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Eric Reguly

Whatever happens in Brussels tonight, when the euro zone finance ministers try to hammer a new bailout package for Greece, it's not really about the debt. For Greece, it's really about financial flexibility; for the rest of the euro zone, it's about insisting that Greece offer up a serious package of structural reforms in exchange for financial flexibility.

But wasn't Greece the star of the "debt crisis" and isn't Greece's debt gruesomely large? The answer to both is yes, but Greece's debt is not as large as advertised. The repayment terms have been tweaked so many times that the official figure is largely meaningless.

On paper, Greece's debt is 175 per cent of gross domestic product. That's the highest in Europe by far and more than double Germany's level. The amount is way too big to be repaid, given the weakness of the Greek economy. And that's the point – it's not really being repaid, at least not quickly. Most of Greece's debt, €317-billion at last count, has shifted from the private sector to the official sector – the European Union (largely through the EU's bailout fund, known as the EFSF), the European Central Bank and the International Monetary Fund. Since the trio, known as the Troika, has little interest in turning Greece into a deadbeat and forcing it out of the euro zone, potentially dismantling the common currency, it has cut Greece a sweet repayment deal.

Interest rates on the debt have been reduced substantially. As a result, Greece's payments on its debt in 2014, as a per cent of GDP, were only 2.6 per cent, according to Bruegel, the German think tank. The interest payments of Portugal, another country that had to be bailed out during the height of the crisis, consumed 5 per cent of GDP. Italy shoveled out 4.7 per cent of GDP on debt payments.

The maturities on much of the Greek debt have also been extended. Greece doesn't have to start paying back the EFSF bailout loans until 2023, and they have an average maturity of 32.5 years. The already generous repayment terms is the main reason why Greece's EU creditors are in no mood for a "haircut" – a debt writeoff. Greece's negotiators have reluctantly agreed. They dropped their demands for a haircut but are still lobbying for a debt swap that would see the issue of new bonds whose payments would be tied to economic growth. The higher the GDP, the faster the bonds would be paid off.

But Greece apparently has no intention of backing down on the primary surplus – the budget surplus once debt payments are stripped out – that it must report. Under the bailout terms, Greece's primary surplus must reach 3 per cent of GDP this year and 4.5 per cent next year. The numbers are absurdly high for a country whose social welfare spending has been gutted. A figure of 1 per cent or 2 per would allow Greece to devote more money to social spending and reduce or eliminate some taxes, notably the despised property tax, known as enfia.

But to get permission to run a lower primary surplus, plus obtain a financial "bridging" agreement that would allow the Greek government to keep its doors open and pay its obligations to the IMF and the ECB – the total owed to both this year is about €16.5-billion – Greece has to give up something in return. That means a commitment to structural reforms and lots of them, ranging from going after tax avoiders and tax evaders with religious zeal to making good on its privatisation agreements.

The Troika, however, is not getting its hopes up. The IMF noted that the fast majority of reform commitments made by the last Greek government died on the table. The new radical left government of Prime Minister Alexis Tsipras has already cancelled privatization plans and promised to rehire government workers and raise the minimum wage. The Troika wants to know: With what money?

The lack of structural reform – indeed the reversal of some reforms since Mr. Tsipras's Syriza party won the Jan 25 election – is why Greece will face an enormous battle in today's negotiations for a new austerity and fiscal package. The Troika simply doesn't trust Greece, nor Greece the Troika. It is for that reason that Greece's tenure in the euro zone cannot be assured, at least not yet.