Ben Hall: Kyriakos Mitsotakis, welcome to the FT Global Boardroom. It’s great to have you here. Greece is very dependent on tourism and you are opening up the country already to foreign tourists. Are you sure this is the right move, given the relatively high level of infections and occupancy of intensive care beds?
Kyriakos Mitsotakis: First of all let me point out that the recent trends, as far as the pandemic is concerned, are rather encouraging. Cases have been coming down and so are hospitalizations. And if you combine that with an accelerated pace of vaccinations, the massive deployment of self-tests and the fact that we can have most of our activities outdoors, I do expect the situation to improve dramatically over the next months.
What we’ve said, Ben, is that we want to open up safely. What does that mean? That means essentially that if you want to travel to Greece and not be subject to any quarantine restrictions you should provide the Greek authorities either with a proof of vaccination or a proof of past illness or a negative test, a PCR or an antigen test. Essentially these are the foundations of what Europe called the “Green Pass”. Obviously, we’ll be implementing this before this actually goes live at the European level and we expect to start welcoming tourists as of May 15th.
We’ve already started to open up al fresco dining. We started to open up retail. So the first visitors who come to Greece, as of May 15th, should be coming back to a relatively normal state of economic and social activities. But again, as I told you, I do expect the situation to improve dramatically over the next month. I think this is going to be a European trend, not just a Greek, trend as vaccinations ramp up.
We’ve administered more than 3.2 million shots in Greece. We expect to hit a record number today, possibly getting close to 100,000 vaccinations per day. And, as we will be receiving more vaccines in May and June, we do expect to offer vaccines to the entire adult population relatively soon. Right now anyone above 30 can have a vaccine administered. So, overall I think the news is good. I think that the tourism industry has learned a lot from last year and we will open up in a safe and protected manner, but we will still make the full Greek experience available to tourists who choose to come to Greece this summer.
Ben Hall: Now you’ll, you’re going to be letting in tourists who have been vaccinated with the Sputnik jab and the Chinese vaccines, even though the European Commission says it would prefer only vaccines approved by the European Medicines Agency. Are you going to stick to that position?
Kyriakos Mitsotakis: Yes, we’re going to stick to that position. I think it’s particularly relevant to the Sputnik vaccine. I don’t expect many visitors to come from China. Russia is an important market for us. Again from the data that we’ve seen, we consider the Russian vaccine to be safe and effective. Of course it hasn’t been approved by the EMA. Hence we have not procured the vaccine. We’ve been diligently following the European procurement rules. But as far as welcoming people to Greece who have been vaccinated with the Sputnik vaccine, I don’t see any problem with that.
Ben Hall: You championed the idea of a vaccine passport for Europe. As you mentioned it is in the works but it’s a little way off. And yet you are coming up with your own plan, as many other countries are doing. You must be a bit disappointed that every country is doing its own thing.
Kyriakos Mitsotakis:The idea behind a European green pass was exactly to be able to streamline these procedures, rather than having to do bilateral arrangements. I think most countries will essentially, at least the big tourist destinations, follow a very similar strategy, but I do think that, given the speed with which Europe moves, we’ve made good progress on the Green Digital Certificate. So I think it will go into operation at some point, sooner rather than later. And I think there will be a lot of pressure for people to be able to travel freely. Of course the question is not just for them to be able to travel to Greece, but also to return to their home destinations without any additional restrictions, which is probably as important as coming to Greece without much hassle. So we do expect full reciprocity from other countries. Essentially the same requirements for people to return to their home country, as we imposed for people to get into Greece.
Ben Hall: You expect those requirements, or you are going to demand those requirements of reciprocity?
Kyriakos Mitsotakis:I think we expect them. And I’m pretty sure that, given the desire of Europeans to travel, I don’t think that any government will impose additional restrictions on top of what we already have in place for people to return to their home countries. Again, we’re looking at the static situation today in Greece or in other southern countries; I am very, very sure that the situation in a month from now is going to be very different. It is going to be much, much better. What we have seen over the past two weeks is that you can open in a controlled way and do it safely. And, at the same time, see a reduction in the number of cases. This is what we’ve done in Greece.
At some point we were one of the first countries to try to contain the third wave by imposing a lockdown relatively early. We did so towards the end of January. We still had a significant increase in the number of cases, but we never saw the dramatic scenes that you saw in other countries. So, I am pretty sure we made the right choice -again, back in January- to impose a lockdown relatively early, because we also had to deal with the british strain, which was so much more transmissible. But after a certain point, and as the weather improves, it is much better for activities to take place outdoors, where you can properly monitor them. Ιf you go to a restaurant now, there is a maximum of six people allowed (per table), you are still encouraged to wear your mask while you come in, or if you have to go to the bathroom. But all data shows us that the more you can move activities outdoors, the safer it is in terms of reducing community transmission and this is exactly what we are seeing in Greece.
I should also point out that we are one of the first countries to introduce self-tests at a very big scale. So when we opened our schools we essentially gave self-tests to all highschool students (ages 15-18). Because the rest of the schools will open this Monday we’re giving everyone a self-test to be administered twice a week. There were some doubts in the beginning as to how the system would work. It has worked extremely well. We have been able to identify, through the self-tests, asymptomatic cases, which we would not have picked up otherwise. So I think the self-test is also an additional tool that we have, not just for schools, but also for the private sector. We have made them mandatory for all employees now. So they have to have one test a week, at least, which is provided for free by the government.
And, of course, the private sector is also making sure to add on top of that. The tourism sector, because it’s a very highly sophisticated tourism sector, will make sure that the people who will serve tourists in Greece, our hospitality staff -I expect that most of them will already be vaccinated by the summer. But even for those who are not (vaccinated), full precautions will be put in place in terms of massive testing. We are now one of the best countries in Europe in terms of tests per million people. And the reason we were able to do that was that we placed our faith in self-tests, which -given the current state of the pandemic- are a very useful tool.
Ben Hall: Now, the pandemic has been a humanitarian disaster in Greece, as elsewhere of course, and it caused an economic contraction of about 10% last year and pushed Greece’s debt to GDP over 200%. But I wonder whether over the medium to longer term the economic response that the EU has put in place is actually a blessing in disguise for Greece, because it has brought you investments that have been lacking, essentially, in the Greek economy and holding it back.
Kyriakos Mitsotakis: The actual figures are closer to 8%. We will have a contraction of 8.2% in 2020, which is still better than some of our Southern competitors. We have also done better epidemiologically than most European countries. It is still, as you said, a humanitarian catastrophe, but we are way better than the EU average, which was not a given at the beginning of the pandemic, given the fact that we had under-invested in our healthcare system for a decade as a result of the crisis.
I think that the Greek economy is ready for a significant rebound. When it comes to the investment gap that you mentioned, our strategy from day one, when we came into power, was to accelerate private investment. And now we have an additional pool of capital, which was not available before the pandemic. I am referring to the RRF, the Recovery and Resilience Fund. Greece will receive 32 billion, which were not there before the pandemic, out of which 19 billion will be in grants. They will mobilize additional private capital. So we expect investments close to 60 billion to take place, in sectors which are absolutely critical for Greece.
So I think -as you said- the Recovery and Resilience Fund was not planned. Αas you probably remember, eight heads of state and governments wrote a letter last March to the European Commission and to the President of the Council, encouraging some sort of instrument that would allow Europe to borrow at the European, at the supranational level. At the time very few people would place a bet that this could actually happen.
It did happen last July. And I think it was a very important step forward for Greece. But what I do want to point out is that these are not funds to be just distributed as handouts. We submitted our plan. It’s a very detailed plan. It was very well received in Brussels, as you probably know. We were the second country to submit it. It’s 4,000 pages. It includes more than 170 big initiatives, investments and reforms. With a heavy emphasis on digital, on the green transition, on jobs, skills and social cohesion. So I’m very, very confident that it will add additional firepower to turbocharge our recovery once the pandemic is over.
You mentioned our debt. I think it is important to clarify that, yes, Greece still has a very high debt as a percentage of GDP. But, as you know, our debt has very sort of peculiar characteristics. And debt repayments, at least for the next decade, are relatively low as a percentage of our debt. But the capital markets are very optimistic about Greece. We got upgraded by S&P a few days ago. Today we are issuing, after a long period of time, a five-year bond. We are borrowing at record-low interest rates. This, of course, has to do with the fact that the ECB is providing additional liquidity. But I think it is also a vote of confidence in the government, delivering on a very ambitious reform agenda.
We came into power almost two years ago, promising that we will lower taxes, focus on growth, on job creation. We have been able to do that even during the pandemic. It’s interesting that in discussions with our European partners we agreed on a permanent reduction in the corporate tax rate from 24 to 22%. And we have been able to push through aggressive reforms even at a time when most of our attention was focused on the pandemic.
Ben Hall: And how do you think Greece’s experience of its long and painful financial economic crisis, experience of close monitoring by EU and IMF officials, is actually going to shape the way you use this money?
Kyriakos Mitsotakis: Well, that’s an interesting question. I think we probably had more experience in terms of supervision and that’s maybe why we were pretty good at delivering our comprehensive plan. Because we sort of knew what Brussels was looking for. So, we aligned our priorities with the priorities of the European Commission. But this is yesterday’s news. I think we have left the crisis behind us for good. All forecasts for growth for 2021 and in particular for 2022 are very, very optimistic. I don’t want to say any specific numbers because I think we can surprise pleasantly.
There is clearly a sense that this country is much more confident than it was, that it has left the period of the crisis behind. And that there are also some trends that were accelerated during the pandemic that I think clearly work in our favor. Digital transformation: we really did a lot in that respect and Greeks are pleasantly surprised by the fact that they have access to so many digital services now that they didn’t have a year ago. If you look at our vaccination campaign it’s totally digital, completely paperless. People are very surprised by the fact that the state can actually deliver on these types of complicated projects.
So we’re building a repository, a reservoir of confidence, when it comes to our relationship with the Greek people. And I think this is also something which is noticed by the international community. Huge interest in foreign direct investment in Greece, in various sectors, starting obviously with real estate and tourism but going beyond that.
And, of course, the green transition is critical for Greece. We’re blessed with sunshine, wind and a beautiful natural environment which we need to protect and a lot of international companies want to be part of that story. Just to give you one example, we’ve teamed up with Volkswagen to turn one of our medium-sized islands, Astypalea, into a fully electric mobility island by 2025. Totally green, totally sustainable. These types of projects will generate even more interest for investment in Greece. So, all in all, I’m quite optimistic about the prospects of the Greek economy post-pandemic.
Ben Hall: Some other Member State governments are sort of chafing at the demands from the European Commission for economic and welfare reforms. Should they just suck it up?
Kyriakos Mitsotakis: It depends on how you define reforms Ben. We don’t do them because someone asked us to do them. I think that was the mentality for a decade. And I think we got that wrong. For example, we are now pushing through a labor reform. Some people may say this could have some sort of political cost for the government. I don’t see it that way. We need to make sure that our labor market is adjusted to the needs of the 21st century. We need to protect our workers so that their employers cannot send them emails at any point of time in the day, and so that they have the right to disconnect their devices. We need to give them -provided that it happens in conjunction with their employers- more flexibility to allocate their time and find a better work-life balance.
So I think that the term “reform” has received some negative connotations. But we do the reforms because they are, eventually, to our benefit and for the good of our people. We did lots of reforms in Greece during the period of the crisis. Some were imposed upon us. But we should not confuse reforms with austerity. They are two different things.
Austerity is always painful. Reforms can be painful for some, usually special interest groups, the insiders of the system, but in general reforms are good for most people. They are usually good for the unemployed if they create jobs. They are good for low-paid workers, if they provide them with more security and more bargaining power vis-a-vis their employers.
So I would clearly distinguish between reforms and austerity. We are no longer in an austerity phase but we will continue with reforms and we’re champions of reforms and we like the reforms we’re doing, and we explain to the Greek population that they are useful reforms. So far it doesn’t seem to have hurt the popularity of the government, according to recent polls we are probably more popular now than we were two years ago, when we came to power.
Ben Hall: So you will be pressing ahead with pension reform?
Kyriakos Mitsotakis: Yes, there’s a second phase of pension reform that needs to happen regarding our supplemental pension system, which we want to partially privatize. And what we are telling young people is “look, you have more control over your supplemental pension. It’s better that you know how much you save for the time you retire”. So, we are gradually moving away from a pay-as-you-go system, which also creates an additional pot of capital that will be invested in the Greek economy. In the beginning it’s going to be small, but over 10, 20 years, it’s going to be much more significant.
Ben Hall: Greece’s recovery plan looks very good on paper. It has clearly impressed some officials in Brussels. But how can you assure them and Greece’s EU partners that this money will be better spent than the billions and billions of euros of EU money that have been being poured into Greece over decades? Is the Greek public administration actually capable of absorbing this tidal wave of cash?
Kyriakos Mitsotakis: I think that’s a fair question. And we spend a lot of time thinking about the processes and the governance of the Recovery Fund. I think we’ve come up with not just a good plan, but with a good approach of how we are going to absorb these funds. The more mature the projects, the easier it is for them to be absorbed. So I think we have come up with realistic projects. Sometimes we have very grand ideas but we suddenly realize that there’s a big difference between having a great idea and having a project that can be financed and implemented relatively quickly.
So we run a tight ship, Greece is still a relatively centralized country, which I think has served us well during the pandemic. And we’ve placed a lot of emphasis in the governance structure of the new Fund. A lot of it is at the level of the Prime Minister’s office, in order to make sure that this is not just a competition amongst various ministries for appealing projects.
And we want to make sure that the money is distributed fairly, that everyone in Greece will benefit, that regions will benefit. But we also tell people, ministries, regions that you have to come up with mature projects that fit into our grand plan, and that also fit into what Europe asks us to do.
We’ve also created a commission under Nobel Laureate Pissarides to come up with a growth plan for the Greek economy for the next decade. So, this is also a very useful template that we have, which helps us identify specific investment initiatives. So what you mentioned is also an area of concern to me. But I think we’ve earned the trust of Brussels as a competent government that can deliver on its commitments. Hence, all the post-program evaluations have gone very, very smoothly so far. As you know, we haven’t had any hiccups.
Ben Hall: You mentioned Foreign Direct Investments a bit earlier. I wonder whether I could ask you about the role of Chinese investments in the Greek economy. There’ve been periods in the past when it seemed as if the Chinese were the only investors willing to pour money into Greece and their investment in Piraeus Port has obviously been a success. Will you privatize the rest of Piraeus Port and hand it to Cosco?
Kyriakos Mitsotakis: As you know there’s a shareholders’ agreement that we will honor and there are obligations on both sides. They also need to proceed with investments. We have some issues that we are sorting out with them to make sure that this is a mutually advantageous investment. But in the grand scheme of things, yes, China invested in the port of Piraeus at a time when nobody was interested and it has been a successful investment. But Greece is not particularly dependent on Chinese investment, when I look at the map of Foreign Direct Investment, certainly when I look at the countries that are interested in investing in Greece. We have other ports that are being privatized, we have interest from many different countries, many different pools of capital. So I don’t expect particular dependence on China when it comes to infrastructure investment in Greece.
Ben Hall: Okay. We have a couple of questions from our audience, if I may. One is, how do you think the tensions in the Eastern Mediterranean can end?
Kyriakos Mitsotakis: Well, we’d probably need another half-hour session on that topic. I think that tensions can end if we all agree that issues, conflicts, disagreements can be resolved through a framework that will place international law and respect for international law at the center of managing these types of disagreements.
We have also made it very, very clear to our European partners that what happens in the Eastern Mediterranean, especially when it comes to the difficult relationship we have with Turkey, is relevant not just for Greece and Cyprus, but also for Europe as a whole. Hence we have taken -as a European Union- I think the appropriate approach, which is a dual track approach. We are offering Turkey a positive agenda, but we’re also making it very clear that what we put on the table is conditional and potentially reversible, if Turkey were to return to a more aggressive or revisionist foreign policy, as we saw during 2020.
I am sure this message has been communicated very, very clearly to Turkey and we have seen some good indications of de-escalation over the first months of 2021. But again, we will stick to our guns when it comes to making it very clear to Turkey that the issues we have, one main issue which is the delimitation of our maritime zones in the Aegean and the Eastern Mediterranean, cannot and will not be resolved through unilateral actions. It can only be resolved by respecting international law and if need be through taking our case to the International Court, in the Hague.
I think it’s a very reasonable approach. We’ve proven that we can conclude these types of agreements with other countries. We did a delimitation agreement with Egypt. We did one with Italy. We agreed in principle with Albania to take our difference to the Hague. So this is a way, frankly, to behave in our neighborhood. So we have a confident foreign policy that is ready to engage with Turkey, but on the other hand sets very, very clear limits as to what behavior can be or cannot be accepted.