The so-called deal between Greece and its European creditors does little to dispel the political and economic uncertainty in that country and the Euro Zone. It neither affirms nor rules out the Grexit option. Greece’s prime minister Alexis Tsipras has agreed to sweeping structural reforms as a precondition for talks on receiving €86 billion financing over the next three years — which means there can still be many a slip between the cup and the lip. Those taken aback by how he could have proposed and signed up on a plan to reform taxes, pension and labour laws, and privatise the electricity sector just days after ‘winning’ a referendum against precisely such moves, should reflect on whether Tsipras was driven to exhaustion and desperation — staring at the prospect of his country’s banks not opening for days on end if he didn’t give in. The July 5 referendum has been interpreted by observers not just as a vote against austerity but also, oddly enough, for an agreement that helps Greece stay with the euro and the Euro Zone (rather than shift towards Russia). Tsipras was left with a hard choice. By accepting the creditors’ (read Germany’s) terms Tsipras perhaps feels he has offloaded the moral responsibility for a possible Grexit on to them. But events may not play out that way. Perhaps sensing the pro-Euro Zone mood in Greece, Germany smuggled in a veiled Grexit threat in its latest talks, calling it a five-year “time out”, to put pressure on Tsipras.

When an embattled Tsipras seeks a confidence vote back home today for the second time in five days for the deal, he faces a clutch of angry dissident Syriza party MPs. He will need all-party support, failing which he will lose power and plunge Greece into another round of elections. Greece’s pendulum swing from tough talk to sudden surrender points to a misfiring of the ruling Syriza party’s negotiating tactics. Tsipras has accepted harsh conditionalities for an economy already hit by recession, unemployment and declining public health. Greece may neither be able to revive its economy nor repay some of its debt, going by its five-year tryst with austerity.

Even if the deal goes through Athens, Germany, Finland and other eight Euro Zone parliaments will have to ratify it, only to return to the negotiating table. Germany may actually want a Grexit, as public opinion there is against a third bailout. German Finance Minister Wolfgang Schauble is reliably believed to favour a Grexit to scare the rest of Europe into financial discipline. Such displays of brinkmanship from both sides have damaged the spirit of trust that was central to the idea of a unified Europe. While world markets may weather a Grexit, having discounted the possibility, it could put the entire Euro Zone project at risk and, with it, Germany’s export-oriented economic engine. This makes Germany’s approach hard to understand. Greece is not just a morality play on lending and borrowing. It is about reconciling the rules of finance with those of a democratic polity.

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