The novel Greek bailout agreement has given double benefit that is a significant economic event and a German foreign policy. Both are related to reach other.

The agreement has moved towards European integration, and other steps like reducing interest on bailout loans, extending repayment periods and a $157 billion bailout package would allow Greece’s short term financial stabilization. But economic issues would remain unsolved as Greece’s debt still stands at 150% of GDP.

The bond write down remained less than their 40% market discount. The EU has not increased its European Financial Stability Facility. Euro would be bone of contention, until united European state does not accompany European monetary union. In a united state, like US or China such problems could be dealt with by budget transfers from richer regions to poorer ones, but EU’s central budget was unable to do it.

But if European economic growth happens then the resources would be generated to make adequate transfers to countries such as Greece or in Italy. The core of the Greek bail out agreement is the considerable gains benefits Germany gets from the euro.

The euro is the standby for the dollar in the dollar’s share of the foreign exchange reserves. After the European debt crisis, the German government became clear that they need strong steps to protect the euro.