Despite the Turkish lira crisis, tourists from the country are still flocking to Greece with ample funds in their pockets. Marianthi Milona reports from Alexandroupoli, where the contradictions of modern Turkey are felt.
Image: DW/I. Anastassopoulou
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The eastern Greek city of Alexandroupoli (population of 60,000) is buzzing. Local business owners are experiencing the kind of booming summer even the big Aegean Islanders would be happy with. Here, it's tourist season all year round.
"We live mostly from Turkish tourists," explains seafood restaurateur Kyriakos Stogios. "We didn't know what to expect from them at first but now we know their presence is the best thing that could have happened to us."
His restaurant is not located on the town's busy waterfront yet it is very popular with wealthy Turkish business people and officials, who are only too eager to spend their lira there when they visit.
Last year, Turkish guests accounted for 80 percent of the sales in Alexandroupoli. And even though the Turkish lira has plummeted in value recently, business people in the town don't expect any major changes to that state of affairs. According to them, well-heeled Turks are still making the short journey over the border on a daily basis to spend money in the city.
An Erdogan-free zone
Yet these are not exactly typical Turkish consumers. Damianos Makarios has worked as a waiter in Alexandroupoli for 18 years and at this stage, he has a keen sense of his guests.
"When someone pulls up in a car worth €140,000 ($160,000), you know the type of customer you are dealing with," he says. "I used to assume they were all Erdogan supporters but actually most are not. And despite the fall in value in the lira, they can still eat for less here than in Izmir or Bodrum."
Hotel manager Dimitris Xanthoulis has many Turkish guestsImage: DW/M. Milona
One of the things that draws Turks to Alexandroupoli is the fish, served in the Greek mezedes style — small plates of food, not unlike the style of Spanish tapas. They also come for a hassle-free beer or two, much cheaper here than in their Muslim homeland.
Sometimes, the guests like to open up on political matters at home, says Makarios. "There was a group here recently who saw Erdogan pop up on the Greek news," he said. "They started shouting - 'Turn it off, we don't want to see him!'"
All that you can't have
Hotelier Dimitris Xanthoulis, who owns a five-star facility in the town, says his Turkish guests are there to gamble. "There is a casino located right beside our hotel and with gambling banned in Turkey, Alexandroupoli has adapted cleverly to the demand," he says. In the hotel sector in the town, Turkish tourists are providing half the business at present.
Hotel workers Fatma Selim and Alexandra Maladaki speak Turkish to guests in GreeceImage: DW/M. Milona
"I come from Istanbul, a city of 15 million people," he said. "But with Alexandroupoli only 2.5 hours from my house, we can come here and be Oriental and European at the same time. There are two types of Turks. Those who are very poor and who don't really know what is happening, and those who are rich, modern and very well-informed."
The staff at Kyriakos Stogios' tavern are well used to Turkish visitorsImage: DW/M. Milona
Onur has faith in the Turkish economy. He believes in the country's manufacturing abilities, especially in the electronics and textile sectors. As well as that, he thinks the currently cheap price of Turkish exports is a good thing for the country.
Europe on my doorstep
In this young man's opinion, the Turkish lira crisis will not last long. But he also admits that one of the reasons he is holidaying in Greece, as opposed to other European destinations, is because he can drive there and avoid expensive airfares. "Traveling by car to Europe is certainly much cheaper for me," he says.
Yet the fact remains that for as many as 20 million wealthy Turks, a weak lira will not stop them enjoying the finer things in life, he claims. Kyriakos Stogios can vouch for that. "We have not felt the crisis here in Alexandroupoli and for that we must be thankful for our Turkish neighbors."
Turkey's currency crisis explained
The Turkish lira crash is threatening to turn into a debt and liquidity crisis. DW explains how the lira got to this point.
Image: picture-alliance/A.Gocher
The big picture
Turkey is in the throes of a full-blown currency crisis, with the Turkish lira losing nearly 45 percent of its value since the start of the year. The currency crisis threatens to plunge the world's 18th-largest economy into a financial crisis and trigger contagion in emerging markets and Europe.
Image: Getty Images/C. Mc Grath
Search for yield
Turkey has traditionally suffered from a large current account deficit. This difference between import and export of goods and services has been filled through external borrowing in foreign currency. A decade of easy money and low interest rates in the United States and EU following the 2008 financial crisis led to investors searching for higher yields to emerging markets like Turkey.
Image: AP
Credit-fueled growth
The external funds entered the Turkish economy to finance deficits, massive government spending and company borrowing. Credit-fueled growth helped the Turkish economy grow and boosted the government’s popularity through increased consumption and major construction projects. Here, road paint reads: "Slow down."
Image: Getty Images/AFP/O. Kose
Reducing exposure to emerging markets
Investors have pulled back money from emerging markets in recent months as the US Federal Reserve has steadily raised interest rates and is cutting back on easy money policies in response to a robust American economy. This has caused the dollar to increase, the lira to fall, and Turkish bond yields to rise.
Image: Getty Images/S. Platt
Loss of confidence in Erdogan's strong hand
The pressure on Turkey is reflective of broader trends in emerging markets, although the lira is by far the worst performer. That's because investors have lost confidence in management of the economy under President Recep Tayyip Erdogan, who believes in unorthodox economic policy, demands low interest rates and constantly assails "the interest rate lobby." Inflation is at 16 percent a year.
Image: Getty Images/AFP/B. Kilic
Trump's tweet shakes markets
On August 10, US President Donald Trump announced higher tariffs on Turkish imports of steel and aluminum. The tariffs themselves are minor and impact around $1 billion (€875 million) in trade, but they weighed on market confidence in the vulnerable Turkish economy. Even more, Trump’s direct reference to the Turkish lira sent the currency tumbling.
Image: Twitter/Trump
Frenemies
The imprisonment of US pastor Andrew Brunson has weighed heavily on relations, leading to a series of escalations. Ties between the two NATO allies have also nosedived over US support for Syrian Kurdish forces, Ankara's plans to buy a Russian missile system and Turkey's demand that Washington extradite US-based Islamic cleric Fethullah Gulen, whom Erdogan blames for the failed July 2016 coup bid.
Image: Reuters/K. Lemarque
One man show
Poor relations between Washington and Ankara have added to Turkey's economic woes, but given broader fundamentals it is only a proximate cause of the market mayhem. More than 30 percent of the lira’s loss has come since June, when Erdogan took over the office with new sweeping powers. Erdogan's authoritarian hand has distanced the country from traditional Western allies and hit confidence.
Image: picture alliance/AP Photo/E. Gurel
Albayrak: the son-in-law
After winning a June election, Erdogan spooked markets when he tightened his control over the central bank. Instead of appointing technocrats, Erdogan appointed his son-in-law Berat Albayrak (pictured) to lead the newly empowered Finance Ministry. This has raised concerns over the central bank's independence given the president’s repeated statements against raising interest rates.
Image: picture-alliance/M. Alkac
'Economic war'
Erdogan has not inspired confidence in responding to the lira meltdown. He speaks of "economic war" and a "campaign" waged by external powers designed to weaken Turkey. Instead of taking drastic action to shore up confidence, such as raising interest rates or going to the International Monetary Fund (IMF), the government is couching itself in nationalistic rhetoric of sacrifice.
