The Great European Project is running into the sand nowadays. Even the Franco-German axis, its central bastion, is crumbling under the pressure of resurgent nationalism. The unruly French are threatening to vote no in the May 29 referendum on whether or not to ratify the European Constitution, which will form the basis of the continent-wide superstate. Britain and the Czech Republic are likely soon to follow. Germany complains ever louder about the cost of supporting the Polish and Slovak economies as these countries race ahead, attracting a torrent of foreign investment. The nation-state, it seems, remains robust.

But at a sometimes high price. Its imposition in the former Yugoslavia has been disastrous, helping trigger the wars of the early 1990s and feeding simmering ethnic conflicts that could erupt again in Kosovo and Macedonia. Yet fighting and dying over faiths and flags in the Balkans is a comparatively new development, as Mark Mazower’s timely, magnificent and sometimes unbearably poignant chronicle of Salonica shows. His account of the (now) northern Greek port city brings alive a lost world, one with much to teach contemporary Europe about the nature of identity and nationality. Home for centuries to Christians, Muslims and Jews, Salonica was a cosmopolitan world where people of various cultures and religions lived side by side under the tolerance of Ottoman rule. Even the shoeshine boys spoke half a dozen languages, from Greek and Turkish to Ladino (Judeo-Spanish). The Sublime Porte was better grounded in the reality of statehood than its contemporary Christian rivals. It was easier and more beneficial to let minorities prosper than persecute them. When in 1492 Spain’s King Ferdinand and Queen Isabella expelled the Jews, Sultan Bayezid II looked on in wonder: “They tell me that Ferdinand of Spain is a wise man but he is a fool, for he takes his treasure and sends it all to me.” With the Sultan’s blessings, Spain’s Jews poured into the Ottoman lands and soon flourished under Muslim rule. It was a wise as well as humane decision, for they brought expertise in medicine, science and technology that helped to revitalize the empire and to fuel the great Ottoman expansions of the sixteenth century.

Of all the towns in the empire, writes Mazower, Salonica benefited the most. By 1520 more than half of the city’s 30,000-strong population was Jewish, and it was one of the most important ports of the eastern Mediterranean. Under a Muslim administration and largely Jewish labor force, the city prospered. For the Sephardim, Salonica truly was a new Jerusalem. They simply transported medieval Spain across the waters and re-created it, preserving its dialects, foods and customs, and worshiping in synagogues named for the lost lands of Aragon and Catalonia; Mazower has deftly mined local archives and records to bring forth a rich haul of colorful details about everyday life. Salonica’s Jews did not, it seems, always practice the tolerance they sought. One group of Greeks appealed to the Ottoman authorities to stop their Jewish neighbors from emptying their rubbish into the churchyard and mocking them from their windows.

Neighborly spats aside, the city was also a fertile ground for heterodox beliefs that almost seemed to merge all three faiths. There were Marranos, Jews who had converted to Catholicism but secretly practiced their ancestral faith at home; new Christians, who were Jewish by descent but practicing Catholics, both liable to be dubbed “ships with two rudders” by their contemporaries. In the seventeenth century Salonica’s Jews descended into a kind of collective madness over their adoration of the false Messiah Sabbatai Zevi, who had preached in the Marranos’ synagogue, at least until he changed his name to Aziz Mehmed Efendi and converted to Islam. Hundreds of his followers also became Muslims, and blended the two faiths in a community they called the Ma’min, or faithful. By 1900 Salonica’s Judeo-Muslim Ma’min community was 10,000 strong, one of the most extraordinary footnotes in Ottoman history.

The close proximity of all three faiths made for an atmosphere of religious and spiritual devotion. Salonica was “covered in a dense grid of holy places,” writes Mazower. The Sufi orders, which helped spread Islam through the Balkans, had more than twenty shrines and monasteries in Salonica. Their liberal attitudes toward alcohol, opium and tobacco often brought them into conflict with more orthodox Muslim clerics. The city’s indigenous Greeks fared less well. Salonica’s spiritual guardian, St. Dimitrios, had not saved the city from enslavement by the Turks. The Christian community was small, impoverished and almost powerless. The great Byzantine families had mostly left. Salonica was a backwater in comparison with Athens or Mount Athos. The church was authoritarian, fractious and disorganized. Many of Salonica’s Christians were not even Greeks but Slavs. Still, the port’s growing prosperity made it a magnet for economic migrants from across the Balkans. Bulgarians and Macedonians, Slavs and Albanians, flocked to the city. The warlike Albanians were recruited into the pashas’ private militias, raised to counter the threat from the mutinous Janissaries, the empire’s standing army. The Albanians “brought with them an aggressively uncomplicated approach to life,” notes Mazower dryly. Albanian salutations included: “Eat shit,” “I’ll fuck your mother,” “I’ll fuck your wife” and even “I’ll fart in your nose.”

Salonica’s pashas, though, had sown dragon’s teeth. The Albanians soon turned on their former masters. When the authorities tried to arrest one troublemaker called Alizotoglou in 1793, they discovered his house was less a dwelling place than a military garrison, home to 150 Albanians, all well supplied with food and arms. Alizotoglou left only after his house was bombarded by cannon fire and then took hostages with him. The story is eerily prescient of the Kosovo war of the late 1990s, when Kosovo Liberation Army leaders such as Adem Jashari operated from walled family compounds in their home villages. Serb forces attacked the Jashari compound in early March 1998, like their Ottoman predecessors, bombarding it with artillery. By the end of the day fifty-eight members of the Jashari clan lay dead, including twenty-eight women and children.

Salonica, City of Ghosts is peppered with mini-vignettes of fascinating characters, such as the Ukrainian exile Pylyp Orlyk and a corrupt moneylender with the unlikely name of John “Jackie” Abbot. Orlyk spent twelve years in Salonica, and his diary provides a vivid and tantalizing glimpse of life in the eighteenth-century Ottoman city. Orlyk lived well, hunting partridges, hogs and hares, and drinking vast amounts with his interpreter and servant, who was often found sprawled in the gutter after a heavy night. Thus the joys of Salonican life. The minor perils included indigestion from overindulging, bribery to keep officials happy and stepping around the dirt and dung that covered the streets. More serious were the gunfights between the Janissaries and random armed gangs. Sultan Mahmud II finally solved the problem of the janissaries in 1826 by massacring them all. Scribes recorded the slaughter as “the auspicious event.”

As for Jackie Abbot, he was “Greek by religion, [but] British by nationality.” Abbot was a sort of Salonican Tony Soprano, living in the city’s grandest villa, with a fountain that shot water twenty meters into the air. He started out as a leech trader, an apt metaphor. Abbot’s friends were bribed with diamond-studded pipes and vast sums of money, his enemies thrown in prison. When in the mid-nineteenth century Sultan Abdul Mecid visited Salonica, Abbot had the entire six-mile road to his house covered with carpets, insuring that the imperial carriage would not have to suffer bumps. Abbot’s stove was brought for coffee, the flames fed by bank notes. But as the Sultan was about to step down onto the carpet, the skies clouded over and there was a clap of thunder.

The days of the Abbot family, like those of the empire itself, were numbered. Ravaged by the Balkan wars of the early twentieth century, the crumbling Ottoman Empire ceded Salonica to Greece in 1912. The city was renamed Thessaloniki, and the Muslim exodus began. It was finished in 1923, when Turkey and Greece “exchanged,” or in reality expelled, their Christian and Muslim populations. Hundreds of thousands of lives were upended in conditions of great cruelty in the disastrous pursuit of ethnic homogeneity. By the end of January 1925 there were just ninety-seven Muslims left in the city, most of them foreign nationals. The Muslims at least made new lives in Kemal Ataturk’s new state of Turkey. Salonica’s Jews stayed on under their new Greek masters–until, in April 1941, the Nazis arrived.

Mazower is a professor of history at both Columbia University and Birkbeck College, London, whose previous works include the prizewinning Dark Continent: Europe’s Twentieth Century and Inside Hitler’s Greece: The Experience of Occupation 1941-1944. His account of the end of Salonica’s Jews makes for grim reading. He quotes from a heartbreaking series of letters, sent by a woman called Neama to her sons in Athens as the Holocaust unfolded. Salonica’s Jews were enduring scenes that they had previously seen only in the cinema and history books, she explained. “For two nights we sat on the bed, dressed, waiting for the knock on the door to wake us and take us away. Everyone is selling things in the streets to buy food…. The cries, moans and tragedy cannot be described.” While some individuals helped save and shelter Jews, officialdom stood aside. Most depressing of all was the reaction of Salonica’s commercial classes, whose families had traded with the city’s Jews for centuries but who turned their backs in the Jews’ hour of need. In contrast to Athens, where the Archbishop Damaskinos–and the city’s professional associations–protested against the deportations, the Metropolitan of Salonica, Gennadios, stayed quiescent. About 45,000 Jews were sent to Auschwitz, most of whom were killed soon after their arrival. A unique part of Europe’s heritage, a 450-year-old time capsule of medieval Spain, vanished in the smokestacks and crematoriums. A few hundred survivors returned after the war, to find, as Mazower notes, a city “transformed and unrecognizable.” Yehuda Perahia, a tobacco merchant, wrote:

How into rusty iron pure gold has been transmuted! How what was ours has been changed into a foreign symbol!… I walk through the streets of this blessed city. Despite the sun, it seems to stand in darkness.

The Salonica that entranced visitors with its mosques and synagogues, churches and dervish tombs, is gone forever. The medieval synagogues named for Spanish provinces and cities were destroyed in the fire of 1917. Almost all Salonica mosques and tekkes (Muslim monasteries) were demolished soon after Greece assumed sovereignty. The Jewish cemetery was flattened, and is now the site of the university. The Marranos and the Ma’min have vanished. As for Salonica’s Albanians and Bulgarians, its Vlachs and Slavs, who now remembers them? A dreary modernization has reduced one of the wonders of the world to a drab seaside metropolis, studded with a few historic monuments. In 1992 the city was the center of the hysterical state-sponsored campaign to deny recognition to the former Yugoslav republic of Macedonia, which had declared independence. Greece forced the new state to be known by the cumbersome title of “Former Yugoslav Republic of Macedonia,” or FYROM, to distinguish itself from the Greek province of Macedonia. Furious arguments erupted over the origin of Salonica’s most famous son: Alexander the Great, son of Philip II of Macedon, who founded the city in the fourth century BC. Was he Greek or Macedonian?

Does it matter? Not really. Yet the campaign highlighted how uneasily the modern Salonica sits with its past, like an errant son who destroyed the historic family home and replaced it with a shopping mall. Today, the Hamza Bey mosque “stands forlornly in the centre of town like an unwanted guest.” The seafront cafes look out on a wide, traffic-filled avenue that reeks of exhaust fumes. When, after years of lobbying by the Jewish community, a Holocaust memorial was finally erected in 1997, it was built not in the city center square where the Jews were rounded up but on the road to the airport. Ironically, as Mazower points out, now that the city fathers have wiped out most of Salonica’s architectural gems, there is a new manic drive to preserve what little has survived. But even a cursory visit, and a stroll along the wide and utterly unremarkable shopping avenues of the downtown city, show that it is too late. Only in the upper town, in the Kastra quarter, where winding lanes of gabled Ottoman houses open onto shady, hidden squares, does something of Salonica’s spirit linger. Kastra has been rediscovered by Salonica’s professional classes. Its houses are being restored, its steep lanes cleaned up. Here the ghost of the Sufi holy man Mousa Baba is still sometimes seen wandering. For Salonica’s dead outnumber the living, and ghosts are all that is left.