After five months of tense, often nasty negotiations, Greece’s 40-year old Prime Minister Alexis Tsipras put forth an 11th hour package aimed avoiding a financial “accident”. The effort proved divisive, by alienating both his creditors and the left wing of the Syriza party.

In the initial proposal, a number of so called politically sensitive “red-lines” were crossed — the pension retirement age raised to 67, the primary surplus requirements massaged to what he saw as more realistic levels and VAT rates escalated for some services to up to 23 per cent.

At the start of the emergency meeting in Brussels this week, Tsipras said he was after “substantial and viable solutions that would allow Greeks to come back to growth”. Investors were forced to ride a rollercoaster of emotions and were too caught up in the drama of hallway comments and Twitter messages to see that a recipe for growth remains absent from the European Union’s collective vernacular.

With so much uncertainty, Greece contracted again in the first quarter, at -0.2 per cent. Business leaders I spoke to in Athens while all this played out said that the downturn will get much worse in the second half of this year as a result of the uncertainty and new tax measures drafted in an attempt to appease both creditors and left-leaning supporters.

To close a revenue gap, Tsipras and his vocal Finance Minister Yanis Varoufakis have already put forth higher retroactive corporate tax rates. So those who have money will likely make a shift where possible outside of Greece not knowing what is coming down the policy pipeline.

Months of debate and quite bellicose public exchanges on both sides led to capital flight of $40 billion in the first four months of the year, peaking at nearly $7 billion a week ahead of the emergency summit.

But the giant elephant in the room clearly remains Greece’s long-term debt, which has skyrocketed under the Troika’s austerity plan. From an already weighty 112 per cent of GDP back in 2009, Greece is now burdened with the highest in the industrialised world, at 175 per cent.

German Chancellor Angela Merkel told me on a panel at the St. Petersburg International Economic Forum exactly two years ago that it was vital for Greece to pass through a period of consolidation and deliver deep economic reforms. But she said with confidence that it would lead to the holy grail of growth when the process was all said and done.

Quite the opposite has transpired on Europe’s southern flank. Unemployment hit 26.6 per cent in the first quarter — the highest in Europe and well above the jobless rate for countries of the Arab Spring which have also gone through four painful years of uncertainty. As another chief executive in Greece suggested, the “debt is like a long shadow” that lurks over our country — despite efforts to stretch out payments and ease terms for decades to come. There is a new terminology that has emerged over the past month as a result of this debt trap, called “round tripping”. Whatever money Greece borrows from the Troika mainly goes back to those institutions to pay interest on debt that was moved from the private sector to the balance-sheets of the EU and the ECB.

A number of studies — including one from the Jubilee Debt Campaign — suggest that 80-90 per cent of the $285 billion in bailout funds actually went to pay off the debt of European banks, mainly held by Greek, German and French financial institutions. While there is a tiny minority of European economists speaking out against the debt package and in favour of more discipline imposed on Greece, there has been a chorus of well-known US economists — including Nobel Laureates Joseph Stieglitz and Paul Krugman — who have said that austerity certainly will not lead to prosperity.

Former US Treasury Secretary Lawrence Summers expressed a similar view on CNN during the heat of the EU’s emergency meeting. “There has to be a balancing of Greek measures with strong support from the outside. That means recognising the unsustainability of Greece’s debts,” said the Harvard economist.

The numbers back up what those in support of debt reduction are saying. Greece’s economy shrank by $100 billion from a peak of $314 billion only six years ago. The average Greek worker has seen per capita GDP fall by a full $10,000 in that time frame. But expect the Troika to delay any action on debt before 2016. A decision at this stage will have to wait until after Spain’s national elections in November.

Prime Minister Mariano Rajoy will not accept a special deal for Athens after the strong showing by the anti-austerity party Podemos in May’s local elections.

Tsipras rose to power promising to ease the burden of austerity, it looks like his only aim at this juncture is avoiding a default on debt, not cutting it.

The writer is CNN’s Emerging Markets Editor.