Nicole Bastian (moderator): We are very delighted to have with us Kyriakos Mitsotakis in Athens. He has been in office for one and a half years now. He started with the ambition to lead the Greek economy back to sustainable growth , but then the Covid crisis came and last year was a devastating year for the Greek economy. The GDP shrank by more than 10% and the deficit stood at more than 6%. How can the country get back to sustainable growth in Greece? I am very happy to have him here, from his office in Athens.
Kyriakos Mitsotakis: Hello. Good morning from Athens
Nicole Bastian: The good news is that there is money coming from Brussels with the European Recovery Fund and Greece can receive more than 30 billion euros and you said it is a great opportunity for Greece to transform the economy and perhaps you can explain your plans how to transform the Greek economy and get back to growth.
Kyriakos Mitsotakis: First of all thank you for the opportunity to participate in this discussion. Let me first of all point out that the Greek statistics regarding the performance of the economy are not unusual. All European countries have been hit by a massive contraction due to covid and I would also like to point out that as far as dealing with the medical aspect of the pandemic, Greece has done probably better than most European countries, something which has enhanced the Greek brand overall. We entered this pandemic with an underfunded public health system but we took measures early. We communicated our message very clearly and we have done better than most European countries. And at the same time we used the pandemic as an opportunity to strengthen our healthcare system. I just literally came back a few minutes ago from one of our leading orthopaedic hospitals where I inaugurated 30 new Intensive Care beds.
These are contributions which will stay with us post-Covid. So strengthening our health care system was and remains one of our main priorities. As far as the economy is concerned I would also like to point out that -in spite of the fact that most of the time has been taken up dealing with Covid but also with international crises we had to address, such as the migration problem- we never stopped our reform impetus. You were right to point out that we were elected on our agenda to return Greece to sustainable growth and the Greek economy was doing exceptionally well before Covid hit us and I do believe it will do exceptionally well once we leave Covid behind us.
In order for this to happen we need to meet certain prerequisites. The first is to make sure that underlying reforms that will enhance our competitiveness will continue to be implemented. For example, simplifying the licensing process, making it easy for international businesses to set up a shop in Greece. And it is interesting to point out that even during the pandemic we have had very important announcements regarding massive foreign direct investments into Greece.
Two examples: Microsoft decided, after making an elaborate comparative study of many countries, to set up three huge data centres in Greece. Volskwagen has announced a very important project to turn one of our islands into an example of green mobility, a sustainable transformation model for islands. RWE is ready to invest in our renewable sector. All these initiatives did take place during the pandemic, because there is a belief in the long-term prospects of the Greek economy. And of course, on top of that as you pointed out we now have the Recovery Fund which we negotiated in Brussels last July. A step change in Europe’s approach to be able to borrow at the European level and channel grants to Member States. We have submitted our Recovery and Resilience Fund program to Brussels. We intend to use these funds 32 billion in total, 19 billion in grants, 13 billion in loans to help drive through this transformation of the Greek economy.
Nicole Bastian: Can you give us an example for which projects you want to use the money? Is there a flagship program for example?
Kyriakos Mitsotakis: We have quite a few. We have four important priorities regarding the Recovery Fun: green transition, digital transformation, focus on private investments and a big focus on skills, education, training. These are all very very important initiatives. Let me just give you one example. We are already putting in place a massive program to retrofit out buildings. Energy efficiency is crucial for Greece. We have relatively old buildings. We can benefit from new technologies. A lot of the materials used are produced in Greece. We have a vibrant building materials industry in Greece and of course these are projects which are labor intensive. So we create lots of jobs and we reduce the environmental footprint of buildings but we also help households with lower energy and electricity bills. We allocate more than 3 billion euros into this program.
A second very important program which we have already started implementing during the pandemic has been the digital transformation of the Greek state. As you know, the Greek state was and to a certain extent still is highly bureaucratic. We used the pandemic as an opportunity to offer a series of digital services to citizens and through this digital transformation, we are transforming the fabric of the state itself. If you just look at the program we have put in place for vaccinations, it is digital end-to-end and we actually go to the end users. We don’t ask them to call us. We actually send them direct SMS messages, we contact them directly, they set up their appointments electronically. It’s all done seamlessly.
And Greeks are actually quite surprised that the state is able to function in this new very modern way. Digital transformation is very important to us. We are moving away from fossil fuels for electricity production. A topic which is also very relevant in Germany. We have an entire region in Greece, Western Macedonia, which for half a century was totally dependent on electricity production through the burning of lignite, brown coal and we took the bold decision that we will stop producing electricity from lignite the latest by 2028. And practically all but one of our lignite-fired plants will be shut down by 2023.
This obliges us to put in place a Just Transition plan for Western Macedonia that will create new jobs to replace the old jobs that will be lost during the transition. And of course a significant funding for these projects will come from the Recovery Fund.
These are a few examples of the projects that we do want to put in place. What I want to highlight is that our government came into power 18 months ago. We have an absolute majority. We are committed reformers. We want to change the narrative regarding Greece. Something which I think is particularly relevant also for the Greek – German relationship. For the past decade, it was sort of a confrontational relationship. We were sort of encouraged to do reforms which we never truly believed in, in exchange for money that was dispersed through various programs to support the Greek economy. All this belongs to the past.
We want to do reforms because we believe that they are good for the country. And we also have a lot of public support in implementing these reforms. The government is more popular now than it was 18 months ago when we came into power. And we won by a significant margin, we almost got 40% in the July 2019 election. So, this is not just a strategy driven by the so-called elites. This is a strategy that wants to make the everyday life of Greeks better, to create jobs, to reduce the tax burden, to offer better public services. And that is why this strategy has a lot of support in Greece.
Nicole Bastian: What do you expect for this year 2021? The covid crisis is still ongoing. When do you think that the economic impact of funds from Brussels and also of the Greek economy itself will be seen again? When do you expect growth to be back again?
Kyriakos Mitsotakis: A lot will depend, obviously, on Covid. Right now because we have had better epidemiological data than most European countries, we have gradually started to reopen our economy, gradually reopen retail. Every month the economy is closed, we are talking about billions of costs for the state in order to be able to support companies that have remained closed, because we actually told them to close. So we are very dependent on how quickly the immunisation project is going to run.
But things will improve significantly. We know that this virus is weather-dependent, we saw it last year. If you have on top of that mass vaccinations which would kick-in in earnest I think in March and in April, I do expect to see a significant uptake in economic activities.
I also want to point out that in spite of the big contraction, we managed to protect jobs. Unemployment has not increased at all in Greece. Our strategy was always to support jobs, to make sure that once we restart the economy there will not be a significant burden in terms of increased unemployment. I think so far we have been relatively successful.
Another factor which I consider to be very important is tourism. We want people to be able to travel during the summer. We want Germans to be able to come to Greece. That is why I was the first European leader to ask for a European discussion regarding what we call the European vaccine certificate.
This is not a license to travel obviously but it will make travelling much easier. If you are vaccinated you should be able to travel easier. If you are not vaccinated, you may be requested all sorts of tests for you to enter the country. This is very important. It’s important for Greece. It is important for southern countries. But it is also important for Germany as vaccines will increase. Maybe now it is not a relevant discussion but I can assure you in a few months it will be very relevant. People will want to travel during the summer and we want them to come to Greece and come safely.
We did manage to open our travel, our tourism sector last year, in spite of the difficulties. We did it in a very safe manner. So we do expect this year -οbviously we are not going to return to normal, that would be inconceivable- but we do expect to do much better than we did last year and we want people to come to Greece and travel safely and return safely to their countries of origin. So tourism is also going to be a very important determinant. And we do expect funds from the RRF to be disbursed in the second half of 2021.
We already can start making payments from programs we know will be approved by the RRF. So some money is already flowing to the real economy. For example our retrofitting program is already up and running cause we know more or less it will be funded by the RRF. So we don’t want to lose much time.
As the debate progressed, Nicole Bastian asked the Prime Minister on tourism and Greece’s proposal to institute an electronic vaccination certificate that would be valid throughout the EU.
Kyriakos Mitsotakis: First of all, let me point out how important tourism is for Greece. Not just for Greece, but the entire European economy. We want to facilitate travel. The airlines want to facilitate travel. The aircraft manufacturers would want to facilitate travel because no one wants to be in a position where we constantly support airlines in order to make sure that they survive. So the question is how we do it at the European level, rather than on a bilateral level. Our proposal is simple. What we consider to be a proof of vaccination, to have a common European form that is mutually recognised. If this doesn’t happen it will happen inevitably at a bilateral level.
So, we have taken the decision at the level of the Council to do the preparatory work for medical purposes and then at some time I would say sooner than April we need to discuss how this will be used. As we have a sort of a common Passenger Locator Form which is a digital form to know who is traveling where, what we would add is simply a mutually recognised proof of vaccination in order to make it easier for people to travel. I consider this inevitable. The travel industry considers this inevitable. The quicker we work towards that direction the more prepared we will be as EU. We have done lots of things well at the EU level.
I know there are complaints about the pace of vaccination and about certain negotiations at the European level with the big vaccine providers, but I would still like us not to lose the bigger picture, which is that it is important, especially for small medium-sized countries, that the EU is negotiating as a whole. And it is distributing vaccines on a per capita basis. Not separating small from big countries, poor from rich countries. This is an important step towards European solidarity.
Of course we can improve the process. But let’s not lose sight of the fact that we did manage to negotiate as the EU and we took the political decision that the vaccines will be distributed in an equitable manner. So I do think that this discussion is mature. I see lots of countries independently are moving towards that logic, because countries also understand that they want to facilitate their citizens to travel. I am absolutely convinced there is a suppressed demand for travel that will be released once we feel safe. And we have to make sure that we do travel in a safe manner.
Nicole Bastian: One argument would be that we cannot start with vaccination certificates until everyone has the chance to be vaccinated and this probably won’t be until summer, late summer. What is your view on this vaccination certificate?
Kyriakos Mitsotakis: I understand that you need to start the discussion now. Because we need to prepare. Even today we are discriminating at our borders. Let’s be honest. We put all sorts of restrictions, we ask people to test themselves in order to enter countries. We do that all the time. So we have to be very honest. The only thing we are saying is that if you have a vaccine certificate, you don’t need to get tested. You can still travel but we may require a test. So we just make it easier. If we have half the people vaccinated, then there is half the population. If we have 30% then there is 30%. It is still a relevant and important number. Everyone will be allowed to travel. It’s just how easy you can make it for those who are vaccinated. So to those who say now is not the time, I say now is not the time to take the decision but now is the time to prepare for something which is inevitably going to happen.
Responding to a question on the European Commission’s handling of vaccine procurement, the Prime Minister said:
Kyriakos Mitsotakis: What happened, happened. But we need to be proactive, look at the new vaccines that are in the pipeline. We know the debate regarding AstraZeneca, we all followed it, we have been very clear that companies need to honor their contractual obligations and Europe is a big enough market and a big enough power to make sure that contracts are honored.
But there are new vaccines in the pipeline. The Johnson & Johnson vaccine is particularly important. Again, we hope it will work, but if it were to work, we want to make sure we have enough doses as quickly as possible. Why is it important? Because it is a single dose vaccine that can be easily distributed. So unlike the more complicated vaccines where you need a very complex supply chain to distribute them, if you have vaccines that can be administered -for example- through pharmacies, because you can transport them easily and they can be stored in a regular fridge or even in room temperatures, that makes the distribution of vaccines so much easier.
So, let’s focus on the future, let’s look at the vaccines that are in the pipeline, let’s make sure there are no delays in the approval process, assuming the vaccines work and (the developers) provide EMA all the necessary data. And let’s make sure we get our hands on enough vaccines and we accelerate the vaccination process.
We know that in Q2 we will have multiple vaccines compared with what we had in Q1 and we also need to prepare our distribution systems for vaccinating significantly larger numbers than now. Greece is one of the countries that are vaccinating at a very fast pace, but we have taken the decision, for example for the Pfizer vaccine, to always keep a stock for the second dose. We never wanted to be left in a position where we wouldn’t administer the second dose on time, in accordance with the approval process.
Let’s focus on the future. Let’s make sure, first of all, that we will get the vaccines that we were promised. And on the new vaccines let’s make sure that we are at the front of the queue rather than the end.
Commenting on the discussion about the proactive use of technology to deal with the pandemic and schedule vaccinations, the Prime Minister said:
Kyriakos Mitsotakis: Let me make one point here that I think is important because it ties to our discussion regarding the digital transformation and -hopefully- the funds that we will receive. We managed to drive through what I think is a digital revolution in the Greek state because we took the decision to centralize our digital functions into one ministry. To break down silos. To make sure we have no proprietary issues with data, obviously we are fully compliant with GDPR. But we made sure we didn’t just create a digital bureaucracy to replace a paper bureaucracy, we always had a customer-centric approach.
It was actually quite moving, because we did send out text messages to everyone. We have an electronic prescription system which is actually working very well. So, everyone who is in the electronic prescription system, and most older people are, we did send them a message and we told them “this is the slot we suggest to you”, if you want to change it and you can’t do it yourself you can obviously ask your kid our your grandkid to do it.
And it was actually pretty moving because we started with those who are above 85 in terms of appointments. We had 98% compliance with the appointments. So, once you treat the citizen as a customer and you go out of your way to approach him or her it’s surprising how well citizens respond.
We even use digital for Covid compliance. If you want to leave the house, even now, you have to send an SMS. It’s still a gesture and we use this very well, so if you don’t have your SMS as proof when you leave the house you will be subject to a fine. In the beginning we gave people a paper alternative, but it was surprising how quickly everything is moving to digital if you just offer people simple digital solutions, and how quickly even older people acquire digital skills. It’s very refreshing.
We are issuing European bonds to fund these projects, so I think it is a very important step. It’s not just one step in the right direction, it’s a big step in that direction. A year ago this discussion would have zero traction. I remember last March I wrote with some of my colleagues, heads of state and government, a letter encouraging the idea of common borrowing to address the Covid crisis and at the time there was a lot of resistance. But I think that Chancellor Merkel saw that this was actually necessary and there was a change in approach. And we all realized that in a once-in-a-generation crisis we do need to spend more, we need to bend some fiscal rules, we probably should be willing to accept higher debt. And the ECB has helped in that direction, providing ample -almost unlimited- liquidity.
Obviously at some point we will have to return to basic fiscal rules. But the idea that you should not spend money now, and when I say “spend” I mean spend and invest money, because the Recovery and Resilience Fund is not just about spending money, it’s about investing, it’s about driving through transformations. It’s about looking at deficiencies that countries have and making sure that they use the money to change and become more competitive. And the more competitive countries become the more uniform our fiscal policy can be, the less of a separation there will be between the rich and the poor, those who perform well and those who don’t perform well.
So, it’s really an opportunity to bridge the divide between European countries. Certainly an opportunity for Greece to catch up. We don’t intend to lose this opportunity and we are very happy, based on what we know, that our plan was very well-received in Brussels. And it gives us encouragement that we are moving in the right direction and that the funds will be disbursed on time to help support what I think is going to be a very robust post-Covid recovery.
Taking questions from the viewers, Nicole Bastian asked the Prime Minister how he would characterize Greco-German relations today, and what are the prevalent sentiments in Greece about the European project.
Kyriakos Mitsotakis: I think the relationship is much improved. It was a difficult relationship during the years of the crisis, we should have no doubt about that, but I think we can make it even better. I think we need to change the narrative, I think we need to talk about common projects of common interest, this should no longer be a debtor – creditor relationship, it should be a constructive win-win relationship when we talk about the economic aspects of the relationship.
And then of course, there is the foreign policy aspect, which is more complicated, I want to be very honest. Part of the Greek population may think that Germany was not as supportive vis-a-vis our differences with Turkey. I do know that the Chancellor tried to play a very constructive role in trying to mediate. I am happy that the relationship has improved, but of course we are always looking for European solidarity from all countries in terms of defending what we think is the right position.
And I think we are right in terms of claiming that we want to resolve our one main difference with Turkey which is the delimitation of our maritime zones based on international law and that, vis-a-vis the EU – Turkey relationship is concerned, there are two paths: We hope for a constructive relationship but if things don’t work out in the right way there need to be consequences on behalf of the European Union vis-a-vis Turkey. I am encouraged by the fact that things have gotten better over the past month that we started to discuss but I’m also not naive. I want to see consistency in this approach on behalf of Turkey.
Nicole Bastian: What support from Germany dο you wish for?
Kyriakos Mitsotakis: A lot of these discussions are taking place at the level of the European Council and the European Council has moved in the right direction. Sometimes I would hope for an even stronger support but overall we did manage to highlight the fact that the relationships between Greece and Turkey, the differences between Greece and Turkey, impact the relationship with the European Union.
The Eastern Mediterranean is critical for the safety and security of the European Union, obviously Turkey is a big partner, they should be a partner in the migration issue, but when it comes to violations of sovereignty and sovereign rights we do expect from all our European partners a uniform approach from all our European partners are uniform approach and sort of unconditional solidarity.
(…)
We have said that Europe needs to flex its geopolitical muscle and not just be an economic power. We need to add some flesh to this claim. We have an opportunity, we are preparing a report, the European Commission is preparing a report on Turkey, which will be discussed on March 25 and 26 at the European Council, and you know the report needs to lay down all the options vis-a-vis Turkey. I am not a fan of imposing sanctions but the threat of sanctions needs to be credible. If it is not credible then it doesn’t work. And I do think that we made a step in the right direction and I think one of the reasons why Turkey took a step back and is being more constructive also had to do with the fact that they realised that even even at the slow pace Europe is moving towards that direction.
And sometimes you know if you want to be a geopolitical power you may want to accept the fact that you may take an economic hit. For example, the US decided to impose sanctions on Turkey, they decided not to sell F-35 fighters to Turkey. That is a big blow for the US, or for the US defence sector but they decided to do it because they said that this is the right approach. We cannot accept Turkey operating S-400 missiles which are Russian-made, sophisticated antiaircraft missiles and at the same time purchase F-35 aeroplanes.
So you can’t have your cake and eat it. For example, Germany is planning to export attack submarines to Turkey. This is an issue of concern to us. Highly sophisticated attack submarines, I am just saying that there are instruments and levers that one can use if one wants to flex, sort of the geopolitical muscle, and not just the economic muscle. Sometimes it’s like we have two hands and the one hand is very bulky, maybe I do not know like a tennis player, and that is the economic hand and then the geopolitical hand seems to be rather weak. So I would like to see both hands of equal sort of size and bulk.
At the end of the debate, the Prime Minister answered Nicole Bastian’s question on EU relations with Russia and China.
Kyriakos Mitsotakis: I think we need to be firm on the Navalny issue, unequivocally condemn what is happening. And I do think that sanctions, when they are consistently imposed they do impose a toll. They need to be imposed in a smart way.
China is a much more complicated topic. It probably requires a completely different discussion. China is both a partner, a trade partner, but also conceivably a strategic adversary. This is a more complicated relationship. I am in favor of moving ahead with the investment approach, but this should not force us to remain silent on issues which should be of great concern to us.
