On Saturday, Spain, Europe's fourth largest economy, became the fourth country in the region to seek a bailout. Hobbled by deteriorating bank loan quality, and by a large outflow of bank deposits in recent months, Spanish authorities agreed to a European Union-led bailout program amounting to €100 billion. In order to forestall fresh turmoil in European credit and equity markets today, the International Monetary Fund advanced to Friday its estimate of additional capital Spanish banks would need, and the rescue program was announced over the weekend. While the banks would need €37 billion, the IMF suggested they may want to raise the additional amount to boost confidence in financial markets. The timing of the rescue was probably prompted also by the €97 billion in capital flight during the first three months of the year, with the outflow likely continuing in April and May. Finally, Greek elections next Sunday also led authorities to announce the program a few days ahead.

Seeking to avoid the opprobrium typically attached to such programs, Finance Minister Luis de Guindos indicated that conditions for getting the loan would be imposed on the banks rather than on the citizens, or on Spanish monetary and fiscal policy. Despite Mr. de Guindos's assertion, I expect that Spain will eventually have to accept limits on economic policy, deepening the recession it already is in, as has been the case with Greece, Ireland and Portugal. Spanish authorities had tried, and failed, to get a deal whereby the bailout money would be directly infused into the banking system without going through the government. As currently structured, the obligation to repay the newly borrowed amount would be the government's since the funds are being funneled through a Spanish public sector entity. The rescue mechanism arrived at this weekend will, therefore, increase public debt and worsen Spain's debt-GDP ratio.

In throwing more money at Spanish banking institutions in the hope that would somehow solve the sector's crisis, the EU was staying close to form – continue to assume that the problems in Europe result from a temporary liquidity shortage, and that the €100 billion loan would enable the Spanish banking system to return to sound financial health. The new bailout also follows the EU's modus operandi in other bailed-out countries of avoiding recognizing losses in asset prices such as declining values of Spanish real estate loans. The structure of the new program also suggests that Europe's leaders are not yet ready to implement a lasting solution to the region's crisis.

The Spanish rescue has raised equity prices today in Asia, Europe and at the U.S. opening. As was the case with similar EU efforts over the past two years, the relief is also likely to prove ephemeral.

Komal S. Sri-Kumar, a senior fellow at the Milken Institute, is chief global strategist at TCW.