After many weeks of confusion and political wrangling, the 16 eurozone countries have finally reached a deal on how to help debt-laden Greece. Like most political compromises, it is an agreement filled with caveats, imperfections and uncertainty.

The fine details of the deal remain unclear but the substance is a financing plan potentially worth €30 billion. It would consist of the 16 eurozone nations granting coordinated bilateral loans worth up to €20 billion, counting for two-thirds of the money, with the International Monetary Fund (IMF) providing the rest.

The involvement of the IMF is widely being seen as a defeat for the French government and others who believe that the eurozone should be able to look after their own. However, it was one of the preconditions for the German government agreeing to the deal. Public opinion in Germany is strongly opposed to using German funds to assist Greece and Chancellor Angela Merkel may still pay a political price for agreeing to any deal that could involve German money.

I do not think this new agreement constitutes a bailout. It is one thing to implement a bailout and quite a different thing to establish an instrument to provide temporary financial assistance. Indeed, all sides - President Herman Van Rompuy, Greek Prime Minister George Papandreou, French President Nicolas Sarkozy and Ms Merkel - have stated that they do not want this financial safety net to ever be used.

Instead, they believe that the existence of the plan should bring down Greece's borrowing costs. In other words, this agreement is not a bail-out but a guarantee to financial markets that the eurozone will not abandon one of its members. It is also an attempt to stabilise the euro, which has fallen by about seven per cent against the US dollar in the last three months.

While there has been a great deal of public confusion amid fevered talk of bailouts we should not forget that Greece's problems are not just the result of a fiscal crisis but also a competitiveness crisis. Its budget deficit is running at 13 per cent alongside unit labour costs that have risen by 35 per cent against Germany and 60 per cent against the US in the last 10 years. Both problems must be corrected if Greece's public finances are to become sustainable.

Indeed, the Greek government must continue its programme to correct its budget deficit and meet its target to cut the deficit by three per cent this year, alongside reforms to improve the flexibility of its labour markets and innovation. If it cannot convince financial markets that it is serious, then loans and guarantees from the eurozone and the IMF will not be worth the paper they are written on. The position of Greece in the eurozone would remain fragile. In the meantime, the risk premium will now be shared with the eurozone countries where the spreads have already responded.

However, it would be wrong to blame Greece for the problems of the eurozone. Greece's plight is a symptom of a wider ailment in the European economy, where big imbalances in fiscal policy and competitiveness have led to a two-tier eurozone with disciplined members such as Germany and the Nordic countries in one group and the so-called PIGS in the other. Portugal's credit rating has been downgraded from AA to AA- and Spain is also vulnerable.

This divide led to demands at the EU summit, led by Mr Sarkozy and Ms Merkel, for a new "economic government" of Europe, with macro-economic policies more closely directed at EU level. This debate creates another set of political divides. While the Germans see economic governance as a means to introduce better monitoring of economies such as Greece, which had no independent statistical agency, the concept means something more political to the French President and others.

Certainly, it would be misguided to think that this EU summit agreement is the end of the difficulties facing Greece and the eurozone. The fine print of the EU "financing plan" will have to be agreed while the debate about the economic governance (or government) of the EU is one that has only just begun.

Prof. Scicluna is a Labour member of the European Parliament.