Greek Golden Dawn protests
Protesters clash with police following the murder of a left-wing activist (Reuters) Reuters/Yannis Behrakis

As the 'troika' of international creditors flies into Athens on Sunday for discussions on a new bailout, experts fear unrest and far-right violence fuelled by austerity could worsen if loan conditions are too harsh.

Representatives from the EU, the International Monetary Fund and the European Central Bank are expected to demand harsh conditions for providing the country with a further €11 billion (£9.3 billion) loan to plug spending gaps as it struggles to overcome one of the worst recessions suffered by a developed country since the 1929 Wall Street Crash.

They are expected to demand that Greece lay off thousands more public servants, instigate further public spending cuts and close down loss-making mining and defence companies, as well as make efforts to clamp down on tax avoidance and press ahead with unpopular privatisation initiatives.

This week Greece erupted into mass protests following the murder of a left wing rapper and activist, allegedly by far-right Golden Dawn thugs.

Golden Dawn has made sweeping gains since Greece plunged into financial turmoil, exploiting the fear and uncertainty created by the financial crisis to make it the country's third strongest political party.

Activists and experts warn that further austerity could push the country over the brink.

"I can't just watch my country being destroyed by these policies," campaigner Stamatis Stefanakos told the Guardian."Forget about taxes. People can't even pay their rents. When you have a society under such pressure anything could happen, even civil war."

Greece has unemployment rates of about 28%, and its labour union GSEE predicted it could take 20 years for employment to return to pre-2008 levels. Prime Minister Antonis Samaras's coalition government attacked the prediction, claiming it was a "worst possible scenario, designed to predict catastrophe and create a false impression".

"Greece today is at the door of the madhouse. Democracy is endangered," the columnist Panos Amyra warned in the pages of Eleftheros Typos, whose views often reflect those of the governing centre-right New Democracy party. "If the social tension that has built up is not repulsed it could lead to an uncontrollable situation that will only serve those who have invested in general disorder ... [and] the country's tradition of chaos and raw violence."

Rumours of further pension fund cuts caused public-sector workers to hold 48-hour strikes this week, and teachers are also due to hold a walk-out over pay and conditions in the coming days.

"Greece's exit from the crisis is being made much more politically difficult and socially painful than is needed," said Prof Kevin Featherstone, director of the London School of Economics Hellenic Observatory. "The spread and depth of austerity that lenders have insisted on has been much too severe. There has been success, but success at what price? If this is success, who wants to be rescued like this?"