Part tragedy. Part farce. No happy ending. The final stages of the Greek drama have begun.

The tragedy is that there is no end in sight to the suffering of the Greek people. They have seen their country’s economy shrink by 25% in five years and it was already back in recession when the banks closed their doors two weeks ago.

The damage caused by the rapid descent into a cashless, semi-barter economy will be profound and long-lasting. It would take months if not years to repair the damage even if pro-growth policies are pursued.

That, sadly, will not be the case. Greece now faces a fresh wave of austerity policies – increases in VAT, public sector wage cuts, less generous pensions – that will put the brake on activity. This approach has been tried repeatedly over the past five years and it has failed repeatedly. It will fail again.

Greece is like Sisyphus, the king of Corinth who according to legend angered the gods and was condemned to push an enormous rock to the top of a hill. When Sisyphus neared the summit, the boulder would slip from his grasp and tumble back down to the bottom of the slope, forcing him to start again.

Alexis Tsipras, too, has angered the gods, in this case the European commission, the European Central Bank, the International Monetary Fund and most of the 18 other countries that are members of the single currency. His punishment for his five-month show of defiance will be to have Greece’s boulder replaced by an even bigger one.

For this is where the tragedy turns to farce. The terms Tsipras is now willing to accept are actually more severe than the ones he rejected two weeks ago. This was the moment in Brussels when the Greek prime minister stunned the rest of Europe by putting the terms on offer to a referendum.

It looked a bold, even foolhardy move. The ECB capped its emergency support to Greece’s banks. Limits were put on cash withdrawals of €60 a day. As the economy came to a halt, every European leader warned that a no vote in the referendum rejecting the austerity package was effectively a vote to leave the single currency.

Yet, despite everything, Greece voted no by a landslide. Tsipras asked for a mandate and got it. But if he thought this would force the creditors to offer concessions, he was wrong. The choice faced by his government this week has been stark: surrender or leave the euro. He has chosen to hoist the white flag over the Parthenon.

Greeks will be asking today what has been the point of the last month of diplomatic theatre: the endless meetings, the violent rhetoric, the walkouts, and the calling of the referendum. The answer is less than nothing. Untold damage has been caused to the Greek economy for no purpose whatsoever. Tsipras is a much-diminished figure as a result of the events of the last two weeks, and ought to pay a heavy political price.

So what happens now? In theory, there is a chance that the euro group – the conclave of finance ministers from the single currency – could say that the Greek surrender is not yet abject enough. They could ask for still further punitive measures before recommending that Greece be allowed to remain part of the club.

That, though, is not going to happen. There is much political pressure, both internal and external, to keep the euro intact. Greece might only represent a tiny fraction of the European economy, but its departure from the single currency would symbolise the failure of the project and set a precedent. The US has been putting pressure on Angela Merkel and François Hollande to ensure there is no Grexit.

Greece will also get some debt relief. That’s not because the creditors think they owe Tsipras something. On the contrary, he has destroyed most of the goodwill that previously existed. But it is clear to everybody that Greece’s debt outlook is unsustainable and becoming more so. Debts are already 175% of gross domestic product and the economy is going backwards. Shutting the banks for a fortnight makes matters worse. Even the hardliners in Germany recognise that something must be done.

Debt relief, though, is unlikely to be generous enough to make much of a difference. Greece will stay in the euro but the tax increases and the wage cuts will not deliver the promised economic recovery. A third bailout package will be no more successful than the past two. When the next episode in the crisis arrives, as it will, Greeks will look back to the moment when their government had the choice between austerity and the euro and wonder whether it made the right one.

