Greece debt crisis
The groundwork has been laid for a Greek bailout package.Reuters

Greek Prime Minister Alexis Tsipras has been forced into a humiliating climbdown, barely seven days after claiming a referendum he called would give him stronger negotiating power with his nation's creditors.

A week is a long time in politics, as the saying goes, and so it has proved.

From the heady days of early July when Tsipras appeared to gain the upper ground on the European Union, the International Monetary Fund and the European Central Bank, the creditors have hit back, in a big way.

On 13 July, Tsipras accepted conditions that are harsher than the bailout deal he last rejected and rubber stamp austerity on a grandiose scale.

IBTimes UK looks at the deal in detail, the various scenarios and how they might play out.

The deal

In return for a bailout package of up to €86bn (£61bn, $95bn) for Greece, the broke country must make sweeping economic reforms to pensions, tax policy, energy and retail markets, transport, labour markets and its financial sector.

In addition, Greece must create a fund to sell off €50bn worth of assets, the proceeds of which will go to repaying the new bailout and help refinance its banks.

Greece will then gain access to bridging finance to avert the collapse of its banking system and be permitted to resume discussions on debt restructuring.

Most importantly, the deal means the threat of a so-called Grexit has been avoided.

Timeline

Tsipras must pass the mammoth set of reforms through Greek parliament on 15 July, after which the German parliament will vote on whether to open talks on a new loan to Greece.

Greece will then need to start passing the reform laws before 20 July, when it is due to pay debt owed to the ECB.

This will unlock one tranche of funding and, following further reforms being passed, a full bailout package will be released in September.

What will this mean for ordinary Greeks?

Should the package be signed off, which is by no means a certainty, experts believe the already battered Greek economy will take another beating.

"This crisis has caused fundamental damage to the Greek economy and financial system and those problems aren't going away. Today's agreement is a sticking plaster and kicks the can down the road. Capital controls are likely to remain and the new austerity measures will probably, at least in the short term, damage the already incredibly fragile economy even further," said Nigel Green, founder and chief executive of deVere Group.

In summary, the Greek people, who overwhelmingly voted against austerity, will be presented with yet more austerity. In return, the will get to remain in the eurozone.

Capital controls, which are limiting Greeks to withdrawing €60 a day from ATMs as banks remain shut, are likely to stay in place for some time.

Greek bailout deal: What Greece has agreed to in 90 secondsIBTimes UK

What could possibly go wrong?

Other than the prospect of the Greek parliament rejecting the deal, and further protraction in an already long running saga, some analysts have ironically harked back to post-First World War Germany to caution on Greece's future.

Michael Every of Rabobank said: "Of all countries, Germany should recall the lesson of 1919, when the Treaty of Versailles unfairly saddled it with unpayable debts in reparation for a terrible war that all involved had been party to, not just it; and that Chancellor Bruning's deliberate austerity policies led to the rise of the Nazis and the horrors of World War Two.

"After the war, the US Marshall plan rebuilt Germany, while the Allies slashed its debts and included the key provision that repayments were only to be made while Germany ran a trade surplus, to incentivise others to buy German goods, despite more than a little 'lack of trust' about the Germans at the time."

The risk of an implosion in Greek society over the coming years with extremists of all description profiting from economic misery has been well documented.

Long-term fallout for the European project

The consensus view, that Greece is being asked to give up fiscal sovereignty in return for staying in the eurozone, greatly damages the fundamental principles of the European project: that of unity, cooperation and a shared future.

"The ramifications of this weekend's incredible bloodletting will have long-term consequences. Chancellor Angela Merkel looks seriously constrained by the more hawkish members of her government who have moved to flex Germany's muscles and assert their version of rule based monetary union," said James Nixon at Oxford Economics.

"The damage done to relations between France and Germany may prove irredeemable while the German suggestion that Greece be granted a short-term euro area [exit] surely shatters the principle that membership of the euro area is irrevocable."

Nixon also argues the saga has effectively pitted southern European governments against those of the north, again conjuring up images of battles rather than unification.