Greece and the European Union have reached another deal. A second bailout will avert a Greek bankruptcy, although the reprieve is likely to be only temporary. The harsh austerity measures that the EU is demanding as a condition of its aid, ironically, are likely to make it even harder for Athens to reach its debt targets. But the deal has bought Greece and the EU time to prepare for the next crunch and its potential to spill over into other parts of the union.
Both Greece and the EU have struggled with that country's solvency since the scale of its indebtedness became known a couple of years ago. (Creative budgeting hid the size of the country's problems from the Greek public, opposition politicians and the EU itself.) The prospect of bankruptcy and a subsequent contagion among other euro economies spurred the EU to inject $145 billion in May 2010, an effort that ultimately failed as restructuring measures could not put the economy back on its feet.
Facing default when a $19 billion debt payment comes due March 20, Athens and the 16 eurozone governments entered into another round of negotiations. They struck a deal Monday night after 14 hours of negotiations that will provide Greece with another $172 billion in exchange for tough austerity measures. Among those measures is a cut of 150,000 public sector employees (a staggering cut in a country of just 11 million people), a reduction of the minimum wage by 22 percent, pension cuts and stepped up measures to sell Greece's publicly owned companies.