Greece seized by new sense of foreboding as violence flares in streets

Clashes between far-right Golden Dawn and anti-fascists raise fears that crisis has reached new stage

It was not the scene that Greece’s international stewards envisaged when they last visited the country at the epicentre of Europe’s financial mess. When representatives of the ”troika” of creditors arrived in June, book-keeping in Athens had been problem-free and monitors described their inspection tour as ”almost boring”. The great Greek debt crisis, it seemed, had finally gone quiet.

But when mission heads representing the European Union, International Monetary Fund and European Central Bank fly into Athens on Sunday – for the start of a review upon which the future of Greece will hang – what they will find is a country teetering on the edge: its people divided as never before, its mood brittle, its streets the setting for running battles between anti-fascists and neo-Nazis. And unions girding for battle.

After six years of recession, four years of austerity and the biggest financial rescue programme in global history, it is clear that Greeks have moved into another phase, beyond the fear, fatigue and fury engendered by record levels of poverty and unemployment.

Along with the teargas – fired on Monday for the first time in more than a year outside the administrative reform ministry – there is a new sense of foreboding: a belief that they might never be ”saved” and, worse still, could turn against each other.

This week’s murder of the hip-hop artist Pavlos Fyssas by a member of the far-right Golden Dawn party highlighted that fear.

”It really worries me that political passions have got out of control, that they’ve surpassed any notion of common sense,” said Stamatis Stefanakos, gasping for breath after being teargassed at an anti-fascist rally held in Keratsini, the working-class district where Fyssas was stabbed to death late on Tuesday. ”I don’t know how it will happen, or when it will happen, or what course it will take but with mathematical precision there will be an explosion here, of that I am sure.”

Nervy, bespectacled and intense, Stefanakos is, at 41, typical of the new type of activist Greece’s economic crisis has spawned. For the past year the computer scientist has volunteered at food banks and participated in the burgeoning solidarity movement now taking root in local neighbourhoods. He has witnessed, first-hand, the ”quiet desperation” of ordinary Greeks pushed to the brink by draconian cuts, escalating taxes and loss of benefits.

”I can’t just watch my country being destroyed by these policies,” he said. ”Forget about taxes. People can’t even pay their rents. When you have a society under such pressure anything could happen, even civil war.”

Greek officials make no secret of the fact they are investing hope in Germany, the main provider of bailout funds to date. ”After the elections there everything will change,” said one well-placed insider. ”The new government will be able to relax the pressure.” But few are persuaded recovery will be that easy.

With joblessness nudging 28%, Greece’s largest labour union, GSEE, this month predicted it would take at least 20 years before employment returned to pre-crisis levels. Prime minister Antonis Samaras’s fragile coalition hit back, describing the forecast as the ”worst possible scenario, designed to predict catastrophe and create a false impression”.

But in a country which has seen its economy contract by 25% since 2008 – a decline not experienced by any advanced western economy since the 1929 Wall Street crash – it is the union and not the conservative-dominated government which has been proved more accurate in its predictions.

The death of hope that has come with the failure to rein in Greece’s runaway debt – at the start of the crisis it stood at 120% of GDP, now it amounts to 175% – has been compounded by the news that Athens will almost certainly need a third bailout to plug a €11bn (£9.3bn) funding gap over the next two years. Fresh aid is likely to mean more belt-tightening on top of mass lay-offs in the public sector that Athens’s troika of creditors has demanded by the end of the year.

”Had these fiscal policies worked, had they resolved some of the country’s problems, we might be more understanding,” insisted Ermes Kasses, the newly installed head of the civil servants’ union, Adedy. ”Instead the situation has gone from bad to worse and now the troika want our blood. Well, they are not going to get it because we are going to put up the mother of all battles. We know that our enemy is methodical, hard and cold, that what we face is a test of endurance … but we won’t tire, we will go on, we will fight this battle until the government, troika and Europe change these policies.”

The union, which brought the entire civil service to a 48-hour standstill this week, will decide what form further industrial action will take over the weekend. Teachers have already announced five-day rolling strikes to protest against job losses.

Fears are mounting that unless Greece is cut some slack it will tip into the sort of left-right strife that kept the country divided, bloody and poor in the 1940s and internationally isolated during the seven years of military rule that preceded the restoration of democracy in 1974.

No party has profited more from the crisis than the vehemently anti-immigrant Golden Dawn whose insignia resembles the swastika and whose leadership openly admire Adolf Hitler. In the three months since international inspectors last visited Athens, support for the extremist group has jumped from 10% to 15% despite its deliberate attempt to escalate political tensions by targeting leftists.

”Greece today is at the door of the madhouse. Democracy is endangered,” the columnist Panos Amyra warned in the pages of Eleftheros Typos, whose views often reflect those of the governing centre-right New Democracy party. ”If the social tension that has built up is not repulsed it could lead to an uncontrollable situation that will only serve those who have invested in general disorder … [and] the country’s tradition of chaos and raw violence.”

Samaras acknowledged this week that Greece was experiencing an ”extremely critical time”.

Pledging he would not allow the ”descendents of Nazis to poison society”, he appealed to Greeks to remain calm so that they could get on with the business of mending their economy and seeing their ”immense sacrifices” pay off.

The electric atmosphere is not likely to make negotiations with the troika – already being described as the toughest yet – any easier. In addition to mass firings, creditors are demanding the government shuts down loss-making defence and mining companies, presses ahead with controversial privatisations and cracks down on tax avoidance.

Overhanging all of this is the fear that social security funds are on the verge of collapse – a prospect that would mean yet more cuts to pensions. ”Politically and socially, the crisis is only just beginning. It’s going to be a very difficult winter,” said the political commentator Giorgos Kyrtsos. ”With unemployment at such explosive levels it is clear that pension funds are about to cave in.”

Greek politicians liken their position to being at war. Seated behind his ornate wooden desk, under an oil painting of doves flocking around a Greek flag, the health minister Adonis Georgiadis spiritedly conveys the dilemma.

He doesn’t want anyone to think that Athens is unwilling to keep its side of the deal. And perhaps to make the point a sign emblazoned with the words Pacta Sunt Servanda (agreements must be kept) also hangs above his head. But there are limits. His own budget, he says, has been cut by 50% – losses that have prompted concerns Greece is now heading for a public health disaster.

”We are ready to enact all the reforms that are needed but there is not one single member of our parliament who would vote for further measures that would destroy our society,” he said. ”The last three years have been really very difficult, maybe the most difficult our country [has endured] since world war two … now we have to give Greeks hope. Morale is a very big thing in battle.” It was imperative that hope was given to the young because with youth unemployment at 65% it was they who were flocking to Golden Dawn, he said.

Four years of relentless cost-cutting has not been without result. Greece has balanced its budget to the point it is now on track to achieving a primary budget surplus once debt repayments are made. That, says Samaras, will allow it to return to markets and relinquish dependence on international aid.

”Politically it’s the most sensitive time because we are nearing the end of our huge effort and, like athletes in a marathon, the last two to three kilometres are always the most critical,” said Georgiadis.

Greek officials hope that once a new government is installed in Germany, Berlin will also agree to discuss debt forgiveness – widely seen as the only possible way of making Athens’ €321bn debt load sustainable.

But much will depend on political stability and that is far from given.

”Greece’s exit from the crisis is being made much more politically difficult and socially painful than is needed,” said Prof Kevin Featherstone, director of the London School of Economics Hellenic Observatory. ”The spread and depth of austerity that lenders have insisted on has been much too severe. There has been success, but success at what price? If this is success, who wants to be rescued like this?”