MYTILENE , Greece — At first glance, the capital of the island of Lesbos appears to be a bustling economic center. Businesses with Greek, Turkish, and English signs ring the U-shaped port. Tourists stroll past hotels, locals mix at local bars and restaurants, and street merchants call to potential customers.
But Mytilene looks different on closer inspection. Patrol boats and cutters flying a variety of European flags are docked next to the sidewalks, on stand-by as part of Frontex, the European Union’s border patrol. A Hellenic Navy gunboat cruises in and out of the harbor periodically.
Why are these warships docked in a peaceful port city? In 2010, as more and more refugees fleeing the civil war in Syria began to cross from Turkey into Greece, the Greek government requested help from the European Union and it arrived in the form of Frontex. Over the next few years, the influx of hundreds of thousands of migrants on an island of just 86,000 people thrust Lesbos into the media spotlight, brought hundreds of volunteers from aid organizations and governmental agencies to the area, and “destroyed some local economies to the largest extent,” according to local businesswoman Afroditi Vati-Mariolas.
Around the same time the migrants started arriving, the Greek government-debt crisis began on the heels of the global Great Recession. After the government ran out of money, bailout measures accepted by Greece forced Prime Minister Alex Tsipras’ government to implement austerity policies, causing social and political unrest in the Hellenic Republic.
The combined economic and migrant crises caused the economy on Lesbos to face serious challenges and local businesses had to scramble to adapt to a new environment.
The government debt crisis
In a nutshell, the Greek government debt crisis was a result of successive Greek governments lying about the size of their government deficits and debt to the European Union. Greece uses the euro as its currency and must keep its deficit and debt under control, in line with European Union and European Central Bank requirements. After the deficit was revealed to be over 12% of gross domestic product (GDP) as opposed to earlier estimates of 6.7% in 2009, the bond market in Greece collapsed and the country entered into multiple bailouts with international lenders.
Money-saving requirements imposed on Greece by lenders led to higher taxes on the middle class, privatization of some state enterprises, and cuts to government spending.
On Lesbos, reduced government spending hit local residents hard. Over 25% of working people in the North Aegean region—Lesbos makes up almost half the population—are employed by the state.
“The financial crisis caused a reduction in salaries for state employees,” said Evangelos Myrsinias, president of the Lesvos Chamber of Commerce. “Lots of income on the island comes from the state.”
The debt crisis placed the Lesbos economy on unstable ground as state spending dried up. But the worst was yet to come.
Even after the debt crisis began, the tourism industry on Lesbos was doing well. Charter flights were booked, cruise ships were coming, and hotels were full of tourists. The island is not as famous as other Greek destinations like Mykonos or Santorini but on average welcomes a few hundred thousand tourists a year.
By the end of 2016, however, the industry had taken a major hit as a result of over half a million migrants arriving on Lesbos in 2015.
“Tourism was not so big before,” Myrsinias said. “But it was the sector most directly affected by the migrant crisis.”
The period from April to October, the tourist season on Lesbos, saw a decrease by 60%-70% in charter flights from 2015 to 2016. These flights, especially from Northern European countries, were essential for the tourism industry, said Vati-Mariolas, who runs her family’s hotel in the northern part of the island.
The decrease in the flights was “devastating for the tourism industry,” she said. At one point all charter flights from Sweden, the Czech Republic, Finland, Belgium, Italy, Poland and Slovenia were cancelled. While the flights are finally returning to pre-migrant crisis levels, local business owners are still wary.
Cruise ships, a popular form of vacation for many foreign tourists in Greece, also declined in numbers. In the 2015 season 53 cruise ships arrived on the island. Compare that to 2017, when only one ship came to Lesbos.
Hotel arrivals in the North Aegean region fell by 18.9% between 2015 and 2016. Occupancy rates and number of nights spent in accommodations fell too.
A main cause of the decline in tourism, according to Myrsinias and Vati-Mariolas, was the image of Lesbos portrayed by the media. Headlines and photos proclaimed the horrible conditions migrants had to endure on the island at refugee camps like Moria as well as the sheer number of migrants arriving every day—especially in 2015, when daily arrivals peaked around 1,500. The island is still trying to recover its brand.
“The image was damaging,” said Vati-Mariolas. “We’re still trying to prove that the island is amazing and what it’s all about.”
Myrsinias asserted that non-governmental organizations assisting migrants on the island played a role in the tarnishing of Lesbos’ reputation.
“[The aid organizations blamed local people in order to get a picture that made themselves look like angels,” he said, so they could attract donors. Myrsinias noted that this excludes bigger organizations like the International Rescue Committee, the United Nations’ refugee organization, and Doctors without Borders, which were vital to the island’s handling of the arriving migrants.
A study by the University of the Aegean found that the main wave of migrants in 2015 that passed through islands in the Aegean, including Lesbos, had a negative impact on tourism and created an image perceived as negative that will take years to restore. 168 hotel managers on the islands of Lesbos and Chios were interviewed and it was determined that there were substantial decreases in reservations and increases in cancellations from the tourism season in 2015 to 2016.
An economic realignment
The northern coast of the island is one of the main engines of tourism on the island. Coincidentally, it is also the closest part of the island to Turkey and thus where most migrants made their way into Greece. Where the boats literally washed ashore ended up being places like Vati-Mariolas’ hotel.
“By August things were out on social media, people started cancelling reservations, leaving early from the hotel,” said Vati-Mariolas. Initially left alone with no non-profit or governmental aid, it was up to hotel owners like her and guests to help the migrants.
As the number of migrants arriving in the north kept increasing, businesses were under increased pressure to attract and keep customers while providing help to migrants. But it proved to be a difficult task.
“Other businesses have closed and families have left the island,” Vati-Mariolas said. “We still haven’t come back [economically].”
The government is partly to blame in the economic decline of the northern part of the island, especially in towns like Molyvos and Mithymna, according to her.
“Local, national, EU governments were sitting on the sidelines,” she said. “The government still needs to provide more.”
Organizations eventually showed up to help local residents and business owners cope with the influx of migrants on their shores. But according to Vati-Mariolas they quickly moved to Mytilene and “were not here for long.”
As businesses began to close in the northern part of the island and media began cover the growing crisis, tourism shifted south to the capital city and non-profits, governmental organizations like Frontex and the United Nation’s refugee agency set up shop too. Businesses in Mytilene began to see positive gains from economic activity from these groups. Vati-Mariolas didn’t mince words—the migrant crisis created a “multibillion dollar industry of people on the move,” she said.
Aid workers and border patrol agents from Frontex needed places to stay and food to eat. Consequently, those were the two industries that benefitted the most from the migrant crisis in Mytilene .
“Hotels saw growth from Frontex soldiers and aid workers,” Myrsinias said. “Food businesses like tavernas and bars benefitted too, as well as taxis.”
Marios Andriotis—Konstantios, International Relations Senior Advisor to the mayor and municipality of Mytilene , echoed Myrsinias’ observations, and added that real estate saw a boom too.
“Landowners and apartment owners saw benefits,” he said.
While her hometown in the north of the island saw economic devastation, Vati-Mariolas watched the capital thrive.
“The area of Mytilene benefited greatly from the refugee crisis. Houses were being rented, aid workers went to clothing stores and restaurants,” she said. “They had more money than they could imagine in their lives.”
Business owners like Stavros Repanis were able to capitalize on the influx of migrants. Repanis owns a travel agency in Mytilene and made what he described as “unlimited money” busing migrants from the Ministry of Migration registration center in Moria to the port in Mytilene , where they would depart for Athens.
The initial economic growth did not last forever. As fewer and fewer refugees came over, international non-profits had fewer and fewer reasons to be on the island. Slowly, they began to pack their bags and leave.
“Some NGOs were like pirates. They tried to collect funds from people in the United States and Europe and make themselves look good,” Mysrinias said. “But they aren’t here anymore because they don’t smell blood.”
In March 2016 the Greek government stopped all migrants from departing the island without prior clearance, ending Repanis’ business busing migrants and forcing the residents to cope with a more permanent population of migrants.
According to Andriotis—Konstantios, the eventual change in economic prospects wasn’t unexpected.
“The local economy was not centered around providing services to NGOs and Frontext,” he said. “It is very difficult to shift the economy toward refugees and aid workers in the long term. It’s just not sustainable.”
What happens next?
“Everything is getting a small bit better,” said Myrsinias, the chamber president. “This will be a good year, up to 2015 numbers.”
In 2017, total hotel stays shot up to 343,000, a 20% increase over 2016 and almost back to 2015 levels.
As tourism continues to rebound, however, another threat looms in the distance—literally. Turkey, only a few miles away, has created new tensions with Greece and the European Union. Recently, a Turkish drilling ship commenced operations inside of the Cypriot Republic’s exclusive economic zone, a move that many see as a Turkish violation of international law.
The Turkish Lira has dramatically fallen in value against the Euro over the past five years, making it more difficult for Turks to travel abroad to Eurozone destinations like Lesbos, which relies on Turks for a major part of its tourism industry.
Retaliatory sanctions by the European Union or others could further cripple the Lira and negatively affect tourism on islands like Lesbos.
“The Turkish people are very good here,” said Repanis, the travel agency owner. “It could be a big problem this time.”
Repanis offers his website in Turkish, and businesses around the harbor in Mytilene have Turkish signs and menus. A ferry crosses from Mytilene to the Turkish port town of Ayvalik daily in the summer.
Greece and Turkey have sparred before. For decades, the two countries have argued over territorial and economic claims in the Aegean Sea. Tensions still remain over Turkey’s invasion of Cyprus, and island with a large ethnic Greek population. But recent hostilities have never led to anything beyond small skirmishes.
“We have see many conflicts like this before and it is always resolved—common sense will prevail. But it will affect normality and is not necessary,” Myrsinias said.
“This is the place where we choose to live our lives and make business.”