On the brink, EU leaders clinched bailout deal -- with an SMS

Greece's Parliament Backs Austerity Measures For Bailout

BRUSSELS (AP) -- As dawn broke in Brussels on Monday, Europe's frazzled leaders gazed into an abyss: The looming exit of Greece from a common currency that symbolized European unity.

Hours past a midnight deadline to clinch a Greek bailout deal, German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras were about to walk away from the table -- exhausted from all-night talks filled with threats, shouting and ultimatums.

A single text message rescued the talks -- and possibly the euro. Dutch Premier Mark Rutte, a hard-liner on Greek reform waiting outside with other leaders, sent European Union President Donald Tusk an SMS proposing a compromise on the last sticking point keeping the two sides apart.

Images of reactions in Greece post-bailout:

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Greece reactions post-bailout
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On the brink, EU leaders clinched bailout deal -- with an SMS
Members of the Communist Party-affiliated trade union PAME demonstrate in central Athens, marking a 24-hours public sector and pharmacists strike on July 15, 2015 against the new package of austerity measures. Greece geared up for a parliamentary vote on draconian reforms demanded by eurozone creditors in exchange for a huge new bailout, just hours after a bombshell report from the International Monetary Fund criticised the deal. AFP PHOTO / ANDREAS SOLARO (Photo credit should read ANDREAS SOLARO/AFP/Getty Images)
Pro-communist supporters demonstrate in front of the finance ministry in central Athens, marking a 24-hours public sector and pharmacists strike on July 15, 2015 against the new package of austerity measures. Greece geared up for a parliamentary vote on draconian reforms demanded by eurozone creditors in exchange for a huge new bailout, just hours after a bombshell report from the International Monetary Fund criticised the deal. AFP PHOTO / ANDREAS SOLARO (Photo credit should read ANDREAS SOLARO/AFP/Getty Images)
ATHENS, GREECE - JULY 14: A man begs on the streets of Athens on July 14, 2015 in Athens, Greece. Greek Prime Minister Alexis Tsipras is meeting members of his party to discuss the eurozone bailout deal before a meeting in parliament to begin implementing bailout reforms. (Photo by Christopher Furlong/Getty Images)
A protester argues with police while holding a Greek flag on the stairs leading to the Greek Parliament in Athens on July 13, 2015, during an anti-EU demonstration calling for the dismissal of accords between Greece and its European creditors and further austerity measures. Eurozone leaders struck a deal July 13 on a bailout to prevent debt-stricken Greece from crashing out of the euro forcing Athens to push through draconian reforms in a matter of days. AFP PHOTO/ LOUISA GOULIAMAKI (Photo credit should read LOUISA GOULIAMAKI/AFP/Getty Images)
ATHENS, GREECE - JULY 13: Protesters gather outside the Greek parliament to demonstrate against austerity after an agreement for a third bailout with eurozone leaders on July 13, 2015 in Athens, Greece. The bailout is conditional on Greece passing agreed reforms in parliament by Wednesday which includes streamlining pensions and rasing more raise tax revenue. (Photo by Christopher Furlong/Getty Images)
ATHENS, GREECE - JULY 13: A man sits alone with his thoughts as protesters gather outside the Greek parliament to demonstrate against austerity after an agreement for a third bailout with eurozone leaders on July 13, 2015 in Athens, Greece. The bailout is conditional on Greece passing agreed reforms in parliament by Wednesday which includes streamlining pensions and rasing more raise tax revenue. (Photo by Christopher Furlong/Getty Images)
A woman burns the flag of the ruling party Syriza, surrounded by journalists, in front of the Greek parliament in Athens, during an anti-EU demonstration in Athens calling for a no to any agreement with the creditors on July 13 , 2015. Eurozone leaders struck a deal on a bailout to prevent debt-stricken Greece from crashing out of the euro forcing Athens to push through draconian reforms in a matter of days. AFP PHOTO/ LOUISA GOULIAMAKI (Photo credit should read LOUISA GOULIAMAKI/AFP/Getty Images)
ATHENS, GREECE - 2015/07/13: Leftists demonstrated in Syntagma square against the new agreement between the Greek government and its international creditors during the Eurogroup Summit that announced new austerity measures that will be imposed. (Photo by George Panagakis/Pacific Press/LightRocket via Getty Images)
ATHENS, GREECE - 2015/07/13: Leftists demonstrated in Syntagma square against the new agreement between the Greek government and its international creditors during the Eurogroup Summit that announced new austerity measures that will be imposed. (Photo by George Panagakis/Pacific Press/LightRocket via Getty Images)
ATHENS, GREECE - 2015/07/13: Leftists demonstrated in Syntagma square against the new agreement between the Greek government and its international creditors during the Eurogroup Summit that announced new austerity measures that will be imposed. (Photo by George Panagakis/Pacific Press/LightRocket via Getty Images)
ATHENS, GREECE - 2015/07/13: Leftists demonstrated in Syntagma square against the new agreement between the Greek government and its international creditors during the Eurogroup Summit that announced new austerity measures that will be imposed. (Photo by George Panagakis/Pacific Press/LightRocket via Getty Images)
ATHENS, GREECE - 2015/07/13: Leftists demonstrated in Syntagma square against the new agreement between the Greek government and its international creditors during the Eurogroup Summit that announced new austerity measures that will be imposed. (Photo by George Panagakis/Pacific Press/LightRocket via Getty Images)
ATHENS, GREECE - JULY 14: A man cleans off the latest batch of anti-austerity graffiti from the walls of the Bank of Greece on July 14, 2015 in Athens, Greece. Greek Prime Minister Alexis Tsipras is meeting members of his party to discuss the eurozone bailout deal before a meeting in parliament to begin implementing bailout reforms. (Photo by Christopher Furlong/Getty Images)
ATHENS, GREECE - 2015/07/13: Leftists demonstrated in Syntagma square against the new agreement between the Greek government and its international creditors during the Eurogroup Summit that announced new austerity measures that will be imposed. (Photo by George Panagakis/Pacific Press/LightRocket via Getty Images)
SYNTAGMA SQUARE, ATHENS, ATTICA, GREECE - 2015/07/13: A protester holds a Greek flag at the anti-austerity protest outside the Greek Parliament. Greeks assembled outside the Greek Parliament under the banner of 'We leave this Europe'. They called for the government to not give into the demands of the Greek creditors for more austerity measures, but rather to leave the Eurozone. (Photo by Michael Debets/Pacific Press/LightRocket via Getty Images)
SYNTAGMA SQUARE, ATHENS, ATTICA, GREECE - 2015/07/13: Protesters pose with a Greek flag next to the Tomb of the Unknown Solider, making a victory sign, at the anti-austerity protest. Greeks assembled outside the Greek Parliament under the banner of 'We leave this Europe'. They called for the government to not give into the demands of the Greek creditors for more austerity measures, but rather to leave the Eurozone. (Photo by Michael Debets/Pacific Press/LightRocket via Getty Images)
SYNTAGMA SQUARE, ATHENS, ATTICA, GREECE - 2015/07/13: A protester holds up a banner at the anti-austerity protest outside the Greek Parliament. The banner reads 'Syriza's Deputies Don't Vote For The New Memorandum, The Only Left Thing Left To Do. #ThisIsACoup #NO-OXI DEMOCRACY NOT FUND ON THIS EUROPE'. Greeks assembled outside the Greek Parliament under the banner of 'We leave this Europe'. They called for the government to not give into the demands of the Greek creditors for more austerity measures, but rather to leave the Eurozone. (Photo by Michael Debets/Pacific Press/LightRocket via Getty Images)
SYNTAGMA SQUARE, ATHENS, ATTICA, GREECE - 2015/07/13: Eleni Louka, a religious activist, rants against the EU and the government at the anti-austerity protest outside the Greek Parliament. Greeks assembled outside the Greek Parliament under the banner of 'We leave this Europe'. They called for the government to not give into the demands of the Greek creditors for more austerity measures, but rather to leave the Eurozone. (Photo by Michael Debets/Pacific Press/LightRocket via Getty Images)
Protesters stand behind a banner in Athens on July 13, 2015 while participating in an anti-EU demonstration calling for the dismissal of accords between Greece and its European creditors and further austerity measures. Eurozone leaders struck a deal July 13 on a bailout to prevent debt-stricken Greece from crashing out of the euro forcing Athens to push through draconian reforms in a matter of days. AFP PHOTO/ LOUISA GOULIAMAKI (Photo credit should read LOUISA GOULIAMAKI/AFP/Getty Images)
People pass by a graffiti showing a euro sign bleeding, in central Athens on July 14, 2015. Greek Prime Minister Alexis Tsipras was on July 14 holding meetings with his party, faced with the tough task of selling a new bailout deal that requires Athens to push through draconian reforms within two days. AFP PHOTO / ARIS MESSINIS (Photo credit should read ARIS MESSINIS/AFP/Getty Images)
SYNTAGMA SQUARE, ATHENS, ATTICA, GREECE - 2015/07/13: Hundreds of Protesters have come to the anti-austerity protest outside the Greek Parliament. Greeks assembled outside the Greek Parliament under the banner of 'We leave this Europe'. They called for the government to not give into the demands of the Greek creditors for more austerity measures, but rather to leave the Eurozone. (Photo by Michael Debets/Pacific Press/LightRocket via Getty Images)
SYNTAGMA SQUARE, ATHENS, ATTICA, GREECE - 2015/07/13: A protester poses for the press with a Greek flag at the anti-austerity protest on the steps leading up to the Greek Parliament. Riot police officers have secured the steps and watch him. Greeks assembled outside the Greek Parliament under the banner of 'We leave this Europe'. They called for the government to not give into the demands of the Greek creditors for more austerity measures, but rather to leave the Eurozone. (Photo by Michael Debets/Pacific Press/LightRocket via Getty Images)
SYNTAGMA SQUARE, ATHENS, ATTICA, GREECE - 2015/07/13: A riot police officer returns the Greek flag to the protester. Greeks assembled outside the Greek Parliament under the banner of 'We leave this Europe'. They called for the government to not give into the demands of the Greek creditors for more austerity measures, but rather to leave the Eurozone. (Photo by Michael Debets/Pacific Press/LightRocket via Getty Images)
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For three hours, Merkel, Tsipras, Tusk and French President Francois Hollande had been stuck in dead-end closed-door talks, and the message suddenly made something click. Within an hour, the deal was clinched.

This account of the dramatic events that led to a last-minute bailout agreement for Greece has been pieced together from interviews with a half-dozen officials from EU nations and institutions who attended the negotiations over the past months. They spoke on condition of anonymity because the talks were not public.

Announcing the deal later that morning, Tusk, the summit host -- who had been instrumental in keeping the opposing sides together before the text message landed -- tried to lighten the mood with corny humor. "We have an a-Greek-ment," he declared.

It was not enough to sweep away the months of bitterness leading to that moment. The negotiations, watched with trepidation around the world, swung from despair to hope and back again as leaders groped for a pact that would keep Greece in the euro and keep global markets steady.

The Greek crisis, roiling Europe since the election in January of Tsipras -- a radical leftist who vowed to free Greece from debilitating austerity -- reached a terminal point at the end of June, when the bailout that was keeping Greece afloat was set to expire. Without a deal, Greece would effectively go bankrupt, likely forcing it out of the euro.

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Markets were sanguine in the run-up to that deadline, amid signs that the two sides were close to an agreement. But no leader could vouch for what would happen in case of failure.

Deep into the night of June 26, after two promising days of summit talks, technical negotiators sat down at EU headquarters to fine-tune the details of what was expected to be the final breakthrough. So everyone was stunned when the Greek negotiators took cellphone calls, then simply got up and left.

They had been instructed of a bomb-shell dropped from Athens.

Tsipras returned to the Greek capital that night, and hastily convened his Cabinet. Hours later, he made a televised address that shocked Europe: He was calling a referendum for the following weekend on whether to accept the European bailout plan — and advocating a 'No' vote.

"From an economic, financial and social point of view it was an absolute disaster," said Irish Finance Minister Michael Noonan.

Within hours, lines had formed at ATM machines across Greece. The bank run continued throughout the weekend, and the government was left with little choice by Sunday night but to declare that banks would be shuttered the following week. It imposed capital controls, restricting cash withdrawals to 60 euros ($67) per day.

The overwhelming "No" vote in the July 5 referendum was a triumph for Tsipras. Emboldened by what he saw as a strong mandate to bargain further with Greece's creditors, he returned to the negotiating table -- but not before asking for the resignation of Yanis Varoufakis, his brash finance minister.

A motorcycle-driving professor with the looks of "Die Hard" star Bruce Willis -- and talk and attitude to match -- Varoufakis had long been a thorn in the side of the other negotiators. It was not only his hectoring attitude but also his negotiating tactics that riled EU counterparts.

"He kept saying that he would bring something at the next meeting, but he never delivered," said one EU diplomat, speaking on condition of anonymity because of the sensitivity of the talks. "This created a great deal of angst and frustration among the other ministers."

Merkel — the uncontested leader of Europe's tough stance on Greece — captured that sentiment when she arrived at last weekend's decisive summit with just one statement: "The most important currency has been lost: That is trust."

On Saturday, the eve of the summit, a German-inspired discussion paper called for the toughest-ever reform conditions for Greece to get money to pay off its immediate debt. Even allies said they came out of the blue.

The paper spoke of a euphemistic "time-out" from the eurozone for Greece. Although kept in brackets -- diplomatic code for the fact that not everyone agreed on such a suspension -- it set the tone for the high drama that was to come.

Images of riots in Greece:

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On the brink, EU leaders clinched bailout deal -- with an SMS
Riot police use their shields against petrol bombs lobbed by protesters during an anti-austerity protest on July 15, 2015. Anti-austerity protesters hurled petrol bombs at police in front of Greece's parliament on Wednesday as lawmakers began debating deeply unpopular reforms needed to unlock a new eurozone bailout.Riot police responded with tear gas against dozens of hooded protesters who set ablaze parts of Syntagma square in central Athens. AFP PHOTO/ LOUISA GOULIAMAKI (Photo credit should read LOUISA GOULIAMAKI/AFP/Getty Images)
Masked protesters stand amid tear gas in front of thre Greek parliament in Athens during an anti-austerity protest on July 15, 2015. Anti-austerity protesters hurled petrol bombs at police in front of Greece's parliament on Wednesday as lawmakers began debating deeply unpopular reforms needed to unlock a new eurozone bailout.Riot police responded with tear gas against dozens of hooded protesters who set ablaze parts of Syntagma square in central Athens .AFP PHOTO/ LOUISA GOULIAMAKI (Photo credit should read LOUISA GOULIAMAKI/AFP/Getty Images)
Riot police stand amid petrol bombs threw by protesters during an anti-austerity protest on July 15, 2015. Anti-austerity protesters hurled petrol bombs at police in front of Greece's parliament on Wednesday as lawmakers began debating deeply unpopular reforms needed to unlock a new eurozone bailout.Riot police responded with tear gas against dozens of hooded protesters who set ablaze parts of Syntagma square in central Athens .AFP PHOTO/ LOUISA GOULIAMAKI (Photo credit should read LOUISA GOULIAMAKI/AFP/Getty Images)
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A summit participant, who spoke on condition of anonymity because he was not authorized to speak to the media, said that the extra demands were immediately seen as provocative. But this time, leaders needed to hammer out an agreement — or face a possible economic and political catastrophe. Tusk and 19 eurozone leaders were locked together for a marathon 17-hour summit that soon descended into cries of "humiliation" and betrayal.

In the end, the acrimony centered on a relatively minor point: How to allocate funds in the 50 billion euro privatization fund that was one of the key platforms of the bailout agreement. At first Tsipras wanted 25 billion euros of the package to be available for investments, while Merkel insisted on only 10 billion euros for that purpose.

Then came the text message to Tusk, cobbled together by Rutte, a close ally of Merkel and a leader from a nation that also had gone through the pain of a bailout. It proposed a split of 12.5 billion euros for investments and 37.5 billion euros to pay off debt. Leaders agreed that was the only compromise that would allow Europe to stave off disaster.

In the end, Tsipras was left with an agreement that was harsher than the one proposed before he called the referendum. It would keep his debt-ridden nation in the euro but leave his people laden with so many economic and financial impositions — and such a loss of sovereignty — that #ThisIsACoup soon began trending all over the Internet.

Now comes Tsipras's bitter task: persuading Greece to accept an agreement that promises years of hardship.

EU Keeps Greece Afloat
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