A snap election held in late January produced a decisive victory for Syriza. This leftist party pledged to force the IMF, the EU, and the European Central Bank — the so-called “troika” — to renegotiate the terms of agreements made by previous governments to obtain emergency loans totaling $280 billion, and gave its blessing to the write-off of about one-half of the country’s near $400 billion public debt.

Syriza won 149 seats, two short of the minimum required for a bare majority in the 300-member Parliament. The speed with which Syriza leader Alexis Tsipras concluded a coalition deal with Independent Greeks, a conservative party that has little in common with Syriza beyond its anti-austerity stance, suggested that he was not prepared to compromise, even as German officials made clear that they intended to hold Greece accountable for its entire debt.

Demands for an immediate debt write-off ran into strong resistance, and Tsipras and his finance minister, Yanis Varoufakis, quickly shifted their focus to securing an extension of the existing bailout agreement, which was set to expire at the end of February. Varoufakis requested a six-month extension of the credit arrangement to buy time for Greece and the troika to negotiate a longer-term deal, but the no-strings proposal was rejected out of hand by his German counterpart, Wolfgang Schauble.

The two sides reached an 11th-hour agreement under which Greece will continue to receive loans for a period of four months, with disbursement contingent on satisfactory progress on structural reforms.

The deal has merely delayed the decision point. The voters who carried Syriza to victory will be looking for immediate moves by the new government to honor its promises of relief from austerity. A delay could jeopardize the survival of the government in Athens, but any moves that weaken Greece’s fiscal position will only dim the prospects for the successful conclusion of a longer-term deal—there is already speculation about a third bailout package — with the troika.

The key near-term risk is that the new government will take policy steps that produce a fait accompli, leaving Greece’s euro-zone partners with a choice of either backing a forced debt write-off or letting Greece default, a development that would all but ensure a chaotic exit from the monetary union. If presented with that choice, the latter option might very well seem the more preferable of the two.

The granting of concessions to Greece would almost certainly fuel a surge of support for anti-austerity parties in other debt-hobbled countries unless Germany and the other members of the euro-zone core offered similar terms to Spain, Portugal, and Italy. Such a strategy would risk triggering a backlash by German taxpayers, who would end up footing most of the bill for regional debt relief.

Consequently, were Greece to force the issue, German Chancellor Angela Merkel may well decide to leave Greece to its fate, wagering that the economic crisis triggered by the country’s abandonment of the euro would dampen the appetite for debt showdowns elsewhere in the euro zone, thereby limiting the danger that Grexit might lead to the disintegration of the broader monetary union.

At this early juncture, the actual implications of Syriza’s victory remain uncertain. However, the probability of a mutually beneficial outcome for all is unfortunately low, and the risk of a potentially disastrous miscalculation is uncomfortably high.

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