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(Reuters) - Arm raised in a Nazi-style salute, the leader of Greece’s fastest-rising political party surveyed hundreds of young men in black T-shirts as they exploded into cheers. Their battle cry reverberated through the night: Blood! Honour! Golden Dawn!

"We may sometimes raise our hand this way, but these hands are clean, not dirty. They haven’t stolen," shouted Nikolaos Mihaloliakos as he stood, floodlit, in front of about 2,000 diehard party followers filling an open-air amphitheatre at Goudi park, a former military camp near Athens.

"We were dozens, then a few hundred. Now we’re thousands and it’s only the beginning," cried the leader of Golden Dawn, a far-right party that is seeing its support soar amid Greece’s economic collapse. Last month’s rally revealed the party, which describes itself as nationalist and pledges to expel all illegal foreigners, has a new-found sense of triumph, even a swagger, that some find menacing.

Riding a wave of public anger at corrupt politicians, austerity and illegal immigration, Golden Dawn has seen its popularity double in a few months. A survey by VPRC, an independent polling company, put the party’s support at 14 percent in October, compared with the seven percent it won in June’s election.

Political analysts see no immediate halt to its meteoric ascent. They warn that Golden Dawn, which denies being neo-Nazi despite openly adopting similar ideology and symbols, may lure as many as one in three Greek voters.

"As long as the political system doesn’t change and doesn’t put an end to corruption, this phenomenon will not be stemmed," said Costas Panagopoulos, chief of ALCO, another independent polling company. "Golden Dawn can potentially tap up to 30 percent of voters."

The party now lies third in the polls, behind conservative New Democracy and the main opposition, the radical leftist Syriza. Violent behavior by Golden Dawn members, who often stroll through run-down Athens neighborhoods harassing immigrants, seems to boost rather than hurt the party’s standing.

As the government imposes yet more austerity on an enraged public, the collapse of the ruling conservative-leftist coalition remains on the political horizon. The possibility that Golden Dawn could capture second place in a snap election is slim but real, say pollsters.

Analysts believe that, ultimately, the party lacks the broad appeal and structure needed to gain mass traction. In World War Two Greece suffered massacres and famine in its fight against the Nazis, and the spectre of the 1967-1974 military junta still hangs heavy over its modern politics. So why are many Greeks now turning to a party whose emblems and rhetoric, critics say, resemble Hitler’s?

Golden Dawn denies any such resemblance. In an interview with Reuters at an open-air cafe in the Athens district of Papagou, a traditional neighbourhood for military personnel, Ilias Panagiotaros, a Golden Dawn lawmaker and spokesman, explained the party’s appeal. “Golden Dawn is the only institution in this country that works. Everything else has stopped working or is partially working,” he said.

"We operate like a well-organized army unit, because the military is the best institution in any country." Greece’s far-right party goes on the offensive (PDF) link.reuters.com/rut83t > Greece’s other debt problem (PDF) link.reuters.com/ryq82t

Short, squat and combative, Mihaloliakos once praised Hitler and denied the Nazi gas chambers existed. A former special forces commando in the Greek army, he met the leaders of the Greek military junta while in prison for carrying illegal weapons and explosives as a member of a far-right group in 1979.

When pressed on such issues, Golden Dawn says they are all in the past and it is looking to the future.

For years after Mihaloliakos founded the party in 1985 it remained marginal: in the 2009 elections Golden Dawn won just 0.29 percent of the vote, or fewer than 20,000 votes. Yet in June, the party amassed votes from across the political spectrum, wiping out the more moderate nationalist LAOS party and winning support from as far left as the communist KKE party, pollsters said.

Now it is stealing votes from New Democracy, which flip-flopped on the international bailout keeping Greece afloat and, after coming to power, imposed harsh cuts instead of relief measures. Though Golden Dawn attracts mainly urban male voters up to 35 years old, the party is also gaining its share of women and the elderly, primarily those suffering unemployment or falling living standards, say pollsters.

Part of its appeal is down to the sort of welfare work that Hamas, the Palestinian party, does in Gaza. Golden Dawn distributes food in poor neighborhoods, helps old ladies get money safely from ATMs - and has also set up a Greeks-only blood bank.

A short film showed highlights of the year, which included attacks on immigrant street vendors, clashes with police outside parliament and food distribution to the poor. When the film showed Golden Dawn lawmaker Ilias Kasidiaris slapping a female communist lawmaker, Liana Kanelli, across the face on live TV, youths bellowed profanities against the victim.

"Golden Dawn’s target is simple. We want the absolute majority in parliament so we can replace the constitution with our own," Kasidiaris told the crowd. “It will then be easy to immediately arrest and deport all illegal immigrants.”

Pollsters were ready to write off the party when Kasidiaris slapped Kanelli after she swatted him with some papers during a dispute he was having with a Syriza lawmaker. Kasidiaris says he was defending himself; Kanelli says she was coming to the aid of the Syriza lawmaker after Kasidiaris had thrown water at her.

Painting Golden Dawn as an aberration stemming from the financial crisis, pollsters said the party’s support would dwindle. The opposite happened - the party gained 3 to 4 percentage points in polls as a direct result of the Kasidiaris incident.

In parliament Golden Dawn’s 18 lawmakers cluster in a rear corner of the marble-covered hall, but make no attempt to hide their ideology. Recently, Panagiotaros asked the welfare ministry to find out which babies admitted to state day-care centers were actually Greek. Eleni Zaroulia, wife of party leader Mihaloliakos and also a lawmaker, described immigrants as “every sort of sub-human who invades our country carrying all sorts of diseases.”

Artemis Matthaiopoulos, another Golden Dawn lawmaker, was formerly the bassist for a heavy metal band called Pogrom, which produced songs such as “Speak Greek or Die” and “Auschwitz”.

Rights groups say racist attacks in Greece have been surging, but that many immigrants are reluctant to report them because of their illegal status or mistrust of the police.

Like other victims, he accuses Greek police of supporting Golden Dawn and hindering immigrants in reporting attacks. In a July report, advocacy group Human Rights Watch said gangs of Greeks were regularly attacking immigrants with impunity and authorities were ignoring victims or discouraging them from filing complaints.

Greek police deny accusations they are soft on, or even sometimes work with, Golden Dawn. Public Order Minister Nikos Dendias has vehemently denied reports that police were beating up illegal immigrants and has threatened to sue British newspaper The Guardian over the issue. He is at such odds with Golden Dawn that the party ridiculed him during the youth festival at Goudi park.

But a member of the police officers’ union, speaking to Reuters on condition of anonymity, admitted there was some sympathy for the party among the ranks. “There are some among the police who ideologically support Golden Dawn and a handful that have been violent against illegal immigrants,” the unionist said. “But these cases are being probed by justice.”

H/T: Reuters

BERLIN — Eurozone countries extended Sunday a hand of compromise to Greece after the victory of parties supporting the country’s international bailout, signalling some flexibility on the painful reforms.

“There can’t be substantial changes in the engagements” undertaken by Greece in the bailout deal. “But I can imagine we discuss again a delay” in achieving the targets, he said on Germany’s ARD public television.

The job, spending and wage cuts required under the 130 billion euro ($165 billion) bailout were a key issue among voters in Sunday’s Greek parliamentary election, with all parties calling for a relaxation of the terms if not outright cancellation of the deal.

Germany has been one of the most hardline eurozone nations and insisted that Greeks have to implement the agreed deal if they want the bailout funds needed to keep the country from going bankrupt and possibly exiting the euro.

French Finance Minister Pierre Moscovici said eurozone finance ministers would soon release a statement on how they will approach the situation in Greece.

German Finance Minister Wolfgang Schäuble called the results a “decision by Greek voters to forge ahead with the implementation of far-reaching economic and fiscal reforms in the country.”

But Belgium’s Foreign Minister Didier Reynders said that there is “room for maneouvre” on the time Greece needs to deliver on bailout commitments.

New Democracy party won the election and will be able to form a pro-bailout majority with the socialist PASOK party.

But even New Democracy chief Antonis Samaras has called for the terms of the bailout deal to be revised.

Revising the deal doesn’t come without risks to the eurozone however. Too much flexibility risks calling the Eurozone’s credibility on seeing painful but necessary reforms being carried through.

Too much flexibility also risks provoking calls for leniency from Ireland and Portugal, which are struggling to implement austerity policies.

The anti-austerity leftist Syriza party, which placed second, had vowed to tear up he European Union and the International Monetary Fund bailout deal that has given Greece a credit lifeline in exchange for harsh spending cuts.

“There is no other road but reforms,” said Westerwelle.

However there appears to be greater appreciation of the austerity fatigue among Greeks, who are now suffering through a fifth year of recession.

H/T: The Raw Story