When those madcap Scandinavian satirists awarded the Nobel peace prize to the European Union, they let everyone in on the joke by praising its commitment to "reconciliation, democracy and human rights". If the committee's 2012 citation were anything other than a spoof, you would have read denunciations of the rise of oppressive state power and neo-Nazism in Greece from concerned Euro commissioners long before now.

The EU denounces threats to freedom of speech in Viktor Orbán's Hungary with vigour. European politicians worry with good reason about the fate of independent institutions that stand in the way of the rabble-rousing regime. They notice the fascistic element in the new Hungarian right's flirtations with antisemitic and anti-Roma hatreds and its willingness to indulge the revanchist fantasy that Hungary can regain the lands it lost after the First World War. On the fate of Greek democracy there is silence, however, although there is much that Europe's leaders might talk about.

You spot the pressure points of a failing state by looking at what it censors. In the case of Greece, the authorities' prosecution last week of Kostas Vaxevanis showed that he had hit a pressure point with the accuracy of a doctor sticking a needle into a nerve. While Greeks live with austerity without end, while Greek GDP has shrunk by 4.5% in 2010 and 6.9% in 2011, and will shrink by a predicted 6.5% this year and 4.5% in 2013, the list of the names of 2,000 Greeks with bank accounts in Switzerland Vaxevanis published, suggested that the well-connected were escaping the burdens that fall on the masses.

"Instead of arresting the tax evaders and the ministers who had the list in their hands," thundered Vaxevanis in a call to arms that stirred the blood, "they're trying to arrest the truth and freedom of the press."

His acquittal on privacy law charges, though welcome, was less important than it appeared. It did not mean that freedom of the press was secure in Greece. Even in good times, independent journalism has rarely been a force in the land. Most Greek TV stations and newspapers are owned by either the state or plutocratic corporations, neither of which likes seeing corruption exposed. The leftwing daily, Eleftherotypia, which for all its faults and flirtations with terrorism at least challenged the oligarchs, filed for bankruptcy last year.

Few of the employees of the remaining Greek news organisations reject the notion that they should keep quiet in the interests of holding on to their pay cheques. The state is hounding too many of those who do. "We still have freedom of expression recognised by the law at a theoretical level," said Asteris Masouras, one of the free speech monitors at Global Voices. "On a practical level, well..." And he proceeded to give me a list of instances of menacing forces intimidating reporters that would go on into the New Review section if I ran it in full.

Where to begin? How about the self-defeating austerity policies the troika of the European Central Bank, European Commission and International Monetary Fund have forced on Greece? The authorities used an old warrant to arrest Spiros Karatzaferis, after the journalist threatened to reveal confidential emails, that might have explained how the troika's alleged "rescue package" had pushed the country into depression.

Police brutality is another pressure point, undoubtedly. The Greek left makes persistent allegations of collaboration between the supposed forces of law and order and the thugs in the neo-Nazi Golden Dawn movement. The Guardian ran reports that the police had beaten up anti-fascist demonstrators after they had confronted Golden Dawn. Yes, I know leftists call everyone "fascists" from headteachers to their mums and dads, but as Golden Dawn is building a mass movement while marching under a swastika, the term is correct on this occasion. The following day, Greek state TV replaced Kostas Arvanitis and Marilena Katsimi, the presenters of its morning news show, after they told managers they planned to follow up the Guardian's claims. Another state TV reporter, Christos Dantis, has joined the ranks of the vanishing journalists. His editors assigned him to cover the celebrations of the centenary of the liberation of Thessaloniki from Ottoman rule. He was about to report on popular protests against the presence of the Greek prime minister and president in Greece's second city when his masters turned off the camera and cut to a more amenable hack.

All the Greek journalists I spoke to emphasised that Athens was not Beijing or Tehran, but they described how the liberal certainties they once held now appeared flimsy. Helena Smith, our superb Athens correspondent, says that she feels as if she is standing on shifting sands. If the centrist coalition fails, and the troika's punitive demands have condemned it to failure, then the left opposition in Syrzia will probably take over. After that, Golden Dawn, maybe? No one knows. Nothing is unthinkable in a climate of fear and hopelessness.

One can say with certainty that old alliances between extreme political and extreme religious movements are reviving. Hence, last month Christian fanatics and neo-Nazis (and the difference between the two is fine) protested against a "blasphemous" play with a homosexual theme in Athens. The theatre's management duly pulled it. Greek television cut a scene from Downton Abbey that featured a gay kiss. No one can explain why but a country that censors Downton Abbey on any grounds other than literary taste is in grave trouble.

British Eurosceptics do not understand that the European Union once offered an escape to a liberal future for the peoples of Europe. When I visited Athens in the early 1980s, the old could remember fighting the Nazi occupation and the young had grown up in and on occasion fought the military dictatorship the colonels imposed. Joining the European Union meant saying goodbye to all of that. Now poverty, fear, suppression and state intimidation are back.

You can blame the corruption Greek society tolerated. You can blame the bankers for the crash. But you must also apportion blame to Europe's politicians and bureaucrats who accepted Greece (and the rest of southern Europe) into a single currency area that has put them at a permanent competitive disadvantage and refused to write off debts Greece can never repay.

No wonder they stay silent about the abuse of the human rights the Nobel prize committee insisted European integration guaranteed. Greece is the Eurocrats' very own Weimar on the Aegean. They helped build it.