Wealthy holidaymakers descended from luxury hotels on a recent evening into the gleaming labyrinth of Mykonos’ historic old town, ogling gold jewelery and heading to bars stocking expensive bottles of Veuve Clicquot. Tourists cruising the Aegean on 15-deck cruise ships dove into designer boutiques on day trips filled with unbridled shopping.

Along the island’s famed turquoise coastline, exclusive beach clubs were busily expanding restaurants on the fine sand, catering to an influx of billionaires, celebrities and influencers.

With over two million visitors a year, Mykonos is one of the world’s most popular holiday destinations – and a source of prosperity in Greece’s economic revival. Since the country’s decade-long financial crisis ended in 2018Greece has surfed on one recovery fueled by tourism and investment. Investors have flocked to Mykonos, eager to cash in on a goldmine of development for luxury properties, sprawling hotels and high-wattage nightclubs for the free-spending crowd.

But recently a dark side has emerged amidst the glamour, when a state archaeologist who had been documenting construction violations on the island was mysteriously attacked. The official, Manolis Psarros, 53, was left unconscious with a broken nose, broken ribs and black eyes in a beating that sent shockwaves across Greece.

Nowhere has the reaction been more fierce than in Mykonos, where a close-knit clique of locals have long whispered about unauthorized and sometimes assertive activity by big-socked developers, and a lax enforcement system they say empowers anyone with enough money to go above the law. to operate. law. The Greek government acted swiftly.

“The situation on Mykonos has gotten out of hand,” said Despina Koutsoumba, the head of the Association of Greek Archaeologists. “The attack on Mr. Psarros was a mob-style hit intended for intimidation,” she added. “It is clear that there are major corporate interests at stake.”

Police have opened an investigation into the attack, which took place one night in March outside Mr Psarros’ home in Athens, but declined to comment on the matter.

Aside from its Instagram glamour, Mykonos is one of Greece’s premier locations for antiquities. Neighboring Delosan ancient shrine to the god Apollo and a UNESCO World Heritage Site, it is often packed with travelers from all over the world.

The Ministry of Culture’s archaeologists are tasked with preserving such treasures by inspecting land before new buildings are built. Twelve ancient sites were discovered on Mykonos within eight years during foundation building excavations, with construction halted in some cases and forced to relocate in others.

The mandates of the state archaeologists increasingly came up against the rapid developments and the pressure of the investors behind them. Mr Psarros had reported multiple violations on Mykonos before being attacked. He was due to testify about the wrongdoing in a trial that was adjourned last November, the latest in a series of adjournments since 2018.

Prime Minister Kyriakos Mitsotakis, which faces a contentious election on Sunday, has moved to restore order. Last week, the government ordered one of Mykonos’ most famous beach clubs to close until further notice for building violations, and this week ordered the partial closure of another.

He also recently sent 100 police officers, as well as financial crime investigators and environmental and building inspectors, to step up checks: more than 75 arrests have been made in connection with illegal buildings, compared to 36 arrests in all of 2022. Police are also investigating reports of corruption by their own officers for tipping developers on Mykonos about inspections.

The government has suspended most new building permits on parts of the island pending the completion of a new zoning plan. And the prosecutor of Greece’s Supreme Court ordered further investigations into illegal construction, describing the situation on Mykonos as “miserable”.

Citizen action groups, working to address community concerns, said the government is turning a blind eye. “What happened in Mykonos is no secret. The state authorities have known for years,” said Markos Pasaliadis, a spokesman for one of the groups, the Movement of Active Citizens. “If the attack on Mr. Psarros had not come to light, everything would have continued as it was.”

Residents lament the chicanery, but they’re careful not to speak ill of the island many nostalgically remember as a cultural destination popularized by Jacqueline Onassis and Princess Grace in an era of quiet elegance.

Many are wary of investors coming from outside their world and speak nervously about the development that has seen an influx of black vans with tinted windows and ominous security guards in recent years.

Whether the government’s crackdown will work remains to be seen. Some coastlines are already wrapped in a phalanx of concrete housing. Near Super Paradise Beach, one of the largest party havens, no less than 50 hollow shells lie on the surrounding hills, awaiting completion.

Local authorities are trying to halt new mega hotel complexes, including a multimillion-euro Four Seasons resort that the Athens government had approved.

Houses have mushroomed along mountainsides and in areas classified as ‘unbuildable’, and some villas are larger than allowed. Some construction sites have lookouts and workers disappear when the police arrive. Ms Koutsoumba said some small businesses and hotel owners had reported being pressured to sell their properties to larger interests.

Big clubs have also made money from expansions of bars, restaurants and walls blocking access to public beaches.

Among them is Nammos, a jet-set playground with open-air luxury boutiques and a beachfront restaurant, owned by Monterock International, a Dubai-based private equity holding company, and Alpha Dhabi Holding. On Friday, the government called for the closure of Nammos and police closed one of the beach restaurants. A Nammos lawyer called that order illegal and said the company would challenge it. A Greek court has also rejected an appeal by Nammos against a separate government order to demolish illegal structures on the site.

There’s also Principote, a destination for the wealthy that, despite multiple mentions, has spread over Panormos Beach for years, along a picturesque bay. Authorities have imposed a €22 million fine for illegal building extensions, with the option of reducing it to just €500 if the buildings are removed. Principote, which is registered with a holding company in the Marshall Islands, has contested the violations and resulting fines. Police last week ordered the closure until further notice. The company has appealed that decision.

In 2016, Mykonos Mayor Konstantinos Koukas shut down the company after reports of unauthorized building extensions. “But the owners kept reopening and there was little we could do,” he said.

Principote’s activity raised red flags with the Greek Archaeological Service, which has identified antiquities under the hills near the club. Panormos is one of the areas targeted by archaeologists’ inspections. In a press briefing following his hospitalization, Mr Psarros said archaeologists had requested police protection after seeing armed guards inspecting building extensions.

A lawyer for Principote did not respond to requests for comment.

Tasos Xidakis, the owner of the neighboring Albatros Club Hotel, has watched the expansion of the club with alarm. In 1989, his father built small bungalows above Panormos, a public beach that was once open to everyone. Mr. Xidakis and his brother expanded the business into a rural hotel complex with panoramic views of the Aegean Sea – and of Principote.

Mr. Xidakis watched Principote change from a rustic beach taverna in the 1970s to a destination for a party crowd paying thousands of dollars for sunbeds and sushi. He said his hotel patrons have routinely complained about being blocked from the beach.

Local authorities say they have no means of enforcement and once detectives and police teams leave, the illegal building will likely start all over again. The Mykonos police force is small and the planning authority was moved to Syros, the administrative capital of the Cycladic islands, after the responsible officer on Mykonos was suspended for corruption in 2017.

“We want to protect our island and we are asking the state for help,” said Mr Koukas, a mayor who has served two terms. “Everyone wants to build everything in Mykonos, but underemployment creates conditions where people can break the law.”

There are plenty of options to do this. Only three government-appointed archaeologists, including Mr Psarros, have been appointed to approve building permits on Mykonos and inspect sites.

“Some people don’t want to wait for approvals that can take nine months to a year,” said Antonis Kyrantonis, head of the Association of Project Engineers on Mykonos. “They say, ‘I’ll build something illegal and we’ll see what happens.'”

Christos Veronis, a mayor from 1991 to 2009, said years of treating tourism as a money grab had tarnished the island. But the government’s crackdown would certainly help things improve, he said.

The ugly real estate squabble doesn’t seem to have tarnished the appeal of Mykonos, which was already buzzing with visitors from the United States, France and China just months before peak season.

“It is an international destination,” said Mr. Koukas, the current mayor. “It is the star island of Greece.”