UPDATE, June 4th: Alexis Tsipras, the Greek prime minister, emerged from a Wednesday-night meeting in Brussels withJean-Claude Juncker, the president of the European Commission, claiming that a deal betweenGreeceand itsinternational creditorsis “within sight”. Before the meeting Mr Tsipras had appeared reluctant to accept the creditors’ latest proposals for unlocking €7.2 billion ($8.1 billion) of bail-out funds. Now he says Greece will make its scheduled repayment of €300m to the IMF tomorrow. But further bills loom.

AS PHONEY wars often do, the four-month stand-off between Greece and its creditors may come to a sudden and dramatic end. On the evening of June 1st, Angela Merkel, François Hollande and Jean-Claude Juncker (leaders, respectively of Germany, France and the European Commission) were unexpectedly joined in Berlin by Mario Draghi and Christine Lagarde, the heads of the European Central Bank and the International Monetary Fund. Mr Juncker, Mr Draghi and Ms Lagarde lead the three institutions that monitor Greece's bail-out; Mrs Merkel and Mr Hollande run the two largest countries in the euro zone. The five talked over the Greek mess until the wee hours. But the midnight oil seems not to have been burned for naught; it now appears that the creditors have agreed on the terms they are to offer Greece.

Speculation has mounted in recent weeks that Greece's creditors, frustrated with the glacial pace of negotiations, might present Greece with a "take-it-or-leave-it" list of reforms and fiscal proposals. If the Greek government, led by Alexis Tsipras, were to assent to the terms, the €7.2 billion ($8 billion) that has not yet been disbursed from Greece's bail-out fund could finally be released. The ECB might also allow Greece to issue more short-term debt. Greece's leaders, running desperately short of cash would have little choice but to accept the offer. The alternative would be a debt default, as big repayments become due. That, in turn, could trigger capital controls and a departure from the euro. Yet Greece's creditors have been unable to agree just what to ask of the Greeks. The IMF has demanded tough labour and pension reforms—red lines for Mr Tsipras—while the other interested parties were more willing to compromise in these areas.

Despite all the drama, a deal with Greece is still the most likely outcome But at a meeting of G7 finance ministers in Dresden last week, the key players vowed to resolve their disagreements. Overnight, at least, they seem to have done so. Few details of the proposal have emerged. Sources speak of possible compromise on the labour reforms the creditors have been seeking. It will be harder to find wriggle room on pension cuts, given how much of the Greek budget payments to pensioners gobble up. Greece will be permitted to run a lower primary budget surplus (before interest payments) than its current arrangements allow: one source mentions a figure of "below 1%" of GDP this year, rising to 3.5% by 2018. That is not exactly the anti-austerity ticket on which Syriza stood for election. But it will ease the fiscal squeeze a bit. The creditors might also—and here the details are fuzzy—agree to a second extension of Greece's bail-out, for several months. That would keep Greece eligible for emergency liquidity support from the ECB. It would also provide more time to work out the details of a third bail-out in September or October, worth between €30 billion and €50 billion, which Greece needs because it remains priced out of capital markets. Another component of the deal could see part of a bank-recapitalisation fund redirected to the bail-out kitty. The agreed-upon proposals will probably be presented to Greece this week, before an IMF repayment of €300m falls due on Friday. (Most observers believe Greece has the funds to meet that obligation, if it chooses to.) Mr Tsipras will be given some sort of deadline, perhaps a week, to answer. But Mr Tsipras, whose attempt to invite himself to the Berlin meeting was rebuffed, is doing his best to pre-empt such a development. First, he published a fiery op-ed in Le Monde accusing his opponents of trampling on democracy; second, he drew up his own list of reforms, which he says was sent to the gathered creditors last night. Meanwhile his ministers, including relatively mild-mannered sorts like Yannis Dragasakis, the deputy prime minister, have been loudly proclaiming that Greece will not accept "ultimatums" from the euro zone. Creditors say the demands may not be presented in that form.

Greece's difficult financial straits, in charts

If the prime minister accepts the creditors' proposals, he may struggle to hold his left-wing Syriza party together. Hardline backbenchers, always sceptical of the government's approach, have been making their discontent plain this week, urging Mr Tsipras to walk away if he cannot obtain a good deal. His government may feel obliged to put the terms of a new deal to a referendum, or perhaps to call fresh elections, something which Greek MPs are openly discussing at present. Syriza would almost certainly win a new vote; its creditors hope it might then form a coalition with a party they consider more palatable, like the centrist To Potami (The River).

But there are many hurdles to overcome before that can happen. The creditors must paper over their differences. Some national parliaments, often forgotten in this story, must be satisfied. And Greece must continue to meet the relentless progression of obligations to bondholders, civil servants and pensioners. Though this latest chapter of Greece's long-running saga appears to be ending not a moment too soon, the shift from stasis to action carries the risk of Greece crashing off the rails towards default. Until the deal is truly done teeth will be on edge around the euro area and beyond.