* Government cutting priests' numbers and salaries
* Demand for church charity soaring as crisis bites
* Conservative church turns to modern business deals
By Harry Papachristou
ATHENS, Αpril 20 (Reuters) - Close links between the Greek state and the Orthodox Church are turning from a blessing for the clergy into a curse as the debt-laden government struggles to fund the ancient institution, just as impoverished Greeks need its charitable work most.
Starved of money as the state makes huge spending cuts, the deeply conservative church which grew from one of the earliest centres of Christianity is seeking new sources of funds.
But despite a new spirit of enterprise, such as at one monastery which wants to build a solar energy farm, numbers of priests are dwindling, those that remain are suffering pay cuts, and the church is fighting to keep soup kitchens open as unemployment soars and poverty deepens.
"The tills are empty and the system is collapsing," said Ignatios Stavropoulos, a modernising priest who has his own page on LinkedIn, a social website for professionals.
Under a 60-year-old treaty, the state agreed to pay priests' salaries in exchange for large amount of church property, including l a nd. Bu t this means more than 10,000 priests are now on the government payroll, putting a 190 million euro ($250 million) annual burden on the country's overstretched budget.
Under the terms of an international bailout that saved Greece from bankruptcy, the government is cutting pay which for a typical parish priest is about 1,000 euros a month. Athens will also fund only one new priest to replace every 10 who retire or die, causing shortages in remote parishes during a deep recession when the flock most needs help.
In the cities, the church has stripped operations to the bone to save money for the soup kitchens and charities it runs for the growing army of the homeless and the unemployed.
Unlike in some European nations to the north where the influence of religion is dwindling, the church plays a leading role in the life of the Greece.
Long-bearded priests, dressed in flowing black robes, are a common sight on the country's streets and the Orthodox faith is recognised by the constitution as the official religion. W hen a new government was sworn in last year, the Archbishop of Athens blessed the prime minister and cabinet in a colourful ceremony.
According to opinion polls, about 80 percent of respondents believe in God. This makes Greeks among Europe's strongest Christians, although many are infrequent church-goers.
In a country where private charities and volunteering remain embryonic, the main burden of helping the destitute and downtrodden falls on church shoulders.
But attitudes towards the church are mixed and it often draws criticism for being too close to the state.
Many citizens believe it still owns too much property, pays too little in taxes, and generally fails to contribute its fair share as ordinary Greeks' tax bills soar under the austerity demanded by the country's bailout from the EU and IMF.
The church dismisses such notions. "It's a myth that we're drowning in money," said Father Irinaios Laftsis, a priest in the northern diocese of Alexandroupolis.
Over the past decades the church has transferred 96 percent of its property to the state. It also paid 12.6 million euros in taxes in 2011, it said last month, stressing that the church was treated no differently from any other non-profit organisation.
To cover the shortage of priests, some bishops are permitting laymen to take services. These volunteers receive no state wages and don't wear the characteristic vestments.
For instance, a retired army officer recently started holding mass at Avantas, a village close to the eastern border with Turkey, said Father Irinaios. "Priests in small villages retire or pass away and there is nobody to replace them," he said. "We are going to have a huge problem."
The church is already slashing its operating expenses to cope with the rising costs of its social work. Last year, it spent almost 96 million euros on the 700-odd charities it runs.
"The crisis does not only affect our charities' functioning, it also threatens their very existence," Bishop Efstathios of Sparta said earlier this month. State pension funds had stopped paying contributions to the charities he runs for almost a year, he complained.
Building or restoration work on churches, some home to ancient frescoes and ikons, has often ground to a halt while many are not properly heated during the harsh Greek winter to cut back on fuel expenses.
Economies are being made at all levels. Church orders for candles dropped 40 percent this Easter season, a religious items merchant in the southern province of Arcadia told Reuters.
OFF THE AIR
In February, the church briefly took its 23-year-old, cash-strapped radio station off the air, depriving listeners of the daily mix of sermons and cultural programmes.
Spreading poverty is making matters even worse. Austerity-pinched believers are cutting down on private donations while businesses are going belly up, depriving the church of rental income and swelling the queues in its soup kitchens.
"Needs are increasing while resources are falling," said Father Vassileios Hatzavas, who runs the Athens Archbishopric's poor relief fund.
As Greek unemployment soars to record levels, soup kitchen rations more than doubled in Athens last year to about 10,000 a day, not counting about 3,000 food packages sent to families each month, Hatzavas said.
As the government tightens its purse strings, the clergy are increasingly looking to alternative revenue sources.
Short of cash and with much of its still abundant real estate tied up in ownership disputes, the church is seeking cooperation with municipalities, the army or private business to develop sites, Hatzavas said.
For the first time, the church sent an official delegation last month to a religious tourism fair in Russia, the world's biggest Christian Orthodox country and a major tourism target. Also, Penteli monastery outside Athens is planning to build a solar park to tap into subsidies for renewable energy producers.
Some priests may have gone too far in their fund-raising zeal, such as Efraim, abbot of the 1,000-year-old Vatopedi monastery.
Efraim masterminded a scheme six years ago under which monks at the monastery on Mount Athos, a independent Orthodox peninsular enclave, persuaded government officials to exchange cheap farmland for prime Athens real estate.
Efraim has been charged with a fraudulent deal which prosecutors say cost the state tens of millions of euros.
Notwithstanding the Vatopedi affair, the crisis is offering the church a chance to reduce its financial dependence on the state via legitimate business enterprises, as other churches did decades ago.
"It's a matter of survival for the Church," Stavropoulos said.