If you believe political leaders in Berlin, Paris, Brussels, this Sunday marks a make-or-break moment not only for the eurozone but for the EU itself. An extraordinary state of affairs given that – on one level at least – the only thing happening this weekend is that Greece, a country representing just 2% of the entire EU population, will hold a referendum on whether or not to accept the latest deal offered by creditors. The rhetoric coming from Athens is as heated, where there is talk of European “blackmail” against the free will of Greek voters, as if Europe’s creditor nations don’t have voters of their own. If cool heads are to prevail, they must first reflect on how things have turned so sour. Unless a last-minute deal can be reached between Greece and its creditors, the only thing that can be hoped for is serious damage limitation. In the worst-case scenario of a Greek exit from the euro, it would pile disaster upon disaster if the country were to leave the European Union. Europe must stare into this abyss to prevent itself from falling into it.

No side bears sole blame for the current mess. From the very start, the idea of a common European currency was built on a logical flaw. Put at its crudest, monetary union all but requires fiscal union, which in turn requires political union. Yet when the euro was launched, there were no such institutions or mechanisms, just the perennial but vague hope of ever closer union. What’s more, the world’s largest currency area was run on two unsustainable economic motors: Germany exporting ever more to southern Europe and the rest of the world, and southern Europe relying on cheap credit. That fragile system was crushed under the rubble of the financial crisis.

Nor is there much dispute that creditors have mismanaged the Greek dossier ever since the first bailout in 2010. The troika of creditors – the European Central Bank, the EU commission and the IMF – told Greece that the only way to fix its economy was to adopt severe austerity, medicine that felt to Greeks like the shredding of cherished labour rights and benefits. This programme not only failed to make the debt sustainable; it has recreated the kind of poverty that western Europe thought it had left behind. Meanwhile, the bulk of the €240bn (£170bn) total bailout money Greece received in 2010 and 2012 went straight back to the banks that lent it money before the crash.

But both sides in this clash have motives of their own, not all of them unconnected with democracy. The creditors point to some of Europe’s hardest-hit nations, the likes of Portugal and Ireland, whose voters have endured their own austerity and who would look askance if Greece were now let off the hook. Even the reviled IMF can explain its hard line: given the bitter programmes it has imposed on countries from the global south, it can hardly now be lenient towards a European country that is, relatively, better off.

Greece’s woes are not wholly of others’ making. Witness the decades of clientelist Greek politics of left and right, the notoriously poor tax collection, and the fudging of statistics when the country joined the euro in 2001. Much of this predated Alexis Tsipras and Syriza, but it’s also true that the party won power in January partly by promising that less would have to change than, in reality, it would.

Nor has the Greek prime minister helped his cause by framing Sunday’s referendum question in terms that hardly suggest a great democratic moment. The question put to Greek voters is so technical that it defies understanding, and it relates to an offer (made by creditors on 25 June) that has since disappeared. Negotiations were cut off by Greece before a belated new offer could even be considered.

For all that, Greece’s break from the eurozone, not to mention the EU, would amount to a historic weakening of Europe at moment when solidarity has never been more needed. It may be possible to have a Greek default without a Grexit from the euro, but that will require much creativity – something that has been lacking from this generation of unstatesmanlike European leaders. It is also unclear whether a euro-Grexit would lead to a Greek withdrawal from the EU altogether: the legal debate is complex. This would nevertheless be the absolute worst scenario. A Greek exit from the EU is an outcome no one should want. Whatever the result of the Greek referendum, Europe must not be allowed to self-destruct. The brinkmanship must end, if the 60-year-old project of a peaceful, united Europe is to be pulled back from the brink.