This coming Monday, Eurozone Finance Ministers are gathering for what is being billed with that well-worn cliché as a ‘make-or-break’ meeting on the future of the Greek bailout.
The newly elected Greek government led by the left wing Syriza Party of Alexis Tsipras won a convincing victory in last month’s election on a promise to end the bailout programme altogether and roll back the austerity measures its predecessor had put in place in order to get the 240 billion euro bailout from EU member states, the European Central Bank and the International Monetary Fund.
Syriza argues the country is basically broke and the debt burden it carries simply too great to be paid back. In the party’s eyes endless austerity will not enable Greece to pay off its debts to the EU and IMF.
Athens argues that in order for the country to recover two things are needed – at least some of its debt needs to be written off and cuts to public spending need to be reversed in order to get people back to work and stimulate growth, some of proceeds of which could be used to pay off the remaining debt.
Germany, the major EU creditor nation, is insisting there can be no more debt forgiveness and the economic reforms and spending cuts agreed to by the previous Greek government must be continued. The ECB and many other EU governments are backing Berlin.
So the stage is set for Monday’s key meeting where the Greek Finance Minister, Yanis Varoufakis, will face his counterparts. Monday is seen as so crucial because it is the last Eurozone Finance Ministers’ meeting before February 28th when the current bailout programme runs out.
Greece wants a temporary extension of the bailout so it can continue to pay its bills while it negotiates a new agreement on a debt write off.
Markets and observers are nervous that the showdown could reignite the Eurocrisis.
The Greek bailout deal of 2010, which was extended in 2012, has been credited with helping to stabilise the Euro by preventing a Greek exit from the common currency which many feared could have caused more countries to follow and currency to collapse.
After a couple of meetings between Mr Varoufakis and EU officials there seemed to be little sign of compromise on either side. But going into the weekend, there have been more positive noises with Germany’s Chancellor Merkel saying compromise is possible and Mr Tsipras saying he is confident a new deal can be reached.
EU officials have also been telling the media the Greeks could make changes to the original deal if the effect is the same which seems to suggest room for manoeuvre in talks.
But whatever the outcome of the talks, this clash between Athens and its partners can also be seen to highlight a broader tension in the EU between democracy and technocracy.
Syriza has a clear democratic mandate to renegotiate the bailout.
But for the creditor nations like Germany and the EU institutions, it is technical more than political – they believe there is no alternative to Greece abiding by the agreement it made because it is the only way the Greek economy will be revived, regardless of what Greek voters and Syriza might want.
This isn’t to say there isn’t a healthy dose of politics involved on both sides.
The German and for that matter other EU governments know their voters are sceptical of lending any more to Greece and they also want the existing loans – which faced a lot of media and popular criticism, particularly in Germany, in the first place – to be paid back eventually.
Syriza based its election campaign on the claim that they could and would end the bailout and the austerity that has driven Greek unemployment over 25%, so they stand to lose credibility with voters if they make too many compromises.
But at root the clash remains one between what the Greeks voted for and what the EU institutions and its most powerful member state are insisting on.
Does democracy automatically lead to sound economic policy?
Clearly not; as countries like Greece and Portugal seemingly lived beyond their means after adopting the Euro – taking advantage of the stability of the common currency to borrow more than they could afford. Debts which were cruelly exposed by the global financial crisis of 2008.
However, democracy is the political system the EU has elevated to totemic status. In order to be a member of the Union countries have to meet democratic standards and the EU bases much of its international prestige on its democratic credentials.
So how does the EU reconcile its commitment to democracy with its rejection of what the Greeks have voted for?
Some have argued the Eurozone leaders, especially those in other debtors countries like Spain, need to Syriza to fail or they could face being voted out of office and replaced by parties, like Podemos, advocating similar policies.
Some form of face saving compromise between democratically elected governments in Berlin and Athens would be an answer.
But if Berlin continues to attach totemic value to austerity and the rest of the EU backs it and refuse to offer the Greeks concessions, the danger is not only economic in the form of a return of the Eurocrisis, it is also political.
As parties – of both right and left – critical of the EU could use it to reinforce their accusation the Union despite all its talk of democratic values suffers from a democratic deficit and doesn’t respect the voters’ choice.
EU leaders face a dilemma.
Be too hard on Greece and risk undermining the bloc’s political stability by fuelling populist parties opposed to the EU or compromise too much and encourage voters in other debtor nations to vote for an end to the reforms and austerity they believe stabilised the Euro.