Along with the rest of Greece, Crete is finally emerging from the economic crisis that forced the nation into major austerity measures in return for remaining within the European Union (EU). Key economic indicators are showing a positive turn, with tourism, in particular, going strong – which is creating its own set of problems. Meanwhile, Crete was not as severely affected by the migrant crisis as other Greek islands and has also been part of a pioneering EU-funded integration program.

The Fiscal Crisis & its Fallout

Although its relative abundance of natural resources and geographical isolation from the more urbanised mainland shielded Crete from the worst financial problems, it too got caught up in the tumultuous machinations that have gripped Greece in recent years.

To prevent the country's economy from collapsing, Greece received two financial bailouts (€110 billion in 2010 and €130 billion in 2012) from the EU and the International Monetary Fund (IMF). However, in 2015, it became the first developed nation to go into arrears with the IMF upon failing to repay €1.6 billion when the second bailout expired. Attempts to negotiate a new bailout and avoid default proved unsuccessful as Prime Minister Alexis Tsipras of the left-wing Syriza party took the offer back to Greece and held a referendum. Over 61% of voters were not willing to accept the bailout conditions.

Turmoil followed, with the spectre of a possible 'Grexit' looming large. At the 11th hour, Tsipras secured a third bailout loan of over €86 billion – but it came with even more vigorous austerity measures. Further tax hikes, pension reforms and privatisation of €50 billion worth of public companies left many viewing Greece as a financial ward of Europe.

Under Tsipras' government the economy grew modestly, unemployment fell, consumer spending rose and poverty declined. With the EU agreeing to more lenient repayment targets in 2017, Greece received its final loan in 2018, thereby finally exiting the series of bailout programs. Crete fared quite well too, posting the lowest unemployment rate in the country (18% in March 2019). Even so, the Greek economy has a long way to go before it reaches its pre-crisis level of health.

Although support for Tsipras remained strong in all four Cretan election districts, the majority of Greek voters, exhausted with austerity, rejected Syriza in the local, European Parliament and general elections in 2019. The centre-right New Democracy party, led by Kyriakos Mitsotakis, won by a landslide, giving it an outright majority of 158 seats in the Greek parliament.

Migrants & Refugees

Compared to other Greek islands such as Lesbos and Samos, Crete has only been marginally affected by the refugee and migrant crisis that began in the middle of the decade. According to the United Nations High Commissioner for Refugees (UNHCR), more than one million people washed up on Greek shores in 2015 and early 2016, most of them from Iraq, Afghanistan, Syria and Africa. Numbers dropped after the closing of the Balkan border in March 2016, and the EU struck a deal with Turkey to stem the human tidal wave into Greece. By mid-2019, the number of asylum-seekers in the country hovered around the 67,000 mark, with the majority residing on the mainland.

In early 2016, refugees stranded on Crete were among the first beneficiaries of ESTIA (Emergency Support To Integration & Accommodation), a pioneering aid program designed to move people out of camps and into private housing; it also provides them with a small cash stipend. Funded by the EU and administered by the UNHCR together with the local governments of Chania, Iraklio and Sitia, the initiative put nearly 1000 people into apartments and on the road towards integration. It has proved so successful that the EU extended its funding through 2019 and possibly beyond.

Tourism's Robust Rebound

Along with agriculture – olive oil and wine production in particular – tourism continues to be the backbone of the Cretan economy. Visitor numbers are growing in leaps and bounds, which has helped the recovery from the eight-year austerity crisis. With over 5.2 million arrivals, 2018 represented another bumper year for Crete and made it the most visited Greek island after Santorini. This influx translates to a staggering €3.26 billion, or about 25% of tourism spending in Greece overall.

The flip side of this popularity is, of course, early signs of overtourism, especially in the population centres in the north and at such bucket-list sights as Knossos, which are inundated with visitors in July and August. To stem the tide, the Greek National Tourism Organisation (GNTO) is trying to encourage more people to travel outside the peak season and to develop an economy away from the 'sun and sea circuit', in sectors such as health, wellness and golf tourism.