The 1982 sequel to Grease, the movie, was not a huge critical success. The impending sequel to Greece, the sovereign debt crisis, looks like being even less fun.

You’ll remember that the conclusion to the first crisis was something of cliffhanger. With a bankrupt Greece on the verge of default and expulsion from the Eurozone, the European Central Bank stepped in at the last minute to buy-off the money markets.

Would the deal hold? For a while we were on the edge of our seats. After all, a Greek exit (or ‘Grexit’) from the Eurozone, might trigger similar events across the southern Europe – with dire consequences for the entire project. But after a year of nothing happening, we, in Britain, began to lose interest.

The Greek people, however, have not had that luxury. As Ambrose Evans-Pritchard of the Telegraph explains, the conclusion to the crisis wasn’t exactly a happy ending:

“The EU’s mishandling of Greece has been calamitous. Investment has fallen by 63.5pc. Public debt has spiralled to 177pc of GDP, even after two sets of haircuts on private creditors.

“Unemployment has dropped slightly to 25.9pc, or 49.3pc for youth, but only because of a mass exodus, a brain-drain to the US, Canada, Australia, Germany, and the UK. The work force has shed over a million jobs, dropping to 3.5m.”

It’s hard to see things getting any better:

“Exports were lower in 2013 (€51.6) than in 2007 (€56.6bn). The current account deficit has narrowed because imports have collapsed.

“For all the talk of EU-led reform, Greece’s ranking on the World Economic Forum’s competitiveness index has dropped from 67 to 81 over the last six years, below Ukraine, Guatemala, and Algeria.

“‘The concept of reform has been gradually discredited during the current crisis,’ was the acid verdict of the Athens think-tank IOBE in its latest report. Any marginal gains from EU reforms have been overwhelmed in any case by the hysteresis damage of lost labour skills, which lowers Greece’s future growth trajectory.”

The hard left SYRIZA alliance is now poised to win the next Greek general election, with its leader Alexis Tsipras becoming Prime Minister. In theory, Tsipras wants to keep Greece in the Eurozone; in practice he is prepared to defy his country’s creditors and risk expulsion – if that is what it takes to get a massively more generous deal out of the EU.

If the Eurozone establishment blinks first, then the new deal could be based on the use of a financial instrument known as ‘Bisque bonds’:

“The bonds would be new issues with payments linked to the rate of GDP growth. Greece has already issued such bonds under its 2012 restructuring. Mr Tsipras wants this extended to all the debt, and on better terms. If EMU leaders believe their own tale that Greece can grow its way out of debt at rates of 3.5pc or 4pc, they should have no fear agreeing to such terms.”

In effect, the country’s creditors would be swapping their money for shares in the Greek economy – with the promise of future dividends their only hope of a return.

This would certainly give the Eurozone institutions an incentive to promote growth in Europe’s struggling economies, but what would stop other countries – including Italy – from demanding the same deal? For that matter, what’s to stop the money markets from anticipating the repercussions of a SYRIZA victory and going on strike – i.e. pushing interest rates on Greek and other Eurozone debt to unsustainable levels?

If Mr Tsipras is elected and refuses to back down, then there would be no good options for the Eurozone establishment, because all of them carry the risk of triggering a much wider crisis.

Those of a conspiratorial frame of mind might conclude that the only way out would be to ensure that SYRIZA doesn’t win. But that, one hopes, is a plot-twist too far.

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