Traveling to Greece During the Economic Crisis (Updated August 2015)

 

Summer 2016 Update

Updated from Greece: September 2016

While you hear of Greece and it's negotiations with its lenders now and then in the news, once there you would be hard pressed to know there is an economic "crisis" going on.

The reality is that the Greek people are undergoing considerable hardship in the form of higher taxes and lost benefits, so perhaps a few extra protests and union strikes are expected. Long-time visitors however, know that such events have been common in Greece even during the best of times, so there is no need for additional concern.

Some Key Points:

  • On August 14, 2015 Greece and the Eurozone agreed to a third bailout. This deal eliminated the fear of a 'Grexit' in the foreseeable future.
  • Bank (including ATM) withdrawals have no limits for visitors who draw money from accounts abroad, and Credit Card transactions at sale points are unrestricted.
  • Capital controls are still in effect for Greek accounts, but they do not affect tourists.

 

 

 

Travel Advice to Tourists: Visit

We would advise travelers that they may visit Greece without fear.

The beauty of the country has not been affected by the economic crisis. The landscape is just as beautiful as ever, the beaches just as relaxing, the sun just as warm, and the people just as wonderful (albeit a bit more pensive than previous years). All the reasons you could ever think to visit Greece are still there unchanged.

Tourists who travel to Greece after 2016 should have no concerns, as the danger of Greece exiting the Eurozone has been severely minimized. Given the rough negotiations and bad press, prices in Greece have dropped a bit compared with the years before the economic problems became acute.

 

Is it Safe?

Greece is still a safe country to travel to. Tourists are not targets of violence because of their nationality or status as visitors, and the Greek tourist destinations always feel safe. Protests and demonstrations are usually localized in the center of Athens, around the Syntagma square. Needless to say, if there are no demonstrations, Syntagma square is a safe place to be.

As a rule, such citizen protests are peaceful and very rarely end up in mayhem. But every once in a while, tension boil over, so even the most peaceful of demonstrations have the potential to turn ugly and even violent at a moment's notice. Unless you like being entangled in out of control crowds and being showered with tear gas (rare but potential), it would be best to avoid mingling in protests and demonstrations while vacationing in Greece.

While this is our standard advice to all travelers, it’s more relevant now: I would be best to avoid all political conversations with locals. No matter how passionate you feel about your political ideas, or how close you think your politics are to the local concerns, it would be best to gracefully exit any such conversations from the start. Turn the conversation to the glorious history of the Greek people and you’ll enjoy instant popularity.

 

Chronology of a crisis

In January 2015 Greek elections brought the Syriza party and Mr. Tsipras to power. He ran a campaign promising to end austerity by leading tough negotiations for a better bailout deal with its lenders.

In February 2015 Greece applied and received a 4-month extension of the existing rescue package that was about to expire.

By June 2015, and following a rough series of negotiations between Greece, the Eurozone, and the IMF, injected new thoughts of a "Grexit" and "default" in the media reports, and this introduced major questions for travelers. A Greek exit from the Euro during the summer, and the inevitable switch to a new national currency would result in a period of turmoil and uncertainty.

By June 27, with the July 1st deadline (when the existing bailout plan expired and a large payment was due to the IMF) things looked much more uncertain than before, with the Greek government announcing that they plan to hold a referendum on whether Greece should accept the negotiated terms of the bailout plan. This led the European Central Bank (ECB) to stop supporting the Greek banks with liquidity, which in turn caused concern to Greek citizens who rushed to the ATMs to withdraw their money.

Negotiations between the Greek government and the troika broke down on June 27, 2015 and by the evening of the 28th the ATMs were been emptied of cash throughout Greece.

In June 28, 2015 the Greek government announced a bank holiday. The banks closed for at last a week to prevent people from withdrawing their money in panic. This was deemed necessary to combat a major cash shortage after negotiations between Greece and the troika broke down.

On the 29th of June the Greek government imposed capital controls through a series of measures and executive orders that limit the flow of money throughout the country. These include a limit on the amount of money each person is allowed to withdraw from their Greek bank accounts, which is currently set at 60 Euro per day. The ATMs throughout Greece began dispersing the 60 Euro on June 29.

Cards issued outside Greece are not subject to the 60 Euro withdrawal limit at the ATM. Long lines in ATMs have been thoroughly documented in the media, as have the long lines at the gas stations, but other than that Greece remains calm and besides cash, no shortage of goods has been reported by the evening of June 29.

Credit Card and web banking transactions are allowed without limits within the country only. No other banking transaction is allowed. There is no limit on credit cards transactions at sale points, but reports in Greek media indicate that most small businesses are reluctant to accept credit cards (source.)

Large peaceful protest gatherings have taken place - with more to come - in Syntagma square in anticipation of the upcoming referendum vote where Greeks are called to vote for or against a draft proposal by the lenders. The current Greek government is campaigning against the proposal. Other Eurozone countries have indicated that the referendum result will be perceived as a vote for or against the Euro.

By July 1st, news reports begin to document how the capital controls are adversely affect life in Greece.

"The signs of mega economic gridlock were evident all over Athens on Wednesday – and not only in the form of closed shops, empty restaurants and queues outside cash dispensers. Ferry boats sailing from the city’s port of Pireaus were bereft of passengers. Public transport was noticeably thinner, the result of fuel reserves running low, while supermarkets were showing signs of panic buying, with food staples at an all-time low." source

July 4th: While the Greeks are focused on the July 5th referendum, the capital controls took their toll on the Greek economy. Mainstream media began reports and predictions that food, medicine, fuel, and cash will be in short supply after July 6th, unless the ECB increases its ELA support of the Greek banks. However, all experts agree that the ECB cannot increase the ELA unless the Eurogroup signals that it is close to a deal with the Greek government - something that could take days, or even weeks (source1 source2). For tourists, this means that the near future is uncertain, and this could continue through the summer.

July 5th: Greeks rejected the draft deal with the lenders in a snap referendum. The results indicated that the country is tired of the long period of austerity, but it did not solve the economic problems by itself.

July 6th: Bank holiday (closed banks) in Greece extended until at least the 8th. The new government estimate is that banks will open on the 9th, but after the ECB haircut of the Greek bank collaterals, there is a real danger that ATMs will dry out completely within days.

July 8th: Greece applied formally for a third bailout loan from the European Stability Mechanism (ESM). The application is due for review and decision. Greece has given a deadline to submit detailed proposals for review before the subsequent Euro Leaders summit on July 12. The Greek government also announced that the banks will remain closed until at least the 19th of July.

July 9th: Greece submitted a request for a third bailout plan to the Eurozone partners.

July 13: After a marathon summit, Greece and its lenders signed a new bailout agreement to finance the country's needs for three years. This diminishes the possibility of a Grexit for the foreseeable future.

July 15: The Greek parliament approved the conditions of the bailout with the overwhelming support of opposition parties and substantial opposition from the governing party.

July 20th: Banks reopen. The capital controls remain in place, including the 60 Euro per day withdrawal limit. Alternatively, 420 Euro per week may be withdrawn cumulatively.

August 14th: The Eurozone members and Greece reached a deal for a third bailout that will keep the country and its debts financed while the Greek government engages in reforms to jump start the economy. This deal eliminates all fears that Greece would exit the Eurozone.

 

Facts about the economic crisis Prior to 2015

The Greek fiscal crisis began decades ago through government policies that promoted overspending while relying extensively on external loans to finance it.

The issue was exasperated when Greece entered the European Monetary Union (replacing the Drachma with the Euro) and the cost of borrowing became very favorable. For the past decade, Greece could borrow money with interest rates close to those afforded by much more advanced economies.

As a result, the national debt grew uncontrollably to the point where the country could not borrow any more money. In 2009, the Greek government asked the European Union for assistance, and soon afterwards the European partners along with the IMF agreed to a series of loans and debt reductions aiming towards more sustainable debt levels for Greece. As a condition for aid, they requested (or demanded) implementation of major reforms to ensure that the country’s reliance on external borrowing diminishes to sustainable levels.

The interventions helped eliminate the most dire of predictions about the future of Greece and helped create a relative fiscal stability, even though unemployment rose and the standard of living dropped dramatically. In practical terms, the government cannot finance many of the programs that citizens grew to live with for more than a generation.

But the bailouts and did not eliminate all problems. Because the government in Greece remains the largest employer in the country, a large portion of civil workers has suffered severe cuts to their paychecks. Add to this an abrupt increase in unemployment that skyrocketed to over 25%, increased taxation, and you can guess the result: deep economic recession, political turmoil, strikes, sit-ins, and general civil disobedience acts that affect everyone’s lives.

The political situations has remained unstable with a number of elections and several ideologically diverse governments alternating in power every two years or so amid frequent citizen protest. The most severe protests took place in the first two years of the crisis, but increased again in the summer of 2015.

Given the circumstances and the precarious point at the edge of a disastrous bankruptcy Greeks have faced in the last few years, it is actually amazing that the country has continued to function with grace and pride. To be sure, while you hear about Greece’s problems in the news more nowadays, these problems amount to a hill of beans compared with the violent events of other countries in the vicinity.


For more routine trip preparation considerations see:


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