On the Aegean island that runs on cash, time is running out

http://www.theguardian.com/world/2015/jul/18/greek-aegean-island-debt-crisis-future-austerity

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Agios Efstratios is so remote, so forgotten by the banks, the government and swaths of the modern world that the mobile phone network can’t process data, there isn’t a single ATM or credit-card machine on the island, and it calls up a blank on modern travel websites such as TripAdvisor.

Before Greece was plunged into financial chaos, residents of this tranquil outpost in the northern Aegean managed fine in a virtual time-warp. They did their banking at the post office and the few dozen rooms to rent were booked out every summer with people who had heard – by word of mouth – of its spectacular empty beaches, clear seas and fresh seafood the old-fashioned way.

But because the island still runs on cash, the shuttering of banks nationwide has been utterly devastating. Residents have been forced to make nine-hour round trips to the nearest big island to get cash and Greek visitors say they can’t get together enough money to come.

“Tourist numbers are down 80% this year,” said mayor Maria Kakali, in an office at the heart of the village where she grew up, home to around 200 people. “Even people born here and living in Athens, who have their own places on the island, aren’t coming.”

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Kakali has badgered and bullied the government and a major Greek bank into promising an ATM within weeks, but she still feels it may come too late for this season in an island where tourism dwarfs the two other sources of income: fishing and agriculture: “We have almost no reservations in August, when usually we have people calling us up asking to find a room and we can’t help them.”

A hard winter ahead may be slightly smoothed by 50 workers billeted in the village to expand the harbour, but there is an even bigger crisis looming in the government’s new austerity packages, because Athens has said it will end a decades-old tax break for islands.

Created to help island communities survive when they were being gutted by mass emigration, a lower sales tax contained the costs of living in places where everything had to be imported and made tourism more affordable.

Tourist favourites such as Mykonos fear that losing the tax breaks will make it hard for them to compete with Turkey, but for Agios Efstratios it poses a far more existential threat.

“If we have to pay a tax of 23%, I’m sorry to say it, but we will all die on the island,” Kakali says in her office off the quiet main square of the island’s only settlement. The daughter of a fisherman and mother of two young children, she knows the strains across generations.

Food and fuel are already more expensive than on the mainland, there are no economies of scale and little economic flexibility in an island which, even in summer, boasts only three shops, two restaurants and not a single official hotel.

“This is an expensive island. Everything, even milk or bread, has changed hands three or four times before it gets to us, and each middleman has to take a profit,” said Provatas Costas, a 58-year-old fisherman who can earn €1,500 (£1,000) in a good month, but barely covers his fuel costs in a bad one.

Stefanos hawks €2 watermelons, €5 pairs of shoes, compost, plastic plant pots and a miscellaneous collection of other island needs from a truck that doubles as a moveable shop. He says that business is the worst he’s seen in 35 years on the road. “People aren’t buying because they don’t have the cash,” said the 47-year-old, whose regular route takes him round three remote islands. “If it carries on this way, we will have to close the business. We are working for nothing.”

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For Agios Efstratios and its closest large neighbour, Lemnos, the timing of the crisis is particularly cruel. They were condemned to relative obscurity for years in part because of the misfortune of being served only by slow and unreliable ferries. This year the government has finally turned the contract over to a new, efficient company, drawing floods of new visitors to explore the islands’ largely overlooked charms, before the bank controls hit.

“It started out as the best season in 30 years, and in one week became the worst,” said Atzamis Konstantinos, a travel agent in Lemnos who used to earn €15,000 a month as a captain of petroleum tankers and other large ships, but came home because he missed it so much.

“I always loved this island, even when I was young. I would dock in Piraeus [the port in Athens], take my pay, then get the first boat over. People would say ‘You’re crazy, you can go anywhere’, but I only ever wanted to come here.”

Lemnos has dozens of wild beaches, where even at the height of summer you can swim and sunbathe virtually alone, a small but hedonistic nightlife scene, and cultural sites ranging from a Greek amphitheatre and Venetian castle to the house which Winston Churchill used as a command centre for the ill-fated Gallipoli campaign in the first world war, complete with his carefully preserved armchair.

Lemnos is the eighth largest island in Greece, so is in line for the first round of tax increases this autumn, but far less wealthy than many smaller ones. It has just over 3,000 beds for visitors, compared with tens of thousands on an island such as Rhodes. Its councillors say that they will fight the tax rise, although none can say how.

“We have been suffering economically in the past years and now we will suffer more,” said Lemnos mayor Dimitris Marinakis. “When there is not enough money, you lower your consumption, and therefore the whole economy declines.”

The crisis has been particularly hard on people under 40, who often work two or three jobs to make ends meet and still feel they can’t afford a family. Young people fear they are losing their contemporaries in an exodus to match the one that scattered their grandparents’ friends to America, Australia and Canada.

“What is the future for our generation?” said Katerina Fikari, who feels she is extremely lucky to work for the local government in Lemnos.

Some families on the island now have three generations living off a single pension, and many of her friends and classmates have left Greece: “If you work only to pay your bills, how can you have dreams for your future?”

If taxes go up, even more young people will leave, warns mayor Kakali, who has devoted her year in office to improving education on the island to help keep it an attractive place for families.

Because it is one of the smallest islands, Agios Efstratios has until 2017 before the rise is due to come in, so Kakali hopes that the rollercoaster of Greek politics means it yet may be spared. If not, though, she plans to travel to Athens to remind the distant government what the tax rise would cost.

“The truth is the government doesn’t pay much attention to the islands of the north Aegean,” she said, “so I would take all the kids from our school to the gates of parliament, to tell them: ‘There is still life in these islands’.”