Almost two weeks since left-wing party Syriza topped the poll in Greece's general election, the stand-off between Athens and its international lenders is continuing. This week saw Greek prime minister Alexis Tsipras and his finance minister Yanis Varoufakis embark on a tour of European capitals to drum up support for their plan to renegotiate the Greek bailout.
The Greek odyssey began in France – an outspoken critic of German-led austerity in recent years. Visits to London, Rome and Brussels followed, prompting a stream of positive photos of the new Greek government standing side-by-side with various leaders.
Signs that a compromise was nigh, however, were dashed on Wednesday when the European Central Bank announced it would stop accepting Greek government bonds as collateral, effectively cutting off a significant line of funding to Greek banks.
The next day, Frankfurt sanctioned emergency funding to Greek banks, at least for the short term, but the power dynamic had shifted dramatically.
On Thursday, following a frosty meeting in Berlin between the Greek and German finance ministers, the gulf between the two parties seemed as wide as ever.
Where to now? Following this week’s diplomatic offensive, the Greek government is likely to take stock of events in the coming days, though Tsipras is due to attend his first EU summit in Brussels on Thursday.
The Greek bailout is due to expire at the end of the month, leaving the Greek government without an immediate source of finance.
A number of debt repayments are due in March, and again in July, while close attention will be paid to the Greek banks in the coming weeks to see if the recent outflow of deposits intensifies.
This week's developments show that, for all the show of European solidarity to Greece by EU leaders earlier in the week, ultimately the ECB is the most important player in this Greek drama.
Tsipras will now find it difficult to convince other hard-pressed countries that any form of nominal debt write-down is justified, though some form of debt renegotiation is likely.
Since the onset of the euro zone crisis six years ago, the euro zone has proved itself a master in the art of muddling through. Greece’s euro zone partners will be hoping that once again some form of compromise will be found.
