- The Greek parliament has narrowly approved a package of €13 billion in tax hikes and spending cuts designed to win approval from Greece's European creditors.
- Prime minister Alexis Tsipras must now convince European leaders to accept the package in exchange for providing Greece with another round of bailout funding.
- European leaders are meeting over the weekend to consider the Greek proposal.
The new proposal represents capitulation by the Greeks
The full text of the Greek government's proposal to its European creditors is now publicly available, and the Financial Times has a helpful rundown showing that the new Greek proposal is extremely similar to the reform package Greek voters rejected so decisively on Sunday.
The Greeks have agreed to virtually all of the European creditors' major demands. The remaining disagreements are mostly about the timing and details of these reforms. For example, European leaders had demanded that Greeks drop a special tax break for Greek islands and adopt a uniform tax rate across the country. In the past, Greece opposed the proposal. But now, Greece is offering to phase in the higher tax rate over 18 months in all but "the most remote" islands.
Similarly, the Financial Times reports that Greece's creditors want pension cuts to take effect immediately, while Greece wants to wait until October for the plans to take effect.
The Greeks have very little leverage
Greek Prime Minister Alexis Tsipras swept into office earlier this year promising to renegotiate the terms of Greece's bailout, but he didn't have the leverage to do it. He didn't have any leverage before he called a referendum on the European proposal two weeks ago, and winning the referendum hasn't given him any additional leverage.
The current stalemate is causing a lot more economic pain for ordinary Greeks than for ordinary Germans or Italians, and a Greek exit from the eurozone wouldn't cause the kind of continent-wide meltdown it might have caused in 2010.
The question now is whether European leaders are willing to accept Tsipras's near-total surrender. They're meeting over the weekend to consider the Greek proposal. Officially, their last offer expired on June 30. But they don't want to force Greece out of the eurozone, so they may be willing to show a bit of flexibility.