Europe News

Sale of island sets up clash in Venice

Jim Yardley
WATCH LIVE

A short boat ride from the elegant tourist horde that is Venice, Poveglia Island could be considered the anti-Venice. There are no souvenir shops, no gondolas and no people. A brick bell tower rises from a jumble of abandoned buildings. The overgrown gardens have been untended for decades.

Poveglia might be a forgotten place in the Venetian Lagoon if not for a more recent feature: a digital For Sale sign.

Read MoreBad loans at European banks hit $1.7 trillion

The abandoned 'Stazione Sanitaria di Poveglia' (Hospital of Poveglia) with the San Vitale belfry, August 27, 2011 in Venice, Italy.
Marco Secchi | Getty Images

Now the island is entangled in two very different Italian problems, one national and one local. Italy's public debt is so great that the government has put a list of properties, including Poveglia, on the auction block. And Venice's tourism industry is so booming that many residents complain that ordinary life is becoming less and less tenable, which has turned the online auction for the island into a cause célèbre.

Fearing that Poveglia could be developed into a luxury resort for rich visitors, a group of Venetians is proposing that the island should instead be a refuge from the onslaught of tourists, where anyone can go to enjoy the gardens, learn to sail or just to have a picnic.

Read More'Odds are in our favor': Greece's biggest bank

"What kind of Venice do we have in mind for the 21st century?" asked Lorenzo Pesola, an architect and a leader of the local group, whose motto is "Poveglia for Everyone."

"We have to find some sort of balance between those who want to see it for the first time and those who don't want to see it for the last time."

The auction is being managed under the auspices of the Italian economy ministry. Properties across the country are up for sale, though the process is complicated and Italy has not moved swiftly to sell its cultural assets, often a contentious move. In the case of Poveglia, the government is selling a 99-year lease on the surface of the island, while maintaining ownership.

Read MoreEuro zone business activity at three-year high

The stakes escalated last Wednesday when the first phase of the bidding process was made public. Two bids qualified, one from an anonymous corporate investor, the other from donations collected by Friends of Poveglia. So far, the citizens' group is decidedly in second place: It bid 160,000 euros, or about $220,000, compared with 513,000 euros — $705,000 — by the corporate investor.

Venice is sustained by tourism, even as the relentless growth of the industry is regarded as a rising threat to the city's environment and stability. Five years ago, when the population in the city center had dwindled to less than 60,000 —after topping 108,000 people in 1971 — local activists staged a mock funeral, floating a coffin in a gondola down the Grand Canal. (They later opened it up to reveal bottles of Spumante.)

The number of tourists coming to Venice now surpasses 20 million a year. Cruise ships deliver thousands of visitors on many days, with the huge boats looming over the narrow canals of the ancient city. And a handful of islands in the surrounding lagoon are being developed as luxury hotels or condominiums accessible only to wealthy guests or owners.

Read MoreItaly to launch privatization drive with Fincantieri

Local resistance has steadily coalesced. One contested project involves plans to build an amusement park on an island that once housed the city's landfill. The developer, Alberto Zamperla, whose company helped redevelop amusement rides in Coney Island, says his project will provide jobs while celebrating the history and culture of Venice. Critics say it is another step toward the city's Disneyfication.

"Sometimes when I talk with people, I have the impression that I am before an inquisition or tribunal," said Mr. Zamperla, who is still awaiting zoning approval.

But public frustration seems to have galvanized most over the fate of Poveglia, which is about two miles from St. Mark's Square and the heart of Venice. The island has remained fairly obscure; some accounts hold that plague victims were buried there centuries ago, though local historians say no such evidence exists.

Read MorePortugal decides on 'clean exit' from bailout

If so, that would be fairly typical for many of the islands in the lagoon. A few sensationalistic accounts have described Poveglia as a "haunted" island, though many ordinary Venetians know it as a place where they once spent languorous weekends to escape the city.

"I came out here when I was young," said Patrizia Veclani, who is now part of the Friends of Poveglia campaign. "We used to dive in the water and have barbecues. When we were teenagers, we came out with our boyfriends."

When the government announced the auction, citizens began a donation drive as the issue drew attention in the local news media. Organizers say they have been stunned by the outpouring of donations, including from many people outside the city sympathetic to their goals.

Read MoreSpain's economy grows at fastest pace in 6 years

On a recent rainy afternoon on the island of Giudecca, part of Venice, volunteers were collecting donations at La Palanca, a restaurant. Those who donated at least 99 euros would be listed as a "part owner" of the island if the group wins the auction.

Antonio Cirillo, an elementary-school teacher who has worked in Venice for 12 years, offered 100 euros. "I like being part of anything that is doing something for the people who actually live here," he said. "People who choose to live here make an emotional choice. It is something you do with your heart."

Pier Paolo Baretta, a native Venetian who is an undersecretary in the economy ministry, said he had been impressed by the fervor of the local campaign — and even acknowledged sympathizing with the cause.

"This is a case study to reflect on what a public asset actually means," Mr. Baretta said, adding that he thought the campaign over Poveglia had been an important moment for a city struggling to achieve a balance between quality of life and tourism revenue.

Read MoreEuropean bank CEO pay surges in 2013

"Personally, as a Venetian," he said, "I'm very happy with what we are seeing now. If I were not in government, I would support the association."

The next phase of the auction process will be on Tuesday, when the two remaining bidders can compete and raise their offers. Mr. Pesola, the leader of the citizens' group, said more donations had been coming in, but he questioned whether it could ultimately post the highest bid. He hopes the government might intervene to help.

The group's plans are still developing for the island, which comprises three parts separated by narrow canals, including a small, octagonal naval fortification built centuries ago. Mr. Pesola estimated it would cost several million euros to restore the buildings and the gardens. The group is looking for partners and has been talking with, among others, a local sailing school that is interested in teaching traditional Venetian seamanship.

"Two weeks ago, everyone thought this was a utopian passion for a lost cause," Mr. Pesola said. "But no one does anymore."

Gaia Pianigiani contributed reporting.

Follow us on Twitter: @CNBCWorld