BRUSSELS — The excruciating work of inking a deal to contain their two-year debt crisis over, European leaders turned Thursday to a potentially more difficult task: implementing the agreement that asks banks to take on bigger losses on Greece's debts and hopes to boost the region's arsenal against market turmoil.
World stock markets surged Thursday on the news that the leaders had clinched a deal that everyone hopes will keep the currency union from unraveling and prevent the crisis from pushing Europe and much of the developed world back into recession. But analysts were more cautious, noting that the deal remains vague and its success hangs on the details.
In the pre-dawn hours of Thursday, after the deal was unveiled, leaders claimed victory. But by evening, they were cautioning that their work has only begun.
"I think that yesterday we found a good overall package for the next stage, but I think that we still have many more stages to go," German Chancellor Angela Merkel told reporters in Berlin.
Cracks were already showing not even 24 hours after the deal. In an interview on French television channels TF1 and France-2, President Nicolas Sarkozy defended the deal as necessary to save the eurozone, but took a dig at Greece.
"It was an error" to let Greece join the monetary union in 2001, he said, during the interview aimed at explaining the agreement to the French public.
"Its economy was not ready to take on an integration into the eurozone," he said.
Earlier Thursday, Sarkozy called his Chinese counterpart Hu Jintao and pledged to cooperate to revive global growth.
There was no word on whether Beijing might contribute to Europe's bailout fund. Sarkozy said in his interview Thursday night that he would welcome any investment, but that Europe didn't need China to save it.
"The proof is that we saved it without the Chinese," he said.
The fund's chief executive is due to visit Beijing on Friday to talk to potential investors. Beijing has expressed sympathy for the 27-nation European Union, its biggest trading partner, but has yet to commit any cash.
The strategy unveiled after 10 hours of negotiations focused on three key points. These included a significant reduction in Greece's debts, a shoring up of the continent's banks, partially so they could sustain deeper losses on Greek bonds, and a reinforcement of a European bailout fund so it can serve as a (euro) 1 trillion ($1.39 trillion) firewall to prevent larger economies like Italy and Spain from being dragged into the crisis.
After several missed opportunities, hashing out a plan was a success for the 17-nation eurozone, but the strategy's effectiveness will depend on the details, which will have to be finalized in the coming weeks.
"The finer details still appear somewhat sketchy ... but the prospect of a contagion and a disorderly default appear to have been put to one side for the time being," said Michael Hewson, market analyst at CMC Markets. "The only concern is that this post-deal euphoria could well leave investors with a nasty hangover when they start to look at the fine print."
President Barack Obama, who had been pressuring Europe to get its act together in recent weeks, welcomed the plan but pointedly noted that the U.S. was looking forward to its "full development and rapid implementation."
The most difficult piece of the puzzle proved to be Greece, whose debts the leaders vowed to bring down to 120 percent of its GDP by 2020. Under current conditions, they would have ballooned to 180 percent.
To achieve that massive reduction, private creditors like banks will be asked to accept 50 percent losses on the bonds they hold.