Matt Kaminski: I am Matt Kaminski. I am delighted to be joined here by Greek Prime Minister Kyriakos Mitsotakis. Prime Minister, welcome.
Kyriakos Mitsotakis: Thank you Matt! Always a pleasure to chat with you.
Matt Kaminski: So, let’s start. It’s been quite a year, 2020. At the beginning of the year, it seemed that Greece was coming out of the many years of economic turbulence and really doing very well. Can you tell us where the Greek economy is now? And how much of a shock has Covid been to your plans to get it back on its feet?
Kyriakos Mitsotakis: You are right to point out that we were doing rather well during the first three months of the year, significantly better than the rest of the eurozone. But, of course, the Greek economy is also going to be significantly impacted by Covid. I expect a recession in line with the eurozone average. So, we know that we have a lot of work to do to make sure that we catch up for the lost ground. What I do want to point out is that in spite of Covid, we have tried – I think rather successfully – to keep our reform agenda on track. By “reform agenda”, I mean making Greece more attractive for foreign direct investment, reducing the tax burden, cutting red-tape and also leveraging our natural comparative advantages to attract investment from abroad. We’ve had some very interesting success stories during Covid. Microsoft – for example – announced a month ago that they would be setting up three big data centers in Greece. This is not the only example. But I think companies are looking post-Covid, they are doing their calculations as to which countries can actually deliver long-term growth and I think that Greece is very well positioned in this game.
Matt Kaminski: What is your focus in terms of reforms? Is it fiscal or is it more on making Greece more appealing to investors? What levers do you have?
Kyriakos Mitsotakis: A lot of the reforms are supply-side reforms that have to do with the underlying foundation of the Greek economy. We knew from the beginning that we were not competitive in terms of our taxes. So, we reduced corporate taxes. We reduced taxes on dividends. But we’ve also made it more attractive to invest in Greece by giving tax incentives for investments in R&D. We’ll have more tax incentives for green and digital investments. In 2020 we’ve reduced payroll taxes. We’ve cut taxation on high-wage earners, which makes it more attractive to hire people in Greece. On the fiscal side, I am happy to report that Greece is currently borrowing at record low interest rates. So, there is a broad confidence in the prospects of the Greek economy. Greece is no longer the outlier within the eurozone. And I think that this is an important achievement for a country that has gone through a very difficult period for almost ten years. If you look at our yield curve now, all our debt is essentially trading under 1%. That seems inconceivable compared to where we were a year ago. So, I think in terms of our fiscal position of course our deficit and our debt is going to increase, but I think the markets are comfortable because this is a trend you witness everywhere in the world. I think there is a lot of confidence in this government. We still have almost three years in our term. We have an absolute majority in Parliament. We don’t have to face the sort of political constraints that other coalition governments in Europe have to face. And when we embark on a course, we are very quick at delivering results. I think that both markets, but also foreign direct investors are much more comfortable with Greece these days.
Matt Kaminski: And on a scale from 1 to 10, with 10 being the most confident, how confident are you that the phrase “Greek crisis” or “Grexit” is buried now?
Kyriakos Mitsotakis: Oh, that’s a ten. There is no doubt about that in my mind. We’ve left this period behind us. That’s what the markets seem to believe. And if foreign interest for investment in Greece is a yardstick of our credibility, I can tell you I’m talking to foreign investors who are interested in investing in Greece almost daily. So, I think people see the long-term growth story behind Greece. A eurozone country that still has relatively cheap assets, because it is coming out of an economic crisis. In my mind with a super competitive labor force. This is one of our major natural comparative advantages. And, of course, with sectors where we can be world class, such as sustainable tourism, renewable energy. We strive to be the best in those sectors where we feel we have a natural comparative advantage.
Matt Kaminski: Since we are at the Web Summit – virtually speaking – how does technology and the tech sector fit into your plans to modernize the Greek economy?
Kyriakos Mitsotakis: You wouldn’t necessarily associate Greece with technology. But let me just give you one example of a project we launched a few weeks ago, which – in my mind – symbolizes the transition from the old Greece people sort of remember to the new Greece I envision. We did a deal with Volkswagen. We took a medium-sized Greek island called Astypalaia – not necessarily very well known, but extremely pretty – and we’ve decided that we will use this island as a test case for green mobility. So, the plan is to completely convert the island to a state where all mobility is going to be electric. And all electricity is going to be provided through Renewable Energy Sources. This is just one example of the sort of leaps that we can make in that space. On the technology side, we have invested heavily, not necessarily resources but I think primarily intellectual firepower, into delivering government services through a unified portal called gov.gr. I can tell you Matt that the reception of the Greek people has been extremely encouraging. Greeks had to go to a sort of a guichet in any physical interaction with the public administration. And this is changing very, very rapidly. So the digitization of the government service, of the government sector is a big priority for me.
We are launching a big digital ID card project, very similar to what Esthonia did. So, we are making life for Greek citizens but also Greek businesses so much easier when they interact with the State. At the same time, what is noteworthy is that you have an emerging ecosystem of technology companies that is coming out of Greece, not just Athens but also other cities. The startup scene in Greece is booming. We’ve had startups that have been sold to foreign companies for quite significant valuations. So, I think we can find our own niche within the tech space. And frankly my pitch is very simple: Covid has proven that you can work out of anywhere. Why not work out of Greece? It is a country with exceptionally good connectivity. A safe country, as I think we’ve proven during the Covid crisis, Member of the European Union with exceptionally talented people both within Greece but also outside Greece. Because we had 400,000 Greeks who left the country during the 10-year crisis, many of which are looking to return. We are going to make it much easier for them to return, because we are passing legislation very soon that will give them significant tax breaks and benefits, should they choose to leave their countries of residence and return permanently to Greece and become Greek tax residents.
Matt Kaminski: And of course some exceptionally good weather and good food, which you didn’t say but I feel obliged to add. The EU has just agreed for the first time to borrow as a bloc and has tried to push through a large recovery package, Greece will be eligible for over 70 billion euros. How does that fit into your plans in the next coming months?
Kyriakos Mitsotakis: It is absolutely critical for our plans. We were one of the first countries to submit our first draft of the projects that will go into the RRF, the Recovery and Resilience Fund. As you know there are very specific guidelines, as far as allocations regarding green initiatives, digital initiatives. But all those fit very well into our long-term transformation program. So, for the first time we feel that we don’t just have the plan. We also have the public funds – define public funds as EU funds in this case – that will help us make this transformation a reality. Greece always suffered from an investment gap. How do you bridge this investment gap? You do it through private capital, but you also do it through European funds. And the fact that we will have 32 billion out of the Recovery and Resilience Fund and 40 billion of additional funding through the normal European instruments, gives us the belief that we also have the financial firepower to implement what is essentially a significant transformation of the Greek economy. I feel very comfortable with the plan that we have submitted and we are looking to the European Union to provide us feedback. And hopefully the whole issue regarding the final approval of the RRF will be resolved by the time of the next Summit, because all European countries need the money and I think the money needs to start flowing into the Member States in the second half of 2021.
Matt Kaminski: As you know Poland and Hungary are vetoing the package over the language on the rule-of-law. Hungary is a member of the EPP, as you are. How much pressure can you put on Prime Minister Orban to get this going?
Kyriakos Mitsotakis: Hungary’s Fidesz, which is Prime Minister Orban’s party, is technically suspended from the EPP. And I think for good reason. I have faith in Chancellor Merkel’s ability to find a compromise, a solution that will be in line with the decision that the heads of state and government took in July of this year. It is inconceivable to me that this significant European milestone will be held up because two Member States have some disagreements regarding the interpretation of what we agreed, which – in my mind – was extremely clear. This was important, not just an important, it was really a staggering decision taken by the European Union. You’ve been following European politics very closely. You remember last March it would have been unthinkable that the European Union would take such a step to borrow as a supranational entity and to channel grants to Member States directly. But, it has happened. It has made everyone very comfortable, including the capital markets and those who purchase European debt at the nation-state level. I am sure that a solution will be found very, very soon.
Matt Kaminski: So Greece obviously is in the southeast corner of Europe, which has always been an interesting neighborhood, over the decades and centuries in the security sense. President Emmanuel Macron of France launched a debate over strategic autonomy, that it is time for Europe -Trump or not- to chart its own path on security. Where do you stand on this? And where do you think the other EU leaders stand? Is Macron a pretty lonely voice on this or is there broader support for “strategic autonomy” from the US going forward?
Kyriakos Mitsotakis: I don’t think he is a lonely voice. I think we need to balance the benefits of free trade with the realization that there are certain sectors where you would want Europe to demonstrate a level of what we call “strategic autonomy”. Pharmaceuticals for example would be one such sector. I can think of many others. So, I do think that there is momentum at the European level behind this suggestion. Again, we need to very clearly define those sectors that we would define as strategic, where we would like for economic but also for geopolitical reasons not to be dependent on other major powers.
Matt Kaminski: The Trump Administration has very much strongly supported you in the stand-off you have had in the Eastern Mediterranean with Turkey. Do you think that NATO should be rethinking its mission and its relationship in this decade and going forward, under this Biden’s administration?
Kyriakos Mitsotakis: First of all we are looking forward to the new US administration reengaging productively with Europe and making its presence more actively felt within NATO. It’s no secret that we have our disagreements with Turkey. I think that we’ve gotten support from the US State Department. We’ve gotten support from Europe. The problems between Greece and Turkey are relevant to Europe because they affect the Eastern Mediterranean. They are relevant to NATO because they affect NATO’s south-eastern flank. Frankly, we’ve also made it very clear that Turkish provocation cannot continue without Turkey facing consequences. I think this has become apparent to all actors who have an interest in this part of the world. So, again, it is an awkward position to find oneself in, but I don’t think that Turkey is in compliance with its role as a leading NATO alliance member when it purchases advanced missile systems from Russia or when it openly uses terrorists from Syria to fight proxy wars. So, I would expect a significant change in Turkey’s behavior at some point if Turkey means what it has been recently saying, what President Erdogan recently said, that he actually wants a close relationship with Europe and the Western world. We are past words now. We need to see very clear actions on the Turkish side and that would mean a real change in Turkish policy in the Eastern Mediterranean.
Matt Kaminski: Prime Minister, thank you so much for your time. And now back to Web Summit in Lisbon.
