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He characterizes Greece's banking sector as being "basically sound" and "in considerably better condition" than those in other EU countries and in the United States. He notes that Greece was the first EU country to provide a government guarantee for personal savings up to a total of €100,000.

now the European Commission has instigated disciplinary proceedings, because Athens has exceeded the euro zone budget deficit limit of 3 percent for the third time in a row. The results of audits carried out by Brussels look very different from the information in Livadas's glossy brochures. In EU statistics, Greek government debt is listed as amounting to 94 percent of the country's gross domestic product. Italy is the only other euro zone country which has a higher level of government debt. Greece also has the lowest credit rating of all the euro zone countries. It has to finance its government debt under terms which are worse than for any other euro zone country, with the exception of Malta.

Educated young people from the middle class have little prospect of finding employment, despite being well qualified, and are forced to take casual jobs to make ends meet. As a result, many young Greeks are forced to live with their parents until they are well past the age of 30. The anger of the "€700 generation" -- as the young people are known -- over their situation exploded last December in weeks of rioting throughout the country.

Georgios Provopoulos, the governor of the Bank of Greece, the nation's central bank, warned his countrymen against "self-satisfaction" and spoke of a looming danger of national bankruptcy. And Greece has still to feel the full effects of the global recession.

"The negative factors you see here are all leftovers from the past," says one EU diplomat, adding that most of them are homegrown. Economic experts are anxiously waiting to see what's going to happen this summer. They fear there could be a decline in the tourism sector, one of the most important pillars of growth in the Greek economy, accounting for 17 percent of gross domestic product. The volume of tourist bookings from the United States is reported to have dropped by up to 50 percent. The number of British vacationers, some 3 million annually in the past, alongside 2.3 million Germans, is expected to shrink by up to 30 percent.

The situation of banks that invested in Eastern Europe and in the Balkans is uncertain. Greek financial institutions invested billions of euros in bank takeovers or in setting up their own branches in Romania, Bulgaria, and Serbia. Given that the value of the national currencies in some of those countries has fallen dramatically, what were originally seen as attractive investments in developing economies could well turn out to be huge losses.

That's what the crisis looks like in Greece. "Nobody wants to see it, but everybody is afraid of it," says Kalliope Amyg, a young political scientist. "The country is dancing on a volcano."

The findings of other intelligence agencies in the Middle East also indicate that Iran is sending weapons and explosives to Hezbollah in Lebanon and to the Palestinian radical group Hamas, which controls the Gaza Strip. The latest indication of this kind of support came with a failed attack on a shopping center in the Israeli port of Haifa on Sunday, March 22. Security forces managed to disable several dozen kilograms of explosives that had been loaded into a car parked outside the mall. Both Palestinian and Israeli experts who cooperated on the case believe that the attempted attack was the work of Iranian-backed Hezbollah.

Meanwhile, the Israelis have carried out aerial attacks in Sudan in an attempt to halt the delivery of weapons to Hamas -- including rockets with a range of 70 kilometers, far enough to reach Tel Aviv from the Gaza Strip. The Israeli Air Force bombed a convoy of 17 trucks travelling through the Sudanese desert which were attempting to deliver weapons to Gaza via Egypt. The two bombing raids in January and February killed more than 30 people, including Sudanese, Ethiopians and Eritreans. Last Thursday a Sudanese government official confirmed the attacks took place and on Friday the New York Times quoted unnamed US officials saying Israeli warplanes had attacked the convoy.

The level to which Iran is intervening politically in the region is made evident by the failure of attempts so far to achieve reconciliation between the rival Palestinian factions.

Sources close to the Egyptian mediation efforts say that an agreement between the two sides has been tentatively close on several occasions. There had even been a deal to release 450 Palestinian prisoners in Israeli jails in exchange for the Israeli soldier Gilad Shalit who is being held hostage by Hamas. However, even the veteran Egyptian mediators had underestimated Iran's influence.

Khaled Mashaal is regarded as Tehran's man in Hamas. The politburo chief lives in exile in Damascus but in recent months he has been frequently on the move, with Iran one of his most important destinations. Many Fatah officials, such as Ibrahim Abu al-Nasha from Gaza City who has known Mashaal for over 30 years, are convinced that the Hamas leader allowed the talks to fail under pressure from Tehran.