Chancellor Angela Merkel (center), casts her vote Wednesday on a bailout package for Greece in the German parliament Bundestag in Berlin.

BRUSSELS -- Euro-area finance ministers signed off on a bailout program for Greece of as much as 85 billion euros, paving the way for the nation to pay its bills and begin to rebuild its economy.

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AP

A Greek plainclothes policeman chases Pakistani migrants who grew unruly while waiting to register for travel papers Wednesday on the island of Kos. Record numbers of people fleeing conflict in Syria, Afghanistan and elsewhere are taxing Greece’s resources. Also Wednesday, European finance ministers approved a bailout program for Greece that requires changes in the country’s tax and pension systems.

Greece is due to receive a first installment of funds from the European Stability Mechanism today, in time to pay the European Central Bank and clear its arrears with other creditors. Finance ministers approved the bailout deal on a Wednesday conference call.

"The Greek government is bound to implementing this wide-ranging reform package with determination and we will monitor the process closely," said Dutch Finance Minister Jeroen Dijsselbloem, who leads the eurogroup of 19 finance ministers. "It's not going to be easy. We are certain to encounter problems in the coming years but I trust we will be able to tackle them."

The aid deal comes after months of negotiations and legislative fights in Greece and in creditor nations. Lawmakers in Germany and the Netherlands signed off on the plan earlier Wednesday, after German Chancellor Angela Merkel and Dutch Prime Minister Mark Rutte fought off domestic opposition to push the bailout through.

Greece is due to receive 13 billion euros today, and another 10 billion euros will go into a segregated European Stability Mechanism account that is available for bank recapitalization. A separate 3 billion euros is set to be disbursed by the end of November. At the current exchange rate, 1 euro equals $1.11.

The International Monetary Fund will review whether to contribute money to Greece later this year when European authorities also assess the nation's progress in meeting its commitments. The eurozone also plans to evaluate debt relief options for Greece at that time.

"It's done, after hard work," Martin Selmayr, chief of staff for Commission President Jean-Claude Juncker, said in a Twitter message after the deal was approved. "New stability support for Greece agreed by whole euro area."

Commission Vice President Valdis Dombrovskis signed the deal on behalf of the EU. The bailout agreement also will be signed by Greek Finance Minister Euclid Tsakalotos and by Klaus Regling, chief of the Stability Mechanism, the organization said in a statement.

Greece will use the aid funds for budgetary expenditures, arrears clearance and the build-up of cash buffers, debt servicing, and banking sector recapitalization, the Luxembourg-based Stability Mechanism said. The amount of assistance from the organization will depend on the IMF's contribution, on when Greece can again tap financial markets and on the proceeds from Greece's privatization fund.

The deal "features long-needed pension and tax reforms, structural reforms to stimulate growth and investment, a strengthened privatization program" and more efficient public administration, Regling said. "The ESM will make these reforms possible by ensuring financing for the Greek government at conditions that give it budget flexibility, while also providing a buffer for the Greek banking sector."

Meanwhile, Greece's coast guard rescued hundreds of foreigners in more than a dozen search-and-rescue operations, authorities said Wednesday.

The coast guard said it picked up 534 people off the eastern Aegean islands of Lesbos, Chios, Agathonissi, Samos, Farmakonissi and Kos in the 24 hours to Wednesday morning -- and another 108 during the day Wednesday off Agathonissi and Chios.

Those numbers do not include the hundreds more who managed to reach the islands on their own accord in overcrowded dinghies.

Separately, the coast guard said a little boy of about 2 or 3 years old was found unconscious in a dinghy spotted by a patrol helicopter carrying 54 people off Samos. A coast guard vessel picked the group up and the child was taken to a hospital, but he died, the coast guard said. Authorities said an autopsy would be carried out.

Greece has seen record numbers of migrants and other foreigners arrivals this year, most fleeing conflicts in Syria and Afghanistan and arriving on Greek islands from the nearby Turkish coast. About 160,000 people have reached Greece so far since January, compared to 43,500 for all of 2014, according to figures from the United Nations' refugee agency. More than four-fifths are from Syria.

Hundreds of people have been camping out for days on Lesbos and other islands. Authorities chartered a ferry this week to Kos, one of the most severely affected Greek islands, using it as an accommodation and registration center for migrants.

The ferry set sail Wednesday from Kos with 1,308 people and headed to nearby Leros where it picked up hundreds more. It was continuing on to Lesbos to pick up some of the hundreds stranded there before setting sail for Athens.

The ship, which had been scheduled to sail to the northern port of Thessaloniki, was expected to arrive instead in the Greek capital's port of Piraeus early Thursday, the coast guard said.

Information for this article was contributed by Rebecca Christie of Bloomberg News and by Elena Becatoros of The Associated Press.

A Section on 08/20/2015

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