Each evening, as darkness descends on Athens, police in riot gear wait in buses that line the side streets of the city centre. Some fidget with mobile phones, others stare into the night. What they are waiting for, nobody is sure. But everyone in the Greek capital agrees something could happen any time.
A year after agreeing a €110bn European Union and International Monetary Fund bail-out and economic reform plan, times are hard. Greece is in deep recession: its economy contracted by 4.5 per cent last year; a further 3 per cent fall is expected in 2011. The capital's boarded-up shops and piles of uncollected rubbish testify to the scale of the economic shock and the angry mood of trade unionists.
Beyond Greece, fears are intensifying that the socialist government of George Papandreou –scion of a family that produced two previous left-of-centre prime ministers –will fail to modernise the country's sclerotic economy, or even bring it close to rivalling European peers.
If Mr Papandreou fails, policymakers in other European capitals and Washington will face a dilemma –whether to give Greece another chance or let the country fall into the abyss of default, with potentially devastating consequences on financial systems and economic confidence across the eurozone. The risk premium demanded on Greek debt by international investors has rocketed. Greece's banks are scurrying to shore up their finances.
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