After Brexit stole the limelight last year, the spectre of Grexit is back. Greece, the eurozone and IMF are in a three-way Mexican stand-off over a review of the country’s 86 billion bailout agreed in July 2015, its third since 2010.
Time is now running out once again before Greece faces a possible default on its debt that threatens renewed turmoil in the eurozone.
Here are five reasons the crisis has flared up:
At the heart of latest flare-up is the International Monetary Fund, the world economy’s anti-crisis firefighter that played a central role in the first two financial rescues of Greece.
But the fund, led by the tenacious Frenchwoman Christine Lagarde, never formally joined the third bailout alongside the eurozone and there is increasing talk it may now choose to walk away.
The IMF disagrees with the eurozone on two key issues: economic targets and debt.
On the economic targets, the IMF says those demanded by the Europeans of Greece are unrealistic.
The eurozone insists that Greece can deliver a primary balance, or budget surplus before debt repayments, of 3.5 percent of GDP over several years.
The IMF has said only 1.5 percent is feasible, saying that 3.5 percent requires too much austerity.
The IMF also insists that Greece’s debt pile is “explosive” and requires significant debt relief.
The IMF’s refusal to budge is putting Germany in a weak spot.
Germany leads the eurozone’s fiscal hardliners in refusing the deep debt relief demanded by the IMF.
But at the same time Berlin and other hardliners such as the Netherlands have made their participation in the rescue of Greece conditional on the full involvement of the IMF.
Berlin has serious doubts that the EU alone can keep a hard line against Greece on delivering reforms without the discipline of the IMF, which firmly holds to the demands of its bailouts.
If the fund should walk away, German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble would be left in an extremely tight position just months ahead of elections set for September in which the anti-EU Alternative for Germany is expected to make big inroads.
Greece faces a debt repayment bill of 7.0 billion euros in mid-July that it cannot afford without unblocking more funds from the bailout.
For nearly two years debt-wracked Greece has delivered on reforms and budget commitments, winning plaudits in a significant change from the fractious days of early 2015.
But the latest tranche of bailout cash money is blocked until Greece passes the current review, which Germany and the Netherlands refuse to allow without the IMF as a full member.
As a solution to the deadlock, the IMF has demanded that Greece deliver more austerity reforms, even though it is dubious of the budget targets set by the Europeans.
The Tsipras government firmly rejects this on principle and also because of its razor-thin majority in Greek parliament that would likely fail to survive a new round of austerity.
Elections in Europe
Unofficially, a meeting of eurozone ministers on February 20 is the deadline to reach an agreement, but a deal looks increasingly unlikely with Athens, the IMF and the Europeans still wide apart.
After that date, Europe enters a busy election schedule starting in the Netherlands on March 15. Jeroen Dijsselbloem, the Eurogroup chief and Dutch finance Minister, faces a very uncertain re-election.
The Dutch vote is followed by French elections in the spring and German elections in September.
Amid the campaigning, a noisy return of the debt crisis would make a solution difficult. The idea of offering more help for Greece is unpopular with many Europeans.
The unknown intentions of the Trump administration hover in the background. The United States is the biggest voting bloc on the IMF’s executive board and for now, the US seat remains vacant.
Throughout the Obama years, the US cautiously backed IMF participation in the Greece saga, but whether that remains the case under the unpredictable Trump is not known.
Last week, in a rare case of making its internal affairs public, the IMF said that opinions on its board regarding Greece were divided. Only the Europeans defended a more positive assessment of the Greek economy.