EUROZONE-GREECE/NAXOS BUSINESS Small businesses on Greek tourist island fear future amidst capital controls

Record ID: 148715

  • Title: EUROZONE-GREECE/NAXOS BUSINESS Small businesses on Greek tourist island fear future amidst capital controls
  • Date: 2nd July 2015
  • Summary: NAXOS ISLAND, GREECE (JULY 2, 2015) (REUTERS) VARIOUS OF NAXOS ISLAND SEEN FROM A FERRY WHITE GREEK BUILDING TOURISTS GETTING OFF THE FERRY VARIOUS OF TOURISTS HAVING LUNCH IN A RESTAURANT IN NAXOS PORT VAGGELIS KATSARAS'S HOTEL IN NAXOS (SOUNDBITE) (English) HOTEL MANAGER AND VICE-PRESIDENT OF NAXOS HOTELIERS ASSOCIATION, VAGGELIS KATSARAS, SAYING: "Most of the cancellati
  • Embargoed: 17th July 2015 13:00
  • Keywords:
  • Location: Greece
  • Country: Greece
  • Topics: General
  • Reuters ID: LVA7U3WUZW4IENX66JA58GLRWYYA
  • Aspect Ratio: 16:9
  • Story Text: The idyllic Greek island of Naxos is a summer playground for foreign tourists and Greeks alike, with quaint towns and beautiful beaches attracting the masses during the high season.
    But the island could soon be the latest victim of the country's debt crisis, as local business owners start to see the consequences of capital control imposed by the government earlier this week.
    On Sunday (June 28), leftist Prime Minister Alexis Tsipras announced that the country's banks would close, with people limited to withdrawals of 60 euros a day from ATMs. On Wednesday (July 1) around 1,000 banks opened to pensioners only, as many in Greece do not have debit or credit cards for using in machines.
    After Greece defaulted on a 1.6 billion euro loan to the International Monetary Fund, effects are being felt across the country - with small tourist islands like Naxos no exception.
    Ferries berth at the island's port several times a day, with people filling the four and five-star hotels on the largest island of the group known as the Cylcades.
    But the vice president of the Naxos Hoteliers Association said on Thursday (July 2) that there are already less tourists than last year, especially domestic tourists.
    "Most of the cancellations are from Greek people, they are more on "what is it going to be", and some other Greek that have already booked, they are on stand-by to wait for Sunday," said Vaggelis Katsaras, referring to Sunday's (July 5) referendum on whether or not the country should accept the terms of an international bailout.
    Katsaras said that Greeks, coming from Greece or from abroad, represent about 30 percent of the overall touristic population in Naxos.
    According to him, one and two-star hotels are affected by this situation, with an occupation rate that has fallen to 70 percent.
    But his main concerns are now about the coming days and weeks. He says that 90 percent of the rooms available in the 135 hotels of the island are booked for July and August. But with negotiations with the European Union in a dead-end, and the uncertainty surrounding the result of the referendum, he fears there might be further cancellations.
    He is also concerned about the capital control imposed by the government, and many Greeks fear the daily ration of 60 euros will be curtailed further to as low as 20 euros per day, all this is a major blow for an economy that just emerged from a six-year recession last year.
    Even if a business has the money to pay for supplies on delivery, they cannot because it's trapped in the bank and cannot be wired abroad.
    "Before the situation, we were having the ability to pay, for example, one amount let's say 1,000 euros, we paid at the end of the month. Now, we have to pay by cash whatever we buy, but if the clients pay by credit cards, the amount goes to the bank, we cannot take it. If the people, the whole seller from abroad, they pay after 60 days, let's say, and that goes to the bank...How are we going to pay those people by cash?", he said.
    In small shops around the Naxos, the concerns are the same with many wondering how they will be able to pay salaries and suppliers if cash controls continue.
    Many of the shops stocked up before the season started, like Nikos Fragiskos who runs a souvenir shop in Naxos city port, but should the situation last it will become more complicated he explained.
    For now, shop shelves are well stocked, but according to Fragiskos, this situation could change dramatically within 10 days.
    "It will be an issue for everybody, especially for the business, because nobody can pay nobody. We have very big problem to bring stuff from Athens, we want to pay the providers, we have the money, but we cannot find a way how to pay them, so we cannot have the things we want to sell," he said.
    "The food has expiry dates so they have to provide every week or every 10 days, and everybody now are afraid and go to the supermarket, and they have bigger consumption than the normal consumption, daily or weekly, so I think sooner or later, a lot of things will be missing from the supermarket," he added.
    A couple of Swiss tourists on the island said that the uncertainty frightened them at some point, and they had considered leaving. But they were reassured by Greek people who told them not to worry.
    "I worry for the people here, what will come for the next week, and month, it's not a good situation at the moment, I think, really not," said Swiss tourist Irene.
    Small and medium-sized businesses account for about 86 percent of jobs in a country where one in four workers are already unemployed. More than half of such companies are already behind in salary payments.
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