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ATHENS Two leaders. They do not know each other well. They find themselves locked in a high-stakes game. They sit on opposite sides of the table. The outcome of the game is so important that the US president calls. The IMF and EU are involved, but some of the key moves will be made by George and Angela. One is George Papandreou, the Prime Minister of Greece. The other is Angela Merkel, the German Chancellor.

George has power in his blood. It's the family business. Angela has earned nothing by right. She is the analyser. She is unemotional. She watches, she listens and then decides. She is cautious by nature, unimpressed by the peacockery of male leaders. She does not like cheats.

At the outset George was open about the Greek accounts. The books had been cooked. Angela liked his candour. George began a little belt-tightening. Public sector wages were cut. He promised that this year the deficit would be reduced by 4%. It convinced a few EU officials, but not the financial markets and certainly not Angela. She wanted much more. In her corner she had the German people; they had not joined the euro to bail out cheats.

So round after round they eyed each other. As the cost of borrowing increased for Greece George played his club card. They were all in the European family together. He waved the flag of European solidarity, guessing correctly that others , particularly EU officials, would come to his side. He was after a big loan that would persuade the financial markers to back off. Angela didn't buy into this. Greece had to do more.

George grew impatient and threatened to go to the IMF. He gambled that European officials would panic; they hated the idea of outsiders being called in to put out the fires within. Angela called his bluff. Go right ahead, she said, call in the IMF.

Sometimes George played defence. His hands were tied. He pointed to unrest on the streets. The Greeks couldn't take any more austerity. The anarchists were at the gates of the finance ministry.

But Angela had her crowd too: 65% of her people would prefer Greece to leave the club altogether. Show them the door. They broke the rules.

So the two leaders stared each other down and the financial markets sniffed a stalemate. All the time the cost of financing Greek debt was rising. George was begging to be rescued. This time other eurozone countries were with him. Angela was stony-faced. The outsiders were putting the squeeze on her. Sometimes EU officials would announce deal done. Angela refused to unlock the funds and the deal evaporated.

"If you think we're going to play paymaster you're wrong" was Angela's line. She hinted at new rules, even treaty changes. The serial offenders would be kicked out. The euro officials gasped. Angela was playing the Iron Lady. A new Germany was emerging that put national interest above being "good Europeans".

This was not just the biggest crisis to have faced the euro, it hinted at deeper, more fundamental crises within the EU.

Angela just didn't buy into George's world. She suspected that once the pressure was off the Greeks would be back to their old ways. The phoney receipts. The tax evasion. The black economy. The pay-offs. The back-handers . Time and again George insisted he could not do more. The people would not accept it. Angela did not blink. She wanted a convincing programme of reform. She had grown up in former communist East Germany and knew about nations paying a price.

George, however, understood the end game was close. Greece was effectively shut out of the bond market. The moment of default was approaching. The debt could not be serviced in May. He sensed his moment. This crisis was not about Greece. It was about the euro, the single currency, the European dream. Europe feared contagion, that the debt crisis would spread. It all strengthened George's hand. The Greek economy made up only 2.6% of the eurozone's GDP, but in effect Greece was too big to fail. George had the best cards. The worse it got the greater the pressure on Angela. She had resisted a bail-out. Then her ground shifted. If Greece was to be helped then it would have to be at commercial rates. She had drawn her line, but she was in retreat.

Then a wild card put the game George's way. A ratings agency downgraded Greece's credit to junk. The Greek debt crisis had become a full-blown financial hurricane. It risked the stability of the euro and Angela's bluff was called. She had to defend the currency that Germany used. Initially Germany, as the biggest contributor, was going to lend Greece 8bn euros (£7bn). Within days Germany was in for more than 20bn euros.

The game, however, was not quite over. Angela had wanted the IMF involved. She guessed that they would insist on harsher terms in exchange for a massive rescue package. She was right. The loans will be made every quarter and Greece's books will be examined. Any back-sliding on reducing the deficit and Greece could face sanctions. Contained in the deal is an attempt to restructure the Greek economy. If Greece is to compete in the future it has to change and become more competitive. .

So the package is harsh - harsh enough for Angela to defend it to her people. George might have got the money, he might have staved off bankruptcy, but he has to extract £26bn worth of cuts in three years. His battles will now be fought out on the streets. The IMF negotiator casually mentioned yesterday that "the need for deeper cuts could not be ruled out".

For Angela, she got the best deal she could. She has made it clear this rescue plan is not a blueprint for helping other countries that get into difficulty. Around her are people who suspect Greece won't be able to pay the money back. Despite the bail-out, it is hard to see how the Greek economy will grow. So down the road . The more the Germans are asked to bail-out others, the more they will question the club they belong to. So George won the first round. Angela and most European officials know a breathing space has been bought. That is all.

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