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Gold jewelers of Santorini suffer in the sun.

It is hard to feel too sorry for the gold jewelers of Santorini. Times may be hard, but they do live in one of the most beautiful places on Earth. The collapse of the Greek economy has done nothing to stop the sun glinting off the sparkling lagoon of this idyllic island in the Aegean Sea.

Nor has harsh austerity to avoid debt default obscured the famously romantic sunset watched from a volcanic rim festooned with iconic white houses and tiny blue-domed churches.

The cruise ships are still here -- as many as 150 a month in summer -- and the other tourists are coming back after several years of poor attendance.

But along the ancient rim, or caldera, some of Santorini's best-known contemporary residents -- the gold jewelers -- are getting hammered from all sides.

Greek austerity means higher taxes for the sellers and greater scrutiny from the authorities. U.S. economic weakness means careful American tourists are using dollars that make euro prices look alarmingly high.

And seemingly insatiable world demand for gold means the prices of the jewelers' main stock is now in the stratosphere.

"People don't want to spend money," said Nikolaos Papadeas, owner of four shops on the island and a more than 40-year veteran of the Greek jewelry trade.

A competitor in an upmarket shop further down Ipapantis Street -- commonly known as "Gold Street" -- sat amongst his Baccarat and Lalique with barely a buyer in sight.

"If you were on this street five to 10 years ago you would have seen about 30 percent more jewelry shops," said owner Yiannis Mendrinos, who focused on selling upscale glassware and crystal to try and make ends meet.

He pointed across the road to a clothes shop that was once a bustling venue selling gold chains, rings and earrings.

GOLD BECOMES UNAFFORDABLE Many of the problems faced by these small businesses are only indirectly related to Greece's troubles.

The price of gold, for example, may have risen as investors purchased the metal as a haven because of fears of potential Greek default sweeping into the European banking sector.

But its rise from $650 an ounce to more than $1,500 over four years has far more to do with global investment trends than Greek budgetary profligacy.

Many tourists on Santorini no longer see the gold jewelry and ornamental pieces, some of which are based on Byzantine art and the mythology of ancient Greece, as easily affordable souvenirs of the Aegean islands.

Similarly, the strength of the euro against the dollar and pound is certainly not of Greece's making. Indeed, any weakness the euro has shown recently has tended to be the result of worries about Greece, a euro zone member, going bankrupt.

What is unique for the jewelers at the moment is the additional costs of doing business now heaped upon them by the government in Athens, which is seeking to enforce stringent spending cuts and tax rises needed to gain international aid.

"They put an extra 10 percent luxury take on all my items besides the rise in VAT, which makes my merchandise not so attractive in comparison with other countries such as Italy and Turkey," Papadeas said.

Those countries are keen competitors given the roving nature of the cruise ship business.

Value-added tax on jewelry has risen to 16 percent from 13 percent. Austerity legislation has also hit businesses with a 3 to 4 percent special charge, depending on where the business is located.

It all means that selling gold, even in a sun-drenched tourist haven famous for such a glittering trade, has become, like Greece's economy itself, uncompetitive.

NO HOME CROWD Santorini is different from the rest of Greece in that its clients are mainly foreign, from the United States, Europe and Asia. Were they not, life would be far harder.

Jewelers in the Plaka, the main bazaar of the capital Athens, have found their local trade has dried up with the debt crisis and the age of austerity.

"The Greeks do not buy. The Greeks buy nothing, absolutely nothing," said George Nikolopoulos, owner of a gold and silver shop amidst the narrow streets of Athens' center.

Economic statistics back him up -- and not just about luxury items such as jewelry.

Consumer spending has fallen by nearly 9 percent in real terms since the third quarter of 2008. New car registrations, another guide, were down 16 percent in May on the previous year.

Along Santorini's caldera, the focus remains on tourists.

Selling gold keepsakes to Americans is seen as a lost cause while the dollar remains weak and cruise shops are noted for having gone down market.

There was a time when U.S. visitors would scour the shops for new designs or Ancient Greece-style pendants, pins and hair clips or jewelry based on for example, Alexander the Great, the winged figure of Eros or on the Greek meander key.

There is some hope for new business from an increasing number of visitors from China, but that phenomenon has not yet led to an uptick in high value gold artifacts.

Silver is doing quite well, because although it is expensive in historic terms it is still cheaper compared to gold. But jewelers need to sell more to make the same amount of profit.

So Mendrinos is hoping higher quality, alternative items in his store from luxury designers will come to the rescue by attracting the recession-proof wealthy.

"The rich are always rich," he said.

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Publication:Financial Mirror (Cyprus)
Geographic Code:4EUGR
Date:Jul 6, 2011
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