Greek jobless and pensioners can't endure much more

It is 11pm. A group of men and women, obviously foreign, descend from a bus that has dropped them off at the lower end of Syntagma Square, the plaza that faces the Greek Parliament.

They walk past a man curled in a fetal position at the top of Ermou, a pedestrian street that leads off the square. They pass another slumped across a cardboard sheet, his head in his hands, then a tousle-haired immigrant, arms outstretched, as he murmurs: "Mr, Mr, euro, Mr."

But the men and women don't look. They walk on cheerily chatting towards their hotel.

The group, a team of technical experts mostly from the EU, are in Greece to monitor the state of its debt-stricken economy - and after several days poring over ministerial figures they know how dire the situation is.

They also know that on the ground things will get a lot worse when their bosses at the EU, the International Monetary Fund and the European Central Bank (the "troika") fly into Athens on Thursday to formally approve a new wave of recession-inducing austerity in return for aid.

Amid feverish speculation that Greece is on the brink of default, 16 months after it received the biggest bailout in Western history, the country was the focus of talks at the IMF's annual meeting at the weekend.

There are few who do not believe that time is running out to solve a crisis that began beneath the Acropolis two years ago but, with markets far from appeased, now threatens the global economy.

Surviving on rescue loans from its "troika" of lenders, the beleaguered Greek Government is between a rock and a hard place, under immense pressure to make radical reforms in exchange for support, but also pressured by a populace exhausted by the measures.

"Europe's politicians have persistently been behind the curve. They have made the situation much worse with their policy u-turns, conflicting messages, half-hearted measures and piecemeal approach" said Yannis Caloghirou, an economics professor at the National Technical University of Athens.

"The lost time has produced a lot of uncertainty, which has created a lot of fear. For the first time in decades, people are really frightened."

In Athens, panic is sketched not only on the faces of those who have become increasingly impoverished by the cost-cutting policies the socialist Government has been forced to apply. Last week, as officials announced yet more "shock and awe" measures - job losses, tax hikes and pension cuts in a desperate bid to trim the bloated public sector and secure enough cash to cover public sector wages and pensions - panic was heard in the voices of the ruling elite.

"People justifiably think the crisis is what we're going through now: cuts in wages, pensions and incomes, fewer prospects for the young," said the Greek Finance Minister Evangelos Venizelos, looking drained as he responded to the uproar over the measures. "Unfortunately, this isn't the crisis. This is an attempt, a difficult attempt, to protect ourselves from crisis. Because the crisis will be [Greece following] Argentina: the complete collapse of the economy, institutions, the social fabric and the country's productive base."

With Athens confronting a debt load of €360 billion ($626 billion) - five times the size of Argentina's US$95 billion default in 2001 - there was, he said, little choice.

Faced with crippling sovereign default, the Government had to take an axe to the profligate public sector, whose 800,000 employees more than anyone have borne the brunt of the crisis.

The alternative, said Venizelos, was too awful to contemplate: deeper recession, political turmoil and the collapse of the banking system. And worse still, the country's expulsion from the EU.

But after two rescue packages worth €210 billion, and belt-tightening that has seen the income of the average household drop by 50 per cent, the appetite of Greeks for more measures is clearly running out.

Greece's great economic crisis has been a gradual war of attrition.

Job losses, tax increases and galloping inflation have sapped the nation's energy and, increasingly, Greeks no longer believe what their politicians say. With cuts instead being blamed for slashing consumption, deepening recession and missing deficit-reducing goals, austerity is seen as a pointless exercise that far from freeing the country from crisis has exacerbated its plight.

On the street the view is hardening that the medicine prescribed to rescue Greece's economy is simply not viable.

"The belt is now at the eighth notch, it's become so tight there are only two more left, but nothing has improved," said Georgios Valsamis, a young taxi driver who joined a barrage of strikes that brought public transport to a halt last week.

"People in power, MPs, they're like robots, they do whatever those foreigners [the EU, ECB and IMF] say. We are no longer willing to be a laboratory for failed policies. Low-income earners, those who have been really hit, can't endure much more."

For pensioners forced to survive on less than €500 a month and families hit by unemployment that has reached a record 16 per cent, there is no more room for manoeuvre. The death of faith in the future is the biggest fear.

And a new underclass has appeared: in the homeless and hungry who roam the streets; in the spiralling number of drug addicts; and in the psychiatric patients ejected from broke institutions.

- OBSERVER