The February inflation spike to 4.3 percent is a grim indication of current economic developments and a foretaste of the pending downturn. The looming war in Iraq and the subsequent hike in oil prices are expected to place an additional strain on the economy. An international crisis would have serious repercussions on tourism and the volume of exports, already at a low level. Even worse, the war and the negative climate come at a time when the weaknesses of the Greek economy are being laid bare. The February rate spike is indicative of this. Many analysts believe that real inflation is actually much higher than the official estimates and that the war will reveal the true picture. If this is true, and if war sparks a rise in oil prices, then the Greek economy will be bound to face rampant inflation with all that involves. The rise in prices will spark demands for higher wages, which will in turn raise costs and finally set in motion the vicious circle of income and price increases. All sectors of the economy are under pressure. Banks know that even large businesses are jeopardized by a large debt burden, the unfavorable economic cycle, and the drop in consumer spending. If we add to these the distortions in the free market, the structural shortcomings of the economy, and the failure of politicians to intervene, we get a dangerous mixture that could trigger a chain reaction with unforeseeable consequences. Many analysts regard the war as a possible economic time bomb. If there is a brief war against Iraq, a quick removal of Saddam, a short-term effect on oil markets, followed by a precipitous rise in the world’s stock exchanges and a revival of the global economy, the Greek economy will most likely recover. Cynical as it may sound, this is the only scenario that permits some hope that the looming crisis will be contained.