Perhaps more so than any other country, Greece was slammed by the 2009 financial crisis and has since fallen into a deep depression. Years of overspending, an increasingly uncompetitive economy, and massive obligations to pensioners all collided at a moment when the world’s economy was on the verge of melting down. In the aftermath, Greece garnered headlines due to political instability, protests, and threats to withdraw from the Eurozone. Even in spite of this media coverage, conditions on the ground could potentially be much worse than many people realize.

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Greece’s economy still in free fall

While the rest of Europe has largely stabilized, or at least staunched the bleeding, Greece continues to slip even further into depression. Estimates vary, but many analysts predict that Greece’s economy will contract by about 5 percent through 2013. In 2009, the Greek economy shrank by one percent, by 2010 it shrank another four percent, and in 2011 it shrank by over six percent. When Greece’s bail out and austerity measures were installed, proponents claimed that the economy would be growing by nearly three percent by now. Those economists that were hoping that austerity would spur a turn around in 2012,  were wrong as the economy shrank by an astounding twelve percent.

And this economic decline is having a huge impact on the people of Greece. Sadly, nearly a third of Greek people currently live in poverty and if the economy continues to decline, this number will only increase. Unemployment now rests at some 27 percent and millions of people are working part time jobs while seeking full-time employment. Some two thirds of young Greeks are unemployed, setting dangerous conditions for political instability.

Extremism on the rise

Extreme circumstances often beget extremist parties. The Nazi regime was able to rise in Germany in large part due to tough conditions in the nation during the Great Depression and due to reparations after the conclusion of World War I. Terrorists and extremist parties in the Middle East have used wars, high unemployment, and other conditions to drum up support. Even the United States has seen the rise of both the Tea Party and Occupy movements, though neither party may qualify as “extremist”.

It should come as no surprise then that Greece has seen the rise of extremist parties, the most powerful being the so-called Golden Dawn. The party is an openly fascist party and many party members openly “hail Hitler”. In fact, some members even deny that the Holocaust ever occurred and believe that a Fascist government is the best path forward for Greece. On several occasions, Golden Dawn members, including elected officials, have attacked members of other parties and government officials.

More worrisome, however, is the popularity of Golden Dawn. The party is not a fringe group but instead is currently the third most popular party in Greece. Areas of Athens are now literally under Golden Dawn control and foreigners or immigrants who venture into these areas risk being attacked. If trends continue, there is a serious risk that Golden Dawn will be able to seize the national government and implement its policies and views on the national stage.

Greece: Is a police state emerging?

In response to rising instability and increasingly xenophobic attitudes towards immigrants, police powers have been greatly expanded. New laws now allow the police to stop and search people without any reason or justification. Foreigners and immigrants are especially susceptible to being stopped and searched. There have been numerous instances of tourists visiting the country being stopped and some cases even detained for no apparent reason.

Reports are leaking that immigrants and even Greek citizens are being herded into literal concentration camps. Greek citizens, foreigners, and immigrants who lack the proper paperwork and identification papers are at risk of being seized and sent to said camps. Human rights groups and dissidents claim that people are being denied due process at these camps.

While Greece may not yet be a police state, the police are taking an increasingly hard lined attitude towards dealing with people. Now, protests are increasingly being met with strong-armed police. While expanded police powers may be needed due to unrest in the country, human rights groups are crying foul play and there is a serious risk that the police will overstep their bounds.

Greece: Hope on the horizon?

While there are certainly numerous reasons to be worried, others argue that Greece is beginning to stabilize. The Greek economy most likely will not shrink as much this year as in previous years and yields on government loans are dropping. Talk of a Greek exit from the Eurozone is cooling, and the ruling coalition remains popular. The Greek government has even exceeded deficit targets and accordingly the European Union has  changed its tone from harsh scolding to moderate praise for the Greek government.

Some businesses are also seeing increased interest and activity. In some places, construction and work on new projects is beginning to resume. Meanwhile, economic sentiment figures are at five year highs and protests are not as widespread or forceful as before. The European Union is also moderating its talk of austerity and lenders are showing increased confidence in the situation on the ground. Some even believe that Greece could see low levels of economic growth in 2014.

Whether or not the sense of optimism can hold, and even grow, however remains to be seen.