News analysis: More needs to be done after "Agreekment" reached at Euro summit

After 17 hours of negotiations, the eurozone leaders announced Monday they have reached an "Agreekment" for a third bailout to provide support to Greece.

But there is a lot of uncertainties and much more needs to be done to put Greek economy on a sustainable economic path or secure its membership in the eurozone, European Union experts have said.

"Leaders have agreed in principle that they are ready to start negotiations on an ESM program," European Council President Donald Tusk said after the eurozone summit on Monday. In other words, there are still complicated procedures to undergo in the following days in order to formally kick off technical negotiations on the third Greek bailout deal.

WHAT IS "AGREEKMENT"

According to the final statement of the eurozone summit, Greece has until Wednesday to pass laws on the whole package, which includes implementing VAT hikes and pensions cut, taking steps to ensure the independence of Greece's statistics office, and putting measures in place to automatically slash spending if Greece fails to meet its targets on primary surpluses.

The package of the agreement also includes setting up a 50 billion euros (55 billion U.S. dollars) assets privatization fund, which was the main obstacle to reach a deal.

The fund will be managed by the Greeks and of which 25 billion will be used for the repayment of recapitalization of banks and other assets and 50 percent of the remaining will be used for decreasing the debt to GDP ratio and the remaining 50 percent will be used for investments.

The Euro summit statement also said, the Greek government has until July 22 to overhaul its civil justice system and to implement the Bank Recovery and Resolution Directive (BRRD) to bring bank resolution laws in line with the rest of the EU.

In one word, Greek Prime Minister Alexi Tsipras had to capitulate on positions including pensions, taxes, the involvement of the International Monetary Fund and surrendering control of Greek state assets, simply to open talks on a new aid worth as much as 86 billion euros.

WEEKS TO NEGOTIATE NEW PROGRAM

"It is important to emphasize that we don't have a deal yet. The Greek Parliament will have to agree and Tsipras is facing difficult issues at home. If we do get agreement, it has prevented the worst - a Grexit would have been disastrous for Greece and, especially politically, for the EU as a whole," Fabian Zuleeg, chief executive of the European Policy Center in Brussels, told Xinhua.

According to Eurogroup head Jeroen Dijsselbloem, if the legislation procedure by Greece is successful, they will have a Eurogroup conference call either on Wednesday night or on Thursday morning to assess that, which will be the signal for the other Ministers to go to their national parliaments.

Dijsselbloem said there are six or seven ministers have to go to national parliaments which can take place on Thursday and Friday.

And "hopefully" at the end of the week the Eurogroup will have another conference call, formally to give the mandate to the institutions to enter into a process to decide an MOU, which is the basis for a new ESM program.

"it will take time to negotiate the new program; we have asked the institutions to do that as quickly as possible, but it will probably be closer to 4 weeks than 2 weeks," said Dijsselbloem.

"There is already for next week outlined two issues of further legislation for the Greek parliament to consider. Two other issues: prior actions to take forward. And that way we hope to make a lot of progress on measures and reforms that are necessary, while we are finalizing the MOU," added Dijsselbloem.

EURO MEMBERSHIP NOT SECURED

Fredrik Erixon, director of the European Centre for International Political Economy in Brussels, told Xinhua that while the new agreement hopefully will bring stability to the economic chaos in Greece and avoid the financial heart attack that a disorderly exit from the euro would inevitably lead to.

"It is not an agreement that puts the Greek economy on a sustainable economic path or secure its membership in the euro. Economic and political reforms, and fiscal consolidation are badly needed in Greece, but the structure of the Greek economy simply does not fit with the dominating part of the eurozone," he said.

Erixon's views were echoed by Zuleeg. "It is not a solution to the many structural issues Greece faces, so there will need to be a real focus on growth enhancing reforms in the coming years as well as debt relief and investment to help Greece on to a sustainable growth path," Zuleeg said.

Zuleeg added that Economic and Monetary Union also requires further governance reform to make it stable for the future. "So for now the situation is better but many uncertainties remain and much more needs to be done to create a sustainable long term position," he said. Endit