Alexis Tsipras
Greece's Prime Minister Alexis Tsipras is trying to juggle what he promised to Greek voters with what he can negotiate with the eurozone.Reuters

It was a classic European fudge where nobody got what they wanted. Caught in a tangle of irreconcilable differences, eurozone finance ministers have agreed with Greece to hoof their differences four months down the road by extending the stricken country's life support loans.

A deal came after Greece submitted a list of pledges to enact certain reforms, such as a tax evasion crackdown, and not to do some of the things the governing radical leftist party Syriza had promised to voters in its triumph at the January 2015 elections, such as reversing recent privatisations.

This is at the heart of the problem. What Syriza promised and what it can deliver to voters, once it has been ground through the mill of political realism by its eurozone creditors, are different things.

Not even a week after a hard-fought deal was reached, it is, unsurprisingly, coming under intense pressure from the losing sides in this miserable farce. Which is all of them. It feels like yet another moment when the inevitable is being delayed: a Greek exit from the eurozone.

"It is little exaggeration to say that Greece has comprehensively capitulated to its creditors' demands and that the bailout conditions are fundamentally unchanged," wrote Ruth Lea, economic adviser to the Arbuthnot Banking Group, in City AM.

"So the grim situation for the Greek people and the Greek economy, under the austerity cosh and with an arguably overvalued exchange rate, is unchanged.

"Politics will, of course, eventually decide Greece's fate. But one thing is certain: kicking the can down the road and continuing with the same medicine does absolutely nothing to reduce the chances that Greece will eventually leave the eurozone, devalue its currency, and go for growth."

The Germans, who are Greece's largest individual creditor, are questioning the integrity of Greek promises to reform their economy. Dozens of German MPs are planning to vote against the ratification of the four month Greece loan extension when it is brought against them.

"It wasn't easy an easy decision for us but neither was it easy for the Greek government because [they] had told the people something completely different in the campaign and afterwards," Germany's finance minister, Wolfgang Schäuble, said on German radio.

"The question now is whether one can believe the Greek government's assurances or not. There's a lot of doubt in Germany. That has to be understood."

Wolfgang Schaeuble
Wolfgang Schaeuble, Germany's finance minister.

Syriza is heading for internal schisms between those ministers who secured the loan extension through political pragmatism, and those who think they've sold out.

Panagiotis Lafazanis, the Greek energy minister, is rumoured to be unhappy. Before the deal was reached, he told Greek Reporter that the "red line" for Greece in any agreement should be that it "will not create any obstacles" to Syriza's "fundamental" election commitments.

Members of the communist KKE party are arranging a protest against the deal as well as putting their own anti-bailout legislation in front of the Greek parliament.

What Greek creditors – the Troika of lenders, comprising the European Union (EU), European Central Bank (ECB) and the International Monetary Fund (IMF) – want is for Greece to stick to the original deal. Germany is particularly rigid on this point.

In exchange for bailout loans which spared Greece from bankruptcy and default, the Greek government was obliged to carry out a tough reform programme of austerity, liberalisation and privatisation.

All of this was geared at getting Greek public finances in check. If the Greek economy were to collapse, its painful and messy exit from the 18 member eurozone would put the entire single currency area in jeopardy.

But spiralling unemployment and falling incomes amid the austerity programme have angered the Greek public, who feel they are paying the price of the mistakes of the country's previous governments.

Syriza wants to renegotiate the terms of its bailouts with the Troika so they are less strict and would allow it to increase its spending in the Greek economy. They argue this will help spur on the economic growth needed to get Greece back on track and repaying its enormous debt pile.

The government's critics say Greece cannot afford to increase its public spending because it is essentially bankrupt and to boost fiscal stimulus is not sustainable. They argue it would end up needing to be rescued again and should get on with the painful but fundamental reforms to its economy.

Alexis Tsipras Yanis Varoufakis
Greek Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis talk during a vote in AthensReuters

Alexis Tsipras, Greek prime minister and leader of Syriza, will face further tests in July and August, when two tranches of debt worth nearly €7bn (£5bn, $8bn) are due to mature and must be paid back to the ECB.

Once again, serious questions will be asked of the Greek economy and the spectre of Grexit will return to haunt markets and politicians. It may even need a third bailout on top of the €240bn it has already received from the Troika.

Tsipras has maintained that Greece wants to stay in the eurozone. And public opinion polls in Greece show that the vast majority of the population wants this too. The question is whether it will be forced out by other member states, in particular Germany.

Before, allowing Greece to leave the eurozone was politically unthinkable, hence the hundreds of billions of euros pumped into its economy by the Troika to keep it afloat and within the single currency. Eurozone membership was always supposed to be permanent and allowing a state to leave would bring the entire project into question.

But now the political cost in the home countries of the creditors may outweigh that of a Grexit. It is growing harder for German politicians to argue the case to their taxpayers, of why they should be funding Greece when Syriza is so hostile to the necessary economic reforms demanded in return.

Greece EU bailout talks
Jeroen Dijsselbloem, (L) head of the euro zone finance ministers' group, and Greek Finance Minister Yanis Varoufakis shake hands after their common press conference at the ministry in AthensKostas Tsironis/Reuters

It may be easier for the eurozone creditors of Greece to cut their losses and push it to exit rather than cope with taxpayer backlashes at home over handing the country more money on weaker terms. It would also nobble the threat from anti-austerity parties elsewhere, such as Podemos in Spain.

Though the risk of Grexit has gradually increased over the past few months amid Syriza's dramatic rise to power in Greece, it is not necessarily inevitable, said Vincenzo Scarpetta, political analyst at the Open Europe thinktank.

The membership rules of the EU and the eurozone do not fit with the policy programme Syriza was elected off the back of. But Grexit was never on Tsipras's side of the table as a bargaining chip because "Syriza did not campaign for Grexit," Scarpetta told IBTimes UK.

"At the end of the day, the Greek government does not have a mandate for Grexit," Scarpetta said.

So Tsipras was "caught between a rock and a hard place" in the negotiations with his country's creditors. Therefore he "had to bend to the will of other governments" rather than walk away and drag Greece out of the eurozone.

There are many unknowns about the prospect of a Grexit because there is no precedent. For example, if Greece were to leave the eurozone, it might not be able to stay in the EU as it would probably hope, because it is legally obliged to be part of both. Nobody knows what happens.

Those arguing for a Grexit say it would be extremely painful in the short-term, but it would allow Greece sovereignty over its currency again, meaning it could heavily devalue in order to wear down down debt, cut unemployment and boost economic growth.

Whatever happens, the Greek people would have to be consulted, either by another election or a referendum. Jeroen Djisselblom, the Dutch finance minister and president of the Eurogroup which has been negotiating with Greece, is keen to play down the threat of Grexit.

He said on Dutch TV that the Eurogroup "want to keep the eurozone intact, but you need to stick to your commitments".

"It doesn't help speculating on an exit or not. The danger is gone, now we need to get away further from the abyss," he said.