Sitting at a sidewalk cafe beneath the illuminated symbol of democracy, the Parthenon of Athens, the sight of a fierce-looking man in a black shirt with a shaven head passionately giving the Nazi salute openly in the street was a shock.

It was difficult for us to conceive that on the same streets where Socrates and the great philosophers of ancient Greece once strolled and conversed are now found the enemies of democracy and freedom of thought – the fascist and neo-Nazi party Golden Dawn. The stark contrast between these two images underlines the social crisis currently facing Greece today.

Amid the economic woes of the nation, Golden Dawn is quickly gaining influence and power. Anti-Semitism, xenophobia, and hatred of immigrants, especially Muslims, are at the heart of their vision of the world. As guests of the British Council in Athens for a series of high-profile talks and meetings with senior political and spiritual leaders, diplomats, academics, and community groups, we discovered an immigrant community left voiceless and terrorised and a broader Greek community, with notable exceptions, unsure of the emerging dangers on the right and how to counter them.

Just over half a century after Hitler and his military ravaged the Greek people during World War II, in which more than 300,000 Greeks were killed resisting the Axis powers, Greece is again facing the spectre of the man with the little moustache. It is Adolf Hitler's image, along with other Nazi symbols, and his fascist ideology of racial superiority, now superimposed onto Greek nationalism, that Golden Dawn advocates.

Travelling through the streets of Athens, we witnessed banners hanging from buildings bearing a sinister portrait of Hitler with a swastika in the background. Golden Dawn MPs have shouted "Heil Hitler!", denied the Holocaust, and given the Nazi salute in the parliamentary chamber. Stories circulate of black-shirted Golden Dawn members attacking and killing those they define as foreigners. They have also encouraged Greeks to "kill those who are responsible for their problems", referring to bankers.

One shudders to think that mere decades after the horrors of the Holocaust occurred on this continent such actions are possible. The implications and impact are very real for the European Union and NATO nations, focused as they are on issues of immigration and relations with the Muslim world.

As Greece's economic crisis continues, Golden Dawn has emerged as the fastest-growing political force in the country. The unemployment rate has risen to the historic high of 27.4 percent, with youth unemployment at a record 64.2 percent. This crisis has been marked by an absence of effective and clear leadership. As part of the conservative government's austerity measures, for instance, it shut down the state television and radio service on June 11 with little warning, the primary source of news for those in rural areas of the country. This was the first time since World War II that this service went off the air, a blow to the people's confidence in the national government.

Amid the instability, Golden Dawn has unfortunately found resonance among a segment of the Greek population, winning 18 seats in parliament in the June 2012 elections and garnering 14 percent support in recent polls. They have portrayed themselves as an alternative to government services, running food and blood drives and protection patrols as an effort to promote solidarity and nationalism among "pure blood" Greeks. What it lacks at the moment is a leader – like Hitler – who can mesmerise his supporters and organise his movement on a national scale.

Golden Dawn's messages of hate have largely centred upon pledging to rid Greece of its growing immigrant community, particularly Muslims. A flashpoint has been the recent controversy around the plans for an official mosque of Athens, with many protesting against its construction. Currently, Athens is the only EU capital without an official mosque.

'Something like a prison camp'

In a meeting with the wise and urbane government official directing the mosque project, Secretary General of Religious Affairs George Kalantzis, the main problem surrounding the mosque construction, he explained, was that it was associated with the nation's political, economic, and historical issues.

These are primarily the troubled history with Turkey and the increased presence of illegal immigrants in Greece, many of whom are Muslim, who use the country as a gateway to Europe intending to move on to other countries like Germany and the UK. They become "stuck" in Greece due to EU regulations requiring them to remain in their country of entry for processing. A senior British diplomat referred to Greece as "something like a prison camp" for the arriving immigrants.

Secretary General Kalantzis said there was a need to "disconnect" Islam as a faith from other problems of the nation. For instance, in the Thrace region of northern Greece where a Muslim population of 100,000 has resided for over a century, local Muslims are allowed the right to practice sharia law for personal and family matters.

The secretary general then pointed to his bookshelf, showing us his copies of the Holy Quran and his plans to translate it into Greek, arguing that "if you know the religion of your neighbour, then you have no fear". He then assured us the mosque project was moving forward and would begin construction within six months.

Muslims are currently driven to worship in makeshift mosques found in basements and garages in Athens. For Friday prayers, we were invited by the Muslim Association of Greece to one of these mosques, located in a garage on a side street in Athens.

Descending the stairs below street level, we encountered an expansive room with a low ceiling bearing an intricate maze of pipes and support beams. Warmly welcomed by some and treated with hesitant curiosity by others, we found a defeated community unsure of its place in a city where many have lived for decades. A Pakistani man who first came to Greece more than 20 years ago said that the situation has deteriorated for Muslims in the past two to three years. He said he now intends to leave the country and return to Pakistan.

Indifferent police

There have been a number of threats and attacks on the community, including an incident in which Golden Dawn locked in 40 people praying in one of the unofficial mosques and began to throw in garbage on fire. Young Pakistanis, opening up to us with emotion, spoke of being beaten by groups of Greek youths with bystanders merely looking on. Many of the mosques received anonymous letters giving them until July 1 to leave the country or they will be "slaughtered like chickens".

Despite the threats and attacks, the police have proven to be largely indifferent and unresponsive to incidents of violence. There have been a number of reports that show police officers supporting Golden Dawn. Even a South Asian diplomat stated that he does not go out after 9:00 pm because he is "coloured". A Hispanic diplomat, after stopping to help a woman who had dropped her bag, was attacked by a mob calling him "thief", an incident the police ignored.

While the situation in Athens is grave, outstanding spiritual and political leaders are combating the wave of xenophobia. One such leader is Bishop Gabriel, the young and charismatic Chief Secretary of the Holy Synod of the Church of Greece, who saw the need for the Orthodox Church to "carry the heavy burden of maintaining social cohesion", a position he holds in contrast to the previous church leader. Understanding that "outside is real life", the leadership of the church has reached out to the Muslim community, including donating church land for a Muslim cemetery. Bishop Gabriel emphasised education as a means to promote social harmony, stating that this "is what is missing in Greece". He was doing all this, he emphasised, in the spirit of his faith.

The emergence of Golden Dawn is a slippery slope. The emphasis on xenophobic Greek nationalism and a "pure" Greek identity, as the lessons of 20th-century European history show us, can lead to mass violence and tyranny against the "other" if their growing influence remains unchecked. The comparison to the rise of Nazism in Germany in the 1930s is too striking to be ignored and should serve as a warning.

Greeks are an intensely nationalistic people with a great sense of pride in their contributions to world history, their traditions, land, and even cuisine. Despite their warm and natural hospitality, there is a strain of xenophobia lying just under the surface. The Greece of today is struggling to find its multicultural identity in the age of globalisation. The land of Socrates must do this not by abandoning its own heritage of democracy and freedom but returning to it.

Above all, the Greeks need to follow the dictum of the wise Socrates, displayed at the Oracle of Delphi: "Know thyself."