Greek crisis heads towards an endgame in Berlin

Both sides insist that there is going to be no agreement, no breakthrough at the talks today between Chancellor Merkel and Greece’s Prime Minister Alexis Tsipras, but be in no doubt that this meeting really matters.

The seemingly endless Greek crisis is heading towards an endgame. For all the talking being done by officials and by other Eurozone leaders, it is probably only these two who can keep the show on the road.

First the deadlines. Greece must this week spell out to the Eurogroup the precise reforms it intends to enact. More vague promises are not going to cut the mustard, and if its plans are deemed inadequate there will be no new money. And on 8 April, just two weeks away, the money runs out. Greece really is staring down the barrel of a default.

A week ago Tsipras wrote to Merkel and France’s President Hollande among others warning that it would be impossible to pay back debts owed without short-term financial aid, but that letter (revealed by the FT) makes it clear that Greece is still a long way from agreeing to the demands of the other 18 countries who use the Euro.

Merkel has to be a little careful about being seen to negotiate on behalf of the entire Eurozone. A meeting last week in Brussels between essentially France, Germany and Greece went down pretty badly with other leaders who also have money at stake here. Hence Merkel’s insistence that there’ll be no deal today. “I’ve written down a couple of points and will focus on those things that need to be said,” was her only comment ahead of today’s talks.

Complicating matters is that both leaders are under intense pressure at home not to give any ground. There is a groundswell of opinion among German politicians, both on the centre-right and centre-left, that no concessions must be made to the Syriza Government in Athens. A video showing finance minister Yanis Varoufakis giving the finger to Germany a couple of years ago and the repeated demands that Germany now pay war reparations have hardly built an atmosphere of compromise.

The Chancellor said again last week that she believes that if the Euro fails, Europe fails, and remains committed to finding a way out of this mess, but she has precious little leeway either with her own backbenchers or other European leaders.

Countries like Ireland and Spain can see no reason that Greece should be given an easier deal than they were. Countries even poorer than Greece, like Slovakia or the Baltics, are not about to agree to their own taxpayers taking a hit to give money to wealthier Greeks.

The dilemma in Athens is even more severe. Tsipras was elected just two months ago to overturn the old order, but must now agree to more of the same if he’s to stay solvent. And yet many in his party will never accept more of the same, and are saying so ever more volubly.

So far Syriza retains public support, a recent poll putting them at around 42 percent, way ahead of where they were on election day. But if sticking to their hard line ultimately results in giving up the Euro, that support disappears spectacularly. More than 80 percent of Greeks tell the pollsters that they want to retain the single currency even if that means accepting that austerity must grind on. That is quite some contradiction.

Tsipras may ultimately have to resort to a referendum to resolve this issue, with the Greek people making a clear decision between more of the same within the Eurozone or a new start outside. But it’s not even clear that they have the time to do that. The money is going to run out long before a proper popular vote could be held, and who is going to give them the cash to tide them over in the near certainty that if Greeks vote to leave, they will never get it back?

So much of this crisis had been about technical issues like debt repayment schedules, emergency lending or structural reforms, but we are getting to the stage now where it is all about politics. The politicians, not the officials, are going to have to decide whether Greece is going to be kept in, whatever the cost, or let go, whatever the impact on the Euro’s future.

And political decisions in today’s Europe tend to be taken by a single figure: Angela Merkel. Hence why today in Berlin is really rather important.

Read: Greek PM assures EU creditors after late-night crisis talks