Joggers in Barcelona on May 3

Last year 1.5 billion international tourist arrivals were recorded globally. In 2020, with borders closed and airplanes grounded, the tourism industry has been decimated and its recovery could take years.

The Organisation for Economic Co-Operation and Development anticipates a 45% to 70% decline in the tourism economy — amounting to losses between $295-$430 billion for the global travel industry. For countries that rely heavily on summer tourism, there's a scramble to save the season.

  • Quick to impose a nationwide lockdown, Greece hasn't been hit as hard as other European countries, with 146 registered deaths so far. But with the tourism sector making up about 18% of its GDP, and most of the visitors arriving in the warm months, action is needed. Prime Minister Kyriakos Mitsotakis estimates that the country could be ready to reopen to foreign tourists on July 1, depending on the implementation of health protocols.Tourism Minister Haris Theocharis presented a three-point planto the Parliament earlier this week to help reopen Greece to tourism, I Kathimeriní reports. The plan centers on special health safety standards for hotels, airplanes and tour buses, as well as diplomatic contacts with other governments to allow visitors to come, and finally, a new advertising campaign to promote Greece as a holiday destination in spite of coronavirus.

  • Last year, Spain was the world's second most visited country, with nearly 84 million tourists. Having suffered more than 24,500 deaths, Spain continues to be on strict lockdown. After the ABC daily reported that the government was considering closing its borders to foreign tourists for the whole summer, an outcry followed from the tourism industry. Tourism Minister Reyes Maroto since told El Pais that the reopening of borders would depend on "the evolution of the health crisis'. For now, only domestic travel and tourism will be encouraged as hotels, bars and restaurants will be gradually reopened beginning next week, with reduced capacity and under strict hygiene measures. Some coastal towns are also looking to recruit extra lifeguards to make sure beachgoers respect social distancing, while separate hours for children or elderly people are also being considered. On the destination islands of Mallorca and Ibiza, some hotels are starting to reopen, though it's unclear how people would reach them.

In Malaga, Spain, on May 2 — Photo: Jesus Merida/SOPA/ZUMA

  • Egypt has cut itself from the outside world and cancelled all international flights since March 19, leading to losses estimated at $1 billion per month for its tourist sector. The country, famed for its Pyramids and Nile river cruises earned $12.6 billion in tourism revenues in 2019, the highest in a decade, according to Asharq al-Awsat. Now Egypt has begun to allow hotels to reopen, but only for domestic tourists and at a 25% capacity until the end of May and 50% from the beginning of June. The Egyptian Tourism Federation has devised a plan with a package of health measures for tourism establishments to reopen while ensuring the safety of both tourists and workers, Egypt Independent reports. Hotels will have to clean rooms daily with a special steam machine to disinfect furniture and fabric and all touchable points will have to be cleaned and sterilized every hour in public places and restrooms. Each hotel will also have to provide an on-site clinic and doctor, and assign an area that can be used as a quarantine bay if any coronavirus case is discovered.



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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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