09/02/2015 08:22 GMT | Updated 10/04/2015 06:59 BST

Greece Is No Poker Game - We're All Standing on a Cliff's Edge

Everyone is portraying it as a game of poker. They couldn't be more mistaken.

It seems impossible to get Greece off the front pages of the newspapers. And so it should be. The current untenable situation poses an existential threat to the European Union. Many are treating this as a game of bluff and double bluff. A high stakes poker game. The difference is that poker games have winners and losers. In the current situation we have only two possible outcomes: a compromise where everyone gives something or an outcome where everybody loses. There are no winners to be had in this game.

Led by Germany, some European countries may have deluded themselves that they have the upper hand. A Grexit can be managed and the losses would be just for Greece. How short are our memories. We seem to have forgotten that it was only a few short years ago that the U.S. Government made the judgment that it could tolerate the failure of a single bank - Lehman Brothers. That misjudgment unleashed one of the biggest financial collapses we have ever seen. Greece is not a single bank. The idea that a Greek collapse can be contained and we can all go on living happily ever after is so outrageous that I am sure those taking that position publicly do not, for a moment, believe it themselves.

The election of Syriza in Greece may be the best thing that could have happened to Europe. It has the opportunity to allow Europe to examine itself and embark on a more productive path than that it has been following for the last several years. Let us look at the key issues.

First, it has been clear to everyone for some time that Greece would never be able to repay its debts. Thus was born the strategy of extend and pretend. The time for pretence has, maybe, come to an end. Greece can pay its debts as much as Germany was able to repay its debts after World War II. Germany was forgiven its debts then. Should Greece, and EU partner, be treated differently now?

Second, what are the fundamental problems in Greece? They are primarily issues of embedded corruption, clientelist politics and large scale tax evasion by oligarchs. Yet the Trioka preferred to focus its so-called reform programme on issues like how many cleaners the ministry of finance employed. The Troika's prescriptions destroyed the lives of millions of Greeks but did nothing to tackle the deep issues caused by the wealthy and the powerful. The Troika got into bed with the devil in the form of a Greek government deeply entrenched in the culture of corruption. Now, it seems, they would rather still be in bed with that same devil than help a new government that does not (yet?) have ties with the ruling classes and seems determined to tackle the deep seated issues that have eaten away at the soul of the Greek state.

Finally, it is now clear to everyone that the politics of prolonged austerity are both economically and morally bankrupt. They cannot work, and have never worked, in any country that has a debt burden of the size that Greece is carrying. Austerity only results in ever increasing debt combined with social devastation

Maybe the most important test that Europe now has to face is not about Greece but rather about itself. What does Europe stand for? What is it for? Greece may be the catalyst that shows European citizens the answer to these questions. And they may not like what they see.

Europe was supposed to stand for democracy, solidarity and the rule of law. It was supposed to become an ever-closer union rather than a collection of bickering nation states. All of these ambitions are slowly but surely falling apart. It remains to be seen whether union and solidarity will win out in the Greek crisis or whether it will become even clearer to everyone that this remains a Europe of nation states all fighting their own corner.

As for democracy, we now have senior EU officials declaring proudly "elections don't change anything." We have a bunch of unelected technocrats at the ECB with the power to cut off liquidity at will and send Greece to the wall. Are these the democratic values that Europe believes in?

And the rule of law? What does that mean? Europe, it seems, is unwilling to give Greece the financial space it needs to try to tackle the corruption in its own country. Multinational corporations from other European states are known to be embedded in the corrupt system and yet not much is done. Maybe the aspirational meaning of the rule of law has also been reduced to a mere technocratic concept. Commissioner Mosovici urged the Greeks to abide by the rules "because that is how we do things in Europe." No mention of the fact that France and Germany were the first big countries to break the European Stability Pact rules. No mention of the fact that France's budget today remains outside the rules.

A Greek failure cannot be separated from a European failure - economically and politically. If allowed to happen, a Greek exit or collapse will usher in another major crisis. It will confirm that, in the form of the European Union, Europe has lost its moral compass and its ability to act for the common good. It will show that, while urging individual countries to reform, Europe is utterly incapable of reforming itself. A Greek failure will be merely the next chapter in a progressive unravelling of the European Union which is already there for all to see.

The Greek crisis is no game of poker. It puts all sides on the edge of a cliff perilously close to falling off. If Greece falls, so does everyone else.