Stock markets rallied Friday after European Union leaders agreed on a new bailout for Greece, provided that Athens commits to more austerity measures. But the Greek deal fails to address fundamental problems threatening the future of the 17-member eurozone.
Speaking to reporters on Friday, German Chancellor Angela Merkel described the bailout deal for Greece agreed by European Union leaders in Brussels as "good."
Merkel said the 27-member EU was going to push Greece and another ailing eurozone member, Portugal, to respect austerity programs they have agreed to in exchange for massive loans. European finance ministers are meeting in early July to carve out the details of the new Greek rescue package, which will reportedly be worth more than $171 billion.
But the months-long eurozone crisis - which has not only hit Athens, Portugal and Ireland, but also threatens Spain - is far from over. First, Greek lawmakers must approve more austerity measures in exchange for a new bailout, and it's by no means certain they will do so.
But Simon Tilford, chief economist for the London-based Center for European Reform, says true reform is going to take more than just a parliamentary vote.
"Resolving the Greek crisis is going to need more than a series of bailouts," said Tilford. "Basically, unless the Greek economy can return to economic growth, they won't be able to bring about ongoing improvements in the country's public finances."
Tilford says doing so means addressing fundamental problems not only facing Greece, but the 17-member eurozone as a whole.
"Going forward, one of two things have to happen within the eurozone," added Tilford. "Either they bite the bullet and they forge some fiscal union that is they have a federal budget whereby countries with stronger public finances transfer moneys to those with weaker public finances."
Or, Tilford says EU leaders should address the huge trade imbalances within the eurozone marked by strong exporters like Germany and weak ones like Greece.
Janis Emmanouilidis, senior policy analyst for the Brussels-based European Policy Center, agrees the European Union must address fundamental imbalances within the eurozone if the monetary union is to remain intact.
"I think the member states will come out of the crisis," said Emmanouilidis. "I'm not saying in total. I'm not saying some of the member states won't face even more severe problems. In the Greek case we don't know how the case will in the end start to develop."
If the EU resolves its eurozone debt problems, analysts like Emmanouilidis believe the block could emerge strengthened from the experience. If not, some analysts fear the decade-old currency zone may not survive, at least not in its current form.