Last week a bomb went off in a government building in Athens. The ironies were deep and painful. The target was the Minister for the Protection of the Citizenry, one Michalis Chrysochoidis, who shares the building with one of Greece’s top secret intelligence agencies. It was a simple but powerful parcel bomb that was sent through the post. It was delivered incorrectly and sat on a desk in an adjacent building for two days, without being either X-rayed or sniffed by dogs. It went off when a 52-year-old government clerk opened it (working late at 8.30pm) and killed him instantly. No one knows who sent it yet, but doubtless an anarchist group will soon fess up to the outrage.

Greece needs more than a little bit of help from the gods on Olympos to defeat the much more determined inflation hawks now running (or maybe ruining) Europe’s “recovery”. It’s a tricky one. Is Greece a basket case dragging the entire community down, or just the worst case of a general problem? Or are the bastards using the crisis as an excuse to cuts swathes through the public sector?

While we think about all that, the government of George Papandreou is doing its best to align Greece with the rest of the EU by lifting the retirement age to 60 (from 53) and cutting pensioners’ “privileges” and payouts. Tax evaders great and small are to be fined or jailed (nobody is sure who will get hammered first) but aside from the good intentions and the need for “reform”, the economy is expected to shrink by 4% in 2010. The IMF and the EU still want Greece government revenues ramped to €90 billion-plus this year — up by €5 billion on last year (the EU’s rep has first to give the OK to details of the changes before the Greek parliament gets to vote on them).

A public issue opinion poll in early June said 80% are pessimistic that the future will be worse. And that social unrest is inevitable as reforms bite to the bone. Not that the police aren’t ready. Last Saturday in Ermou street (equivalent of Bourke Street or Pitt Street malls) they were very efficiently and firmly moving West African street traders right along.

But unemployment is approaching 12% and the outlook for work in that perennial Greek standby tourism is looking bleak. You might think northern Europeans would be flocking here for cheap accommodation and budget al fresco dining on thrilling beaches offered at throwaway rates by desperate hotel and taverna operators. Let me know if you hear of one: most things are more expensive here now than two years ago and here, on one of the islands hardest hit by the slump, the charter flights from Manchester or Gatwick few and far between.

Poms aside, visitor numbers are down 30% (since the late 1990s tourism has been declining annually — the Olympics of 2004 did nothing to reverse the trend, a syndrome Australia knows all about) but no one will seeing commercials for luxury Aegean hideaways at bargain prices — the Greek government already owes foreign media €100 million in billings for advertising space already used. Similar syndrome but more serious effects: public hospitals can’t pay the €5 billion they owe to suppliers for medical equipment and pharmaceuticals and are in danger running out completely because they can’t get any more credit. If that means body bags, expect more of the anti-social unrest that scared off the holidaymakers in the first place.

In May the annual inflation rate jumped to a 13-year high of 5.4%, mostly bumped by tax hikes on fuel, fags, booze and real estate. Even the consumption of the beloved national tipple ouzo has toppled by 30%. Or as Kathimerini innocently put it, the booze industry already has a “liquidity crisis” — sellers have to pay alcohol tax to the government within 30 days. This could shut down 80-plus distilleries nationwide. Now that really is cutting to the bone. The distillers claim that the government is going to get less in tax because of the tax hike. A familiar bleat but there’s some truth in it.

But the tourism slump is serious. All over the walls of the residential lanes above the trinket shops of the Plaka in Athens — nestled beneath the historic Parthenon atop the sacred Acropolis (sorry but that’s what it says) — there are grim graffiti slogans, many in English, warning that “Athens Burns” and although Greeks aren’t willing it, they are uneasy. Temperatures on the mainland reached an unseasonal 40° in the first week of June, so if firebugs are on the loose this year it could be a very hard, hot summer.

The government is more worried about people spreading false rumours — one, especially common and dangerous, that Papandreou has ordered a massive supply of drachma to be printed for the day when Greece decides to abandon the euro so it can devalue its way out of trouble. Lies, of course. But MPs on all sides are worried and last week the opposition New Democracy Party’s finance spokesman Kostis Hadjidakis gave the situation a nice Homeric twist when he said all the cuts and reforms must to be taken seriously by everyone because Greece has been “condemned to succeed”.

However, there is a ship of splendour on the horizon, maybe already in the harbour. The Chinese are coming to the rescue. Vice-premier Zhang Dejiang was in Athens last week promising government and business leaders he would instruct strong Chinese companies to invest in Greek industry, which, surprisingly still includes shipbuilding. Greece still has the world’s second biggest shipping fleet and 16 Greeks are in the world’s top 100 shipowners. Could they be the guys who’ll end up in jail for tax evasion? Some chance. Anyway, one (hopefully strong) Chinese company has signed to co-develop a tower block in Piraeus into just what they need — another luxury hotel and shopping mall.

Peter Fray

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