Cantillon: Options weighed as Greece nears brink

The idea that talks over the weekend between Greece and its creditors lasted just 45 minutes illustrates as starkly as anything how intractable the differences remain between the two sides.

Those talks on Sunday came less than 48 hours after the International Monetary Fund had pulled its negotiating team out of Brussels, frustrated at what it sees as the failure of the Greek side to offer meaningful reform.

To convene what must have been seen by all sides as crisis talks only to part company within the hour seems incredible; in truth, it has more to do with the sense of conviction on both sides.

There are two ways of looking at this. The common assumption is that each side is waiting for the other to blink.

On this reading, Greek prime minister Alexis Tsipras is banking on the consensual focus of the European Union institutions and the bloc's fabled inability to make a stand. He knows too of the dread in Brussels at the prospect of letting the euro exit genie out of the bottle.

From the EU perspective, emboldened by the backing of the IMF and the European Central Bank, there is a confidence that Greece must bow to pressure of numbers: the alternative is too drastic to risk.

The second scenario is more nuanced. In this, Tsipras and his ministers fear for the cohesion of Greek society if some relief is not offered from the relentless austerity. Leaving the euro would be traumatic, they know, but they worry that staying within it could only lengthen any period of economic hardship.

Europe is concerned that a backward step would undermine any prospect of longer-term success for the euro. Imposing discipline in a common currency area would become more difficult, if not impossible, threatening economic chaos across the bloc. Added to this, many in the negotiations do not trust the Greeks to abide by any accord unless constrained.

The meeting of eurogroup finance ministers on Thursday is seen by many as a practical deadline for some sort of resolution. The danger is that both sides have entrenched themselves so deeply they cannot chart a route to resolution.

The odds on default and Grexit are rising but neither in the markets nor among the negotiating teams is it yet seen as a done deal.