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Rolf Campos, Professor, IESE, University of Navarra
For Athens, the financial aid will not be free.
After all subject of speculation about whether or not a euro zone country would finally be bailed out in case of need and which body would be in charge of it, it seems that finally at an extraordinary meeting of the European Commission a agreement has been reached among European leaders. The agreement involves the European Central Bank together with the European Union. This move, apart from the obvious risk of sovereign default, seeks to minimize the likelihood of contagion manifested in speculation about the similarities between the Spanish and Portuguese economies with their Greek counterpart. The agreement conveys a message of unity and tries to avoid a deepening of the gap between economies with severe fiscal deterioration and a stagnant Economics and those whose economic recovery is underway.
In any case, financial aid will not be free for Greece. The support, verbal for now, is conditional on a strict control of its public accounts and requires economic austerity that, even if it succeeds in saving the public sector accounts, will weigh on the speed of recovery of Economics.