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Greek Prime Minister Alexis Tsipras attends a parliamentary session before a budget vote in Athens, Greece, Dec. 10, 2016.ALKIS KONSTANTINIDIS/Reuters

Remember Greece?

Before the refugee crisis, Brexit and Donald Trump removed it from the headlines, Greece was infamous as the little country that almost shattered the mighty euro zone in 2012. It attempted a repeat performance in 2015, when it elected a far-left government that vowed to shred the international bailout program only to perform a last-minute U-turn.

Both times, it narrowly escaped ejection from the euro zone. It may not in 2018, when its third – and supposedly last – bailout program ends. A week ago, German Finance Minister Wolfgang Schaeuble, who last year suggested that Greece take a "holiday" from the euro zone, in effect restated his invitation to Greece to get its bags ready. Late last week, Greek cities were hit with strikes and anti-austerity protests.

In an interview published Dec. 4 in Germany's Bild am Sonntag newspaper, he said Greece's debt problem was overexaggerated. "Athens must finally implement the needed reforms," he said. "If Greece wants to stay in the euro, there is no way around it, in fact completely regardless of the debt level."

Grexit – Greece's exit from the euro zone – is still a possibility, in other words, even though the country returned to growth in the past two quarters.

The all-powerful finance minister had a point. Thanks to maturity extensions, interest-payment holidays and other concessions, Greece's annual debt payments, as a portion of gross domestic product, are 7 per cent of GDP. That's less than the proportion paid by Spain, Portugal and Italy, although failure to reach an agreement on a long-term debt deal could see Greek payments soar in a few years.

What's more, Greece's debt to GDP may not be as high as the accepted 170 per cent. Paul Kazarian, CEO of Rhode Island investment firm Japonica Partners, which owns Greek debt, argues that the true figures is a remarkably low 45 per cent after you account for all the debt restructurings and concessions, and factor in national assets and liabilities. While the figure is dismissed as unrealistic by Greek finance officials, there is no doubt the concessions have taken the sting out of the near-term debt payments.

Mr. Schaeuble's point was that lack of competitiveness because of the lack of reforms is what's really holding Greece back, not the debt. Standard & Poor's agrees. "Greece's debt profile is affordable," Frank Gill, the agency's director of European sovereign ratings, said at the recent American-Hellenic Chamber of Commerce conference in Athens.

What Greece really needs is stronger growth, another round of deep economic reforms, inclusion of its bonds in the European Central Bank's quantitative-easing program and healthier banks. If all those factors come together, the Greek treasury should have a good chance of regaining access to the debt markets once the current bailout expires in less than two years.

But it's an open question whether Greece will achieve those formidable goals any time soon – and it's running out of time.

The recovery's momentum will depend in good part on the review of the third bailout by European Union finance ministers, worth up to as much as €86-billion ($119.4-billion).

The review, now winding up, is crucial because its outcome will determine whether the country is meeting the fiscal targets and reforms needed to qualify for the next bailout loan instalments. The review might include a debt-relief plan and set a goal for Greece's primary surplus – the budget surplus after debt payments are stripped out. The stated surplus goal for 2018 is a hefty 3.5 per cent of gross domestic product.

The review will also determine whether the International Monetary Fund (IMF), the EU's partner in Greece's first two bailouts – valued at €240-billion – will take part in the current bailout. The IMF argues that achieving a 3.5-per-cent primary surplus is aggressive and would threaten a sustained recovery. It wants Greece to be awarded some debt relief and a lower primary surplus target.

In exchange, the IMF wants Greece to submit to extra austerity measures, notably pension cuts, which could prove toxic for Prime Minister Alexis Tsipras's Syriza government.

Pension cuts have been a prominent feature of the Greek bailouts since the first rescue, in 2010. Since then, pension payments have dropped steadily. IKA, Greece's social-security institution, says the overall effect has been cuts of 22 per cent to 55 per cent, with 60 per cent of Greek pensioners receiving less than €700 a month.

Syriza has promised that pensioners will endure no more cuts. But the government may be forced into another humiliating U-turn. By any measure, Greece's pension system is still unsustainable. According to 2015 data from Eurostat, the EU's statistical agency, Greece spent an astounding 17.5 per cent of GDP on pensions, the highest in the EU, while the pension deficit was 9 per cent of GDP, three times Germany's level.

Another pension cut could prove fatal for Syriza, whose popularity has sunk to about 20 per cent, putting it well below the conservative New Democracy party. "If they break the pension promises, it's the end of the day for them," said a senior Greek civil servant and economist who did not want to be identified.

If confidence in Syriza evaporates and its coalition partner bolts, Greece would face another election with potentially grim economic consequences.

In 2014, then-finance minister Yannis Stournaras announced that deep, grinding recession was over – growth had finally returned. But a snap election in early 2015, which was won by Syriza, promptly put the recovery into reverse.

A war broke out between his successor, Yanis Varoufakis, and his EU colleagues over bailout and austerity terms. Reforms went nowhere, the economy crumbled and the banks went into crisis. Mr. Tsipras called a referendum on the proposed new bailout terms and won a mandate to reject them. But Syriza had no choice but to accept another austerity-laden bailout package to prevent the wholesale destruction of its banks.

It is an open secret that Mr. Stournaras, who is now governor of the Bank of Greece, fears that a possible snap election in 2016 could make a mockery of the government's forecast for 2.7-per-cent GDP growth next year. Without specifically mentioning Greek electoral risk, he said "considerable risks are still in place" in his speech at the American-Hellenic Chamber of Commerce conference.

George Tzogopoulos, a Greek academic and author whose specialty is Sino-Greek and European-Greek relations, said an election in 2017 is not out of the question. "Tsipras is completely unpredictable," he said. "No one expected him to call a referendum and he did."

Greece is reporting some encouraging economic numbers. Growth returned in the past two quarters and exports have reached 32 per cent of GDP, partly thanks to falling labour costs, up from 18 per cent in the 2008 crisis year. The jobless rate, which was almost 25 per cent last year, is coming down, albeit slowly, and deposits are trickling back into the banks. Manufacturing is up 4.5 per cent this year.

Pierre Moscovici, European commissioner for economic affairs, told the American-Hellenic chamber that "there is light at the end of the tunnel" for Greece before adding that "your country has lacked too much the ability to enact reforms."

A lot has to come together by 2018 if Greece is to avoid permanent bailout-victim status at a time when the EU, especially Germany, is losing its will to keep pumping taxpayers' money into the country. No wonder Mr. Schaeuble, the German finance minister, is not ruling out the Grexit scenario.