Another day, another round of emergency talks in Europe aimed at keeping Greece in the euro.
Finance ministers from the eurozone are meeting in Brussels Friday just a week before a financial lifeline keeping Greece afloat is due to expire.
Without an extension of support, Greece could see a run on its banks and would have trouble paying its bills. It may have no option but to print its own currency.
Two previous attempts to secure an agreement in the last 10 days have failed.
European leaders say they will try anything to keep the eurozone together. So why is it proving so difficult to get a deal with Athens?
It comes down to a clash of two deeply-entrenched positions.
The new left-wing Greek government says austerity is killing the country’s economy, and simply extending the European bailout loans under existing conditions will be counterproductive. It argues it needs easier terms to stimulate the growth needed to repay its creditors.
Many of its partners, led by Germany but including countries from across the region, say they are willing to talk about making the burden less onerous. However, they insist that Greece stick to the reform program it signed up for in 2010 in return for 240 billion euros in international assistance.
The German government, and some others, will need to win parliamentary votes on any change to the Greek bailout program. Others, such as Ireland and Portugal, have swallowed the eurozone medicine and are on the mend. They argue Greece needs to complete the course too.
Greek finance minister Yanis Varoufakis said he hoped for an agreement at Friday’s talks, but made clear he thought the ball was in Europe’s court.
“The Greek government has gone not the extra mile [but] the extra 10 miles, and now we’re expecting our partners to meet us not half way but one fifth of the way,” he told reporters.
German Chancellor Angela Merkel said Greece’s latest proposal — rejected by her finance minister on Thursday — needed considerable improvement.
Some observers say Greece would be better off taking a break from eurozone membership, perhaps to return at a later date.
“It is not good for an economy to live on resources coming from other countries because then they would never be competitive,” said Hans-Werner Sinn, president of Germany’s Ifo Institute for Economic Research.
“It is not [about] kicking them out but a hospital stay outside the euro for a while for the economy to be able to recover. I find that much better than pouring more and more money into a bottomless pit,” he told CNN’s Nina dos Santos.
A Greek exit from the eurozone — or Grexit — is a much less scary prospect for markets than five, or even three years ago, when previous episodes in the country’s debt crisis shook confidence in the currency.
European and U.S. markets were trading cautiously Friday, but not far off recent highs, as the talks took place. Growth is returning slowly to the eurozone, its central bank is about to print money on a massive scale, and the risk of contagion from a Greece crisis is much reduced.
“All things considered, we believe that a Grexit would not lead to a degree of direct contagion that would drive other sovereigns out of the euro, not least because the eurozone rescue architecture is more robust than during the last Grexit scare in 2012,” said Standard & Poor’s credit analyst Moritz Kraemer.
