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Last Updated: Wednesday, 29 August 2007, 17:15 GMT 18:15 UK
Greece prepares to count fire cost
By Clare Davidson
Business reporter, BBC News

A man pulls a plough from ruins in the village of Xirochori, near Zacharo, West Peloponnese 28 August 2007
Crucial agricultural land has been damaged
Greece has seen some of its worst fires in years, leaving property destroyed and land ravaged, forcing people to flee their homes and livelihoods.

It is far from clear what the long-term impact of the devastation will be on the Greek economy as a whole.

But there are fears that damage to the Peloponnese region of Southern Greece - an olive-producing heartland which has borne the brunt of the fires - could seriously harm the local economy for some time to come.

The Greek government has pledged to speed up compensation for those whose homes or land have been affected.

The Ministry of Finance has already announced grants for the immediate needs of victims, compensation for domestic equipment, and increased grants for the families of the deceased.

GREEK COMPENSATION
Suspended VAT and debt payments for firms and individuals impacted
Grants of 5,000 euros for immediate needs
Pending debts suspended
Extra 20m euros for local government to address damage

"The government has decided the priority will be to the villages with the greatest number of fatal victims - Artamitha, Makistos and Smirna from the municipality of Zacharo," government spokesman Theodoros Roussopoulos said.

According to Dee Murphy, a freelance journalist for the BBC, who has just come back from the region, queues were already forming at banks in Zacharo for those seeking government aid.

Much of the area is dominated by farmers, so losing their homes means losing their livelihoods, she said.

Without feed for their livestock or water for their produce, their income is threatened she added.

Output hit

While it is too early to gauge the impact, it is clear the scale of the fires is exceptional.

According to the BBC's Dominic Hughes, more than 120 major fires have been reported this year compared to 52 for the whole of last year.

The government has not posted any official figures on the total costs though unconfirmed estimates have been issued in the local media.

Greek newspaper Kathimerini said the cost of damages will exceed 3bn euros, or 0.6% of GDP, while another newspaper Express put the figure at 0.7% economic output.

Eirianna Kouri, from the British Embassy in Athens, cited Kathimerini as saying that 270,000 hectares and 4,500 homes had been burned by fires this summer.

George Georgakopoulos, the acting financial editor of Kathimerini told the BBC that four areas - Ilia, Laconia, Arcadia and Messina - which are all in the Peloponnese, in addition to the island of Evia - represent 4.5% of Greece's annual GDP.

Olive groves

According to a spokesperson for the Ministry of Agriculture, Kalamata and the surrounding area - one of the worst affected - is one of the country's main olive growing regions.

Olive groves in Greece
Greece exports olives worldwide

He said about 20% of Greece's olives are grown there.

The region is renowned for producing high quality olives that are used for extra virgin olive oil, which is sold at a premium.

As well as being a key exporter to EU countries such as Spain and Italy, Greece also sells to countries including the US and China.

Ms Murphy said one farmer she spoke to who grew olives exclusively had lost 500 out of 700 trees, and estimated it would take up to five years to recover and yield a full crop again.

Tourism

Graphic pictures of the damage wrought by the fires have inevitably raised fears that it could prevent tourists from visiting Greece, further damaging the local economy.

But while Greece may be a popular tourist destination, visitors tend to go to the Greek islands at this time of year more than the Peloponnese, said Manos Hatzimalonas, from the Greek National Tourism Office (GNTO) in London.

"No developed tourist areas have been affected by the fires as those areas consist of mostly rural and mountainous terrain," he said.

But he added that "all figures are speculative at this early stage with fires still burning and people still missing".

Nonetheless, there are hotels in the region which have clearly been impacted.

Panagiotis Zafiropoulos, the head of the Olympia Palace Hotel, told the BBC World Service that the hotel had been empty of clients and tour groups since Sunday night due to the "terrible smoke" making it impossible to breathe.

"We though it was better to call tour operators to tell them to take tour groups to other destinations," he said.

However, the hotel - which overlooks the ancient site of Olympia - had been full of radio and TV reporters covering the fires.

But he predicted that life in Olympia would return to normal by Wednesday.

Ms Murphy, meanwhile, said some of the land around the hotel she had been staying in Pyrgos had been burnt and the hotel had closed as a result.

Recovery time

Even once the fires are out, there is the ongoing issue of land which has been damaged.

It can take up to four years, on average, for Mediterranean shrub land to recover, said Dr Paulo Barbosa of the European Forest Fire Information System (EFFIS).

As for forest regeneration, it can take between two and three decades.

Back in 2003, severe forest fires swept across Europe, with Portugal seeing the worst damage Dr Barbosa said.

At the time, Portugal estimated that 270,000 hectares of forest land had been destroyed as well as 25,000 hectares of agricultural land.

Portugal was awarded 31m euros from the European Union Solidarity Fund - but the total amount claimed was 946.5m euros in direct damage.

The disaster was reported to have caused the loss of goods, jobs and work for some 45,000 people.


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