The time of shadow-boxing, of feints and jabs, is drawing to a close.

Over the weeks ahead Greece must find billions to service its deficit. The moment approaches when it can either raise the money at a reasonable price, or it defaults or it is bailed out.

Even as all parties await the bell, the game goes on. Outsiders are still pouring on the pressure on Athens.

Their plans to reduce their deficit don't cut it. That was the view of a high-powered team from the European Union and the European Central Bank (ECB) which was in Athens last week. Their verdict: you'll miss your targets and you have to slash spending further. How do we know this? The Greek Economics Minister Louka Katseli, among others, has let us in on what he was told.

Even at this late hour others weigh in. The head of the 16-nation Eurogroup, Jean-Claude Juncker, says: “Greece must understand that taxpayers in Germany, Belgium and the Netherlands are not prepared to correct Greek fiscal policy mistakes.” The French Economy Minister, Christine Lagarde, reminded everyone that the euro was built on the premise that “there would be no bail-out, because everyone had to play by the same rules and had to respect the same discipline.”'

At the end of last week the Greek Prime Minister George Papandreou sounded like a man who knew he needed to do more. “Will we let the country go bankrupt?” he asked, “or will we react?” So he may this week announce yet more austerity measures, perhaps a further cut in benefits or a hike in sales tax. He must hope he can squeeze his public sector some more whilst keeping the rioters at bay.

Some European leaders still hope somehow Greece can convince the markets that it can cut its deficit by 4 per cent this year and avoid any rescue.

However, the believers out there are few. Giant hedge funds have placed their bets; the euro will drop further. In their view the euro's inherent weaknesses are not being addressed. Most senior European officials believe some kind of bail-out will be needed.

While they watch these latest moves George Papandreou is set to travel to Berlin on Friday to meet Angela Merkel. It is a key meeting. If Greece is to be rescued by Europe the Germans will have to be at the heart of it. The German people are against; it was their big fear when they gave up their beloved Deutschmark that they would end up bailing out the reckless.

However, in the background rescue plans are being discussed. One possibility is that the German state lender KfW and France's Caisse des Depots will buy Greek bonds — but behind such a move will lie taxpayers' money. It could not be finessed away. The line will have been crossed; that weak countries that buck the rules will get bailed out. For even as European leaders demand that Greece do more, they reveal their final position. Christine Lagarde said it was “out of the question” that Greece should leave the euro. Angela Merkel has said that for the first time the euro is in a difficult position but “it will stand its ground.”

If Germany's big banks step in, where will it end? Will it steady the financial markets or will the same institutions have to underwrite Spanish, Portuguese and Italian debt?

What about the marked differences in competitiveness within the eurozone between Germany, France and some of the southern European countries — how will that be fixed? Will Germany abandon its culture of thrift in order to stoke up demand and so help out other economies?

And that is where — like some massive storm detected on radar — a fierce argument lies ahead. Some of the battle lines are being drawn. On the one hand are those who say that there cannot be a successful single currency when monetary policy is determined for all and fiscal policy remains in the hands of the nation states. Jacques Attali, the founding President of the European Bank for Reconstruction and Development (EBRD), is the latest voice to call for one European economic policy. “So even if public opinion is for the moment against a single tax and fiscal policy for all of Europe,” he said, “Europeans will have to go along at some point. Without it, the euro will not survive.” He does not indicate how public opinion will be persuaded or whether such a fundamental change to the sovereignty of the eurozone states should be put to the voters.

Say Europe ended up with a single treasury, either via the back door or through popular will, what would be the impact on those 11 countries outside the eurozone? They would be part of a single market where some countries have common tax and spending plans. There would be potential for dangerous divisions. Angela Merkel, for one, is unpersuaded and sees the scope for problems. “It would be wrong,” she said, “to have a coordinated economic policy for the Eurogroup while the others can do what they want, because we are of course closely linked to our other neighbours through trade.”

Whether Greece is bailed out or not this fundamental argument lies ahead. It is out there, on the horizon. — © BBC News/Distributed by the New York Times Syndicate

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