by Laura Molloy
New alliances form as Europe scrambles to rescue the tourist season. With summer quickly approaching and nations formulating plans to lift lockdown measures, many wonder what the impending changes mean for the rite of summer vacation. Governments are scrambling to set border policies for vacation travel, while the tourism industry is under pressure to generate profits. These dynamics may be most pronounced in Europe, where entire populations collectively take off in July or August, and many Southern and Central European countries depend on this period to sustain a large part of their economy. While these same countries have been hard-hit economically by the pandemic, they are finding creative ways to highlight their relatively low infection rates to boost their economies.
Observers of the travel industry predict that tourism will be limited to domestic travel this summer, but in Europe, there are countries where coronavirus is considered controlled. They are creating informal blocs in which “corridors” would allow their residents to travel unimpeded to nearby countries with a similar epidemiological profile. In April, Czech travel associations made an initial proposal to their Croatian counterparts to allow Czech visitors to visit the Adriatic coast without completing a 14-day quarantine. Both countries have maintained a low number of coronavirus cases and have seen a consistent decline in active infections.
Croatia is one of the most tourism-dependent countries in the world, with the sector accounting for more than 20 percent of GDP. The Czechs proposed the corridor idea as a “lifeline” for Croatia’s tourism sector. The plan has been discussed at the highest levels of government, with potential add-on participants including Germany and Austria. Similarly, the three Baltic states (Estonia, Latvia and Lithuania) established a “travel bubble” allowing citizens to move freely among them starting on May 15.
Greece finds itself in a similar position to Croatia, with local media celebrating the country’s unexpected success in containing the virus. Despite this victory, owing to the expected shortfall in tourism, the IMF projects Greece’s GDP will drop by 10 percent this year, making it the hardest-hit economy in the Eurozone. To mitigate the damage, in early May, Minister for Tourism Harry Theoharis, said his country was working on a so-called “corona corridor” with Cyprus and Israel to facilitate summer travel. Discussions between governments and industry are ongoing, but their leaders’ proactive attitude suggests these countries may be able to salvage a portion of their seasonal tourism revenues.
While these new blocs represent a way forward for Europe’s most fragile economies, the new system may lead to further cracks in the European Union’s solidarity. Criticism has already come from Italian politicians. MEP Rosanna Conte and MP Alex Bazzano recently presented a parliamentary question to the minister of European affairs, Vincenzo Amendola, suggesting that the corridor to Croatia constitutes “unfair competition,” penalizing Italy for its health crisis. Last week, Prime Minister Giuseppe Conte stated that he will not accept “bilateral agreements that create privileged tourist routes.”
For now, observers can only speculate about the results and consequences of these summer travel corridors. It has become clear, however, that health has become a key bargaining chip for tourism-dependent nations. Whether these regional agreements are fair within the European free movement context, and whether these alliances will last beyond this year, remains unclear.
For more information on Gryphon’s Europe team and Global Strategic Advisory practice, please contact Victoria Mackay at [email protected]