Greece's Prime Minister, George Papandreou , promised that his country will adhere to the European Union's rescue plan and will make spending cuts to bring down the deficit. Currently, the deficit is at 12.7% of GDP, and Papandreou has said his government will bring it down to 2% over the next three years. The recent struggles of Greece--along with other countries, like Spain--are taking a toll on the Eurozone. Wolfgang Munchau , columnist for the Financial Times , writes that the Euro Zone "is entering the most dangerous phase in its 11-year history." He sees the bailout of Greece as an important test. The political maneuvering must be in support of strong economic policy, and actions must be transparent in order to "achieve a maximum degree of legitimacy." Munchau: A good crisis-resolution system must also minimise moral hazard. Countries that benefit from help will have to accept a partial loss of sovereignty, and for this reason it is important that any such regime has wide political backing in all the member states. While eurozone members lack the political will for unconditional bail-outs, they accept that they need to help each other during a crisis. But this help is attached to the condition that the recipient takes corrective action. The second essential prerequisite for survival is a reduction in internal imbalances, which lie at the core of the current crisis. This is an issue that requires action both in countries with large current account deficits, such as Greece and Spain, and in those with large surpluses such as Germany. While Spain, for example, would need to reform its labour market to bring about adjustments in real wages, Germany should implement policies to stimulate consumption, including a long-overdue income tax reform. The build-up of these imbalances is the underlying reason why the Greek problem got out of hand. The place to handle this co-ordination is the eurogroup of the finance ministers of the eurozone, which now constitutes an official European Union institution under the Lisbon treaty. Jean-Claude Juncker , the prime minister of Luxembourg and chairman of the eurogroup, should make imbalances the defining issue of his agenda and propose binding policies. Read What the eurozone must do if it is to survive here .