Protesters gather in front of the Greek parliament during an anti-austerity and pro-government demonstration in Athens last month. “The election of Syriza, a populist leftist party, has thrown Europe into confusion.” Photo: Yannis Behrakis/Reuters

As the eurozone’s fudge to keep the new government of Greece on life-support reached its climax, a comedian tweeted: “Just left a Greek restaurant without paying. I think it’s what they would have wanted”. To the Greek government which was elected just five weeks ago, the euro-fudge must have tasted more like humble moussaka.

The Eurozone finance ministers have extended Greece’s current bail-out terms for four months, kicking the problem down the road to June. To secure this extension, the Greek government has had to come up with a plan to tackle tax evasion and corruption – issues, incidentally, not a million miles from what has been exposed recently here in Malta – and a list of planned economic reforms including to its bloated public sector and restrictive employment laws.

The deal reached will see Greece avoid a painful default and messy departure from the Eurozone, a move that would have destabilised the whole of Europe and beyond. The Greeks will now be bargaining with the eurozone – primarily Germany – about a longer-term solution, which seeks a workable alternative to the failed policy of austerity.

It is patently clear that the original terms of the bailout of Greece were too harsh. Greece should have been offered greater and earlier debt relief in return for sweeping structural reforms of its economy. These cannot be wished away or avoided. More market volatility can be expected in the coming months with the likelihood of another crisis looming at the end of June.

Greece’s newly elected Prime Minister had promised “an end to humiliation and pain”. He wanted to write off “the greater part of Greece’s public debt”, ideally though a European debt conference “such as the deal struck for Germany in 1953”.

The Greeks have long memories and the Second World War still looms large in Athens. It did not help the negotiations that Alexis Tsipras pointedly made his first official act after the election a visit to a memorial for Greek communists executed by the Nazis in 1944.

The last couple of weeks have witnessed an example of ruthless power politics in Europe, as well as a clash of cultures between the north, driven by financial rigour, and a free-wheeling Greek south.

The EU is dividing into “winners” and “losers”. A democratically elected government in Greece, voted in to get its overbearing European partners off its back, has had to eat humble pie.

The eurozone and Europe as a whole are not out of the woods by a long chalk. All leading economists now acknowledge that the design and concept of the single euro currency is deeply flawed. The eurozone of 19 members is buckling under the weight of poor growth, high unemployment and impending stagnation. There is no end in sight to a financial crisis that started seven years ago and has already involved bail-outs for four states and changes of governments in half a dozen.

That Malta’s economy is doing well should be no cause for complacency or self-congratulation. We are as vulnerable to what happens next in the Eurozone as Italy, France or even Germany.

A democratically elected government in Greece, voted in to get its overbearing European partners off its back, has had to eat humble pie

The endemic flaws in the construction of the single currency, and its political and economic fault-lines, lie exposed despite efforts to remedy them.

The political and economic risks, inherent in the euro’s design, remain. What we are seeing with Greece is what happens when democracy collides with an ill-conceived monetary system.

There has never been an example in history of lasting currency unions without political union first. Europe’s currency union was a bad idea in the first place.

It tied together diverse national economies under a single currency and interest rate, while leaving budgetary policies in the hands of national governments. A common currency can only work if there is fiscal union as well.

Greece’s ill-fated decision to join Europe’s single currency in 2001 – which was earnestly supported by Europe’s national leaders, who insisted “you cannot say no to the country of Plato” – did not cause the country’s structural weaknesses. But it aggravated them.

The eurozone’s single interest rate was appropriate for Germany’s then sluggish economy, but was much too loose for Greece (as well as Portugal, Spain and Ireland), which went on a borrowing and spending binge with consequences now plain to see.

But the political (and economic) fallout over the next few months could be wide-ranging and is largely unknowable.

Is it conceivable that the birth-place of European democracy (and a founder member of Nato) could leave the Union and find itself drawn into the clutches of another creditor willing to bail it out, such as Russia, which is itself making overtures to Greece to join the Eurasian Customs Union?

The eurozone is locked into a state of economic stagnation and indebtedness. It is in severe danger of falling into a cycle of deflation that will be hard to escape.

But the really frightening aspect of its endemic weakness is that it is eroding the credibility of mainstream politics throughout the EU by giving impetus to both the populist left and the racist right.

The extreme ends of the political spectrum in France, Spain, Italy, Germany, the Netherlands and elsewhere have hailed Syriza’s victory in Greece as a slap in the face for Europe. Challengers to the established centre-left or centre-right parties are competing for the allegiance of a continent in a state of economic stagnation, high unemployment and deep concerns about uncontrolled immigration.

It is a continent fearful that the political establishment which has held sway for generations lacks the vision, wit and the courage to rise to the occasion.

Fringe parties on the right – from the Netherlands’ Freedom Party to France’s National Front to Germany’s AFD and the Pegida movement (Patriotic Europeans against the Islamisation of the West) and their sister organisations in Sweden and Austria, the Northern League and Five Star Movement in Italy – represent a rebuke to the EU’s complacent leaders for failing to protect the eurozone from record unemployment and uncontrolled immigration.

The election last month of Syriza, a populist leftist party, has thrown Europe into confusion and this from a country which only accounts for two per cent of Europe’s economy.

But the real mark of the wrecking ball heading for traditional European politics lies in the rise of the radical left-wing party, Podemos, in Spain where unemployment stands at Greek levels of unsustainability.

Founded only last year by a group of academics, Podemos may be on course to repeat Syriza’s success in Greece in the general election later this year. If it were to win and begin its own showdown with the Eurozone, it would cause the kind of shock that could break the euro apart. The big question then would be whether finance markets would have enough faith left in Italy and France to hold together.

What then of ? Every treasury in the core North European countries is busy examining the possible repercussions and drawing up contingency plans accordingly.

We can only hope that our government is doing likewise, although, given that contingency planning is not Malta’s strongest suit, I have my doubts. It is vitally important that the government prepares us for the economic shoals ahead.