RIACE, Italy - An Ethiopian pop song blares as a group of African women sit embroidering in an impoverished hilltop town in southern Italy that has opened its arms to asylum seekers as a vital economic resource.

"The people of this village have a huge heart. It's like family," said Asadullah Ahmadzai, who arrived in Riace from Afghanistan four years ago and sells bags and jewelry from his homeland in this settlement of 1,800 people.

Ahmadzai, who has had two children with his wife in Riace, is one of some 200 refugees living in the town who also hail from Balkan countries, Eritrea and Iraq.

In a few days, 130 more refugees from Libya are expected to move in.

"These people are fleeing war. They've suffered torture, they've lived through dramatic events," Domenico Lucano, the award-winning leftist mayor of the town, said in an interview in his decrepit office.

Like many towns across southern Italy, Riace has been deserted over the past decades by inhabitants who have emigrated to the United States, Argentina or more prosperous regions of northern Italy.

Now dozens of stone houses have been renovated to host refugees in the picturesque center of town, with its stunning views of the Mediterranean.

The tobacconist, the bakery and the fruit and vegetable shop are flourishing thanks to the new arrivals, who have taken up local artisanal trades.

A group of local pensioners in the town square said the refugees are welcome - a contrast to the xenophobic language used by the populist Northern League party in government.

Nicola, 87, said Riace had a "tradition of hospitality", recalling that the town once hosted refugees from Gorizia - an Italian town on the border with what was then Yugoslavia that was overrun by Nazi troops during World War II.

The refugees say they have noticed the difference with other parts of Italy.

"I have worked in my friends' restaurant in Ancona for up to 2,000 euros ($2,900) a month. But my son was always crying. He wanted to go back to Riace. They treat foreigners badly there, they say bad things," said Ahmadzai.

The arrival of the refugees has helped give Riace an economic stimulus.

"We've managed to re-open the school, put in place a micro-finance system and open local workshops where people from the village work together with the foreigners," said Lucano, who has been in charge here since 2004.

"But mainly we've sent a message of humanity to the world," he said.

"This town of emigration with its social problems, with the mafia, has become a place of immigration," he added.

The town's social experiment has caught the interest of German film director Wim Wenders, who came last year and filmed a short 3D documentary film entitled Il Volo (The Flight), featuring the mayor and the refugees.

Lucano criticized Italy's policy of holding refugees in camps, calling them "detention centers and concentration camps" and saying it was ultimately more costly than allowing them to settle in small towns like his own.

Helen, who arrived from Ethiopia two years ago, has learned Italian, as well as traditional embroidery and carpet weaving since moving to Riace.

Her artisanal skills provide her with an extra 400 euros ($570) a month in regional subsidies on top of the 200 euros she gets as an asylum seeker.

"There is war both in Ethiopia where my mother is from and in Eritrea where my father comes from. I don't want to go back," said Helen, whose 5-year-old daughter was born in Ethiopia.

Agence France-Presse