Greeks Are Culpable for High Prices: A Response to "Will the Drop in the US Dollar Affect Tourism in Greece?"

By Rudi Neumann

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The Greeks are to blame for their own high prices. The Euro, with a fixed conversion rate and as the principal and only currency, was already in effect 4 or 5 years ago. Accordingly, the drachma was only used for paper money and coins, with the said fixed conversion rate to the Euro in effect.

Then, beginning in 2002, paper drachmas were also converted to Euro currency. Greek business owners took advantage of this situation by falsely claiming that the increased prices they were suddenly charging were due to the Euro conversion. False! The Greek business owners did it themselves.

The same situation with regard to Euro conversion in Austria—and other EU countries, for example—did NOT lead to those price hikes. There was only one small exception: restaurants and entertainment industries which "rounded off" to the next highest Euro amount and charged, for the sake of an example, 3 Euros for a drink, let's say, which should have been 2.82 with the correct conversion rate.

Immediately after Greece converted to the Euro, most tourists returned saying that they could not understand what Greece was trying to do with the prices. For no obvious reason they had been increased dramatically. It couldn't be explained away as the result of increasing prices of imports, because US imports were getting cheaper and cheaper, and imports from European countries would remain the same because of the common currency. The only possible conclusion was that this inflation of prices was entirely contrived by Greek business owners, so the Greeks should not now complain.

As for the exchange rate with the US dollar, the drop in the value of the dollar has made a big difference for US citizens traveling to Greece. But this rate should not have made a difference for tourists coming from Euro countries, who constitute, as I estimate, about 80% of all visitors to Greece. The net result is that even the Euroland tourists are now going to avoid vacationing in Greece because of the unexplainable price increases for tourist food, lodging, and services. Instead, everyone is now going to TURKEY!

Rudi Neumann, a European industrialist, was born in 1946 in Vienna. He earned a degree in electronics from the Technical University of Vienna, Austria, and then became the sales manager and owner of a family-founded business. Also a former venture partner with Christos Papoutsy, he now deals with electronics production equipment, materials and services in Central and East Europe.