“GREXHAUSTION” was the coinage of choice for one Greek television anchor Thursday night, as euro-zone finance ministers failed for the third time in four days to find a breakthrough in their talks over Greece’s bail-out. Throughout the week proposals and counter-proposals have bounced back and forth between Greece and its creditor institutions, slowly narrowing the differences over issues like pensions and VAT rates. But four days before its twice-extended bail-out expires and a €1.5 billion ($1.7 billion) payment to the IMF falls due, Greece and its far-left prime minister, Alexis Tsipras (pictured at left with Matteo Renzi, Italy’s prime minister, and Angela Merkel, Germany’s chancellor) still have no deal.

There is still time. The finance ministers plan to meet again on Saturday in Brussels, hoping that technical discussions will find accord on the outstanding issues and produce a paper they can sign. If a deal is struck it could be approved by Greece’s parliament on Sunday, and by Germany’s Bundestag and other creditor legislatures on Monday. That in turn could unlock €1.8 billion in profits from an old Greek bond-buying programme currently sitting in euro-zone central banks, enabling Greece to pay the IMF on time. Further bail-out funds would be disbursed in the following weeks, keeping Greece afloat over the summer through a series of redemptions, including a total of €6.7 billion owed to the European Central Bank. According to a document obtained by the Wall Street Journal, the aim would be to extend Greece’s bail-out for the third time, this time until November.

That is, just about, a plausible story. But the wheels may yet come off. The outstanding differences between Greece and its creditors may look small, including whether the VAT rate for hotels should be 13% or 23%, and whether a “solidarity grant” for pensioners should be eliminated by 2018 or 2019. But they mask a mood of extreme resentment on both sides. The Greeks thought a proposal they sent last Monday was a huge gesture towards the institutions. Indeed, the intial reception was warm, and markets lifted on the assumption a deal was imminent. But the mood quickly slumped when the IMF said the Greek plan relied too heavily on tax rises and did not cut pensions enough. Some Greeks have taken to conspiratorial murmurs that the secret plan of the creditors is to force an unacceptable deal on Mr Tsipras, in the hope that his government falls. “The Greek side has bent over backwards to accommodate some rather strange demands by the institutions,” said Greece’s finance minister, Yanis Varoufakis, this morning.

Complicating matters further, the creditor side is split. Several euro-zone finance ministers, including Wolfgang Schäuble, the flinty German, complained at yesterday’s meeting that the “troika” of institutions negotiating with the Greeks—the ECB, IMF and European Commission—had been too lenient on them. The IMF has been the toughest on the Greeks over reforms, but shares with Athens the view that a restructuring of its vast debts, worth nearly 180% of GDP, is necessary. The Germans disagree, at least on the sequencing (they want reforms and cuts now; restructuring later, if at all), but do not want to disburse bail-out funds before the IMF does. All of these complexities must be smoothed out, or at least papered over, before Greece can be saved.

And if it is saved, what then? The deal on the table, short on reforms to Greece’s broken public administration and long on austerity measures, will do little to lift Greece out of the recession into which it has again slumped. It will be signed in a mood of bitterness rather than co-operation. It will not involve the debt relief the Greeks so desperately seek, and will be seen domestically as yet another diktat from outside. Greece has struggled to implement every agreement since its first bail-out five years ago. A radical-left government bullied into yet more austerity is hardly likely to have more luck with this one.

Moreover, discussions have not even begun on what to do with Greece once it needs more funding. The scale of the disagreements over Greece’s second bail-out have concealed the puniness of the sums in question: just €7.2 billion remains in the kitty. With Greece priced out of capital markets and still running deficits it will need more help; few dispute a third bail-out will be needed, probably in the autumn. That will involve more debate, more conditions, more parliamentary ratifications, and almost certainly more nail-biting summitry.

 

What happens if there is no deal? Greece will miss its IMF payment, but that will not trigger immediate meltdown: credit-rating agencies have said they would not consider Greece in default, and its other creditors, including the ECB and the EFSF (the euro zone’s bail-out fund), would probably follow suit. Failure to find an agreement, though, would probably accelerate further the deposit outflows from Greece’s tottering banks. The ECB, which has been keeping them alive by drip-feeding emergency liquidity assistance, would come under immense pressure to limit its support if Greece finds itself outside of a bail-out for the first time since 2010. Yesterday one of the more hawkish members of the bank’s governing council, Jens Weidmann, said that the liquidity support threatened to violate the ECB’s ban on monetary financing of a government. A cap on ELA would surely trigger capital controls on Greece’s banks.

The question is whether Mr Tsipras, who was elected in January on a promise to tear up Greece’s bail-out programme, would consider this dangerous path preferable to capitulation to the creditors. Many in his own party, fed up with what they consider the bullying tactics of the institutions, are calling for resistance. But others fear that failure to surrender would mark the first step towards a departure from the euro. Mr Tsipras had long hoped to prove that Greece did not have to choose between the path of the creditors and the road that may lead to Grexit. It is now clear that he must.