KEY POINTS:
Winston Peters has to be brought to his senses. So the Prime Minister has been holding the smelling salts under his nose. Judging from yesterday's angry press conference, they are taking some time to work.
Trying to bring Peters back into the real world - rather than the fantasy world he has been inhabiting for the past fortnight - is not an act of kindness. It is an act of necessity to stop NZ First's downward spiral taking Labour with it.
Helen Clark has gone out on a limb for Peters this week at no inconsiderable risk to her own reputation. But her assistance comes with strict conditions attached.
She does not want to sack her Foreign Minister. She does not want to upset the warm relations between Labour and NZ First. But she has given her warning. When it comes to NZ First and political donations, she has taken Peters on his word that he has done nothing illegal. What is left unspoken is that that assurance had better stack up - and keep stacking up. Otherwise, she will have to ditch him from her ministry.
This time Peters' usual response to crisis - the bluster, the diversions, the smokescreens and games over semantics - are not going to suffice.
He may have long been able to fool some of the people all of the time and some people part of the time. But he sure isn't going to fool Helen Clark at any time. If he tries, the executioner's block has already been readied.
That is why Peters' press conference yesterday after he returned from abroad needed to properly address the allegations about NZ First's mishandling of some large contributions from wealthy corporate donors, rather than leaving things hanging, and not least to also ensure they do not overshadow this weekend's visit by US Secretary of State Condoleezza Rice. It didn't.
But Clark holds all the cards, not Peters. Were she to sack him, Peters technically could pull NZ First out of its support arrangement with Labour. But the only loser from that would be NZ First. Jumping ship would make it look like NZ First put Peters' ego ahead of stable Government. It would demonstrate that NZ First can never be trusted to stay the course. It would be electoral suicide.
The minority Government might not collapse. There is an Appropriation Bill that needs NZ First's backing to pass. But even were NZ First to head for the Opposition lobbies out of spite, the Greens might be willing to back what is essentially a machinery bill so the Government survived the couple of months until Parliament rises for the election.
So Peters really has little choice but to follow Clark's advice. Her concern is strictly limited to legality, however. NZ First's morality is another matter. And here Peters' troubles are just beginning.
Cocooned in a meeting of Asian foreign ministers in Singapore, his initial response to this week's allegations was to miss their real significance.
Regardless of whether the allegations about where the money ended up and how it was used are true or not, there is no argument that NZ First was the recipient of large sums of cash from some big corporate names.
Furthermore, those donations were made in a fashion to avoid laws on their public disclosure.
For years, Peters has railed against the influence of big business on the two major parties. Only weeks ago he was labelling National's acceptance of such donations as "venal". The difference now between National and NZ First is that National did not pretend to be virtuous.
Worse, this week's allegations surfaced just days after Peters had been severely embarrassed by his lawyer finally telling him a $100,000 donation had been received from wealthy expatriate Owen Glenn despite his earlier assurance to the contrary.
If that assurance turned out to be wrong, people will ask themselves whether Peters' subsequent assurances are any more reliable.
His most ardent supporters will explain all this away as further evidence of the conspiracy he claims is being driven by the political establishment to rid politics of him once and for all.
But there is now a credibility gulf between them and those voters who still want to believe Peters is different from other politicians. These are the people he must win over in the election campaign if NZ First is to survive as a parliamentary party. They must now be having a crisis of confidence in him.
Were Peters one of Labour's ministers, Clark would have had her own crisis of confidence and he would have been temporarily stood down while an inquiry was held.
His status as the leader of a support party offers him more protection. Even so, Clark has carefully worked herself into a position where she can largely dictate what might or might not happen to him. But for how long?
The breathtakingly long list of accusations and allegations now hounding Peters combined with yesterday's feeble attempt to brush them all aside mean his assurances of no wrongdoing might not be enough to save him.
In the past week, he or his party have been accused of flouting rules covering ministers' acceptance of gifts, failing to declare a pecuniary interest, soliciting and accepting large secret donations from business figures, ensuring those donations were structured so they did not have to be disclosed to the Electoral Commission and disguising them in a trust which was not disclosed.
Then there are the questions over whether some donations actually ended up in the party's accounts.
Under parliamentary privilege, MPs have questioned whether some donations influenced Peters' decisions as Minister of Racing.
Clark has treated these allegations as what they are - allegations - rather than a reason to stand him down. However, events could quickly shift beyond her control.
Peters faces a possible hearing by Parliament's privileges committee and possible investigation by the Auditor-General and other Government agencies, such as Inland Revenue.
With more revelations expected to flow from the Dominion Post's investigation into NZ First, a tipping point could be reached where Peters is simply too compromised to carry on.
However, nothing will happen to him until he has waved goodbye to Rice after tomorrow's Pacific leaders' summit in Samoa. In the interim, Clark will quietly be taking soundings and weighing up how much public opinion is shifting against Peters, while probably mulling over whether an independent but tightly-focused inquiry is needed.
If he has to go, he will have to go. On yesterday's evidence, he will not go quietly. But there are no surprises in that.
