Prime Minister Kyriakos Mitsotakis was the key speaker in the event of the Greek German Chamber, on the occasion of the traditional dinner and participated in a panel entitled “The Green Deal in the epicenter of Greek – German economic relations”.
“Greece has now turned a page. This Government has proven that it bears a reformative impetus that has not been blurred, not even during the pandemic,” pointed out the Prime Minister estimating that “the final growth rate will be over 7% in 2021”.
A fast de-escalation of unemployment is being reported in Europe.
“And the result is not just some growth figures that, at the end of the day, don’t mean much to the citizens. The result is the de-escalation of unemployment, the faster de-escalation of unemployment in Europe at the moment, as well as the rise of disposable income,” noted Mr Mitsotakis.
“This Government – in the midst of the pandemic – has been coherent in the materialization of the electoral program, especially when it comes to the reduction of taxes and employers’ contribution rates, making Greece more attractive not just for investors, but also improving the disposable income of employees,” he added.
The event focused on the prospects of the Greek – German economic and investment relations.
Wolfgang Schmidt, Head of the German, Federal Chancellery and Federal Minister for Special Tasks, also addressed the event, while the panel’s debate was coordinated by the Chairman of the Greek German Chamber Konstantinos Maragkos.
Konstantinos Maragkos: Do you think that European structures have incorporated the lessons of the ten-year crisis and that the EU and its members can move safely in an environment of intense international competition?
Kyriakos Mitsotakis: Mr Maragkos, first of all, thank you for inviting me to participate in this event today. I cannot forget that it was in March, if I remember correctly, 8th March 2020, when I met with Chancellor Merkel in Berlin, on the occasion of the Hellenic-German Investment Forum, where we announced a series of investment initiatives.
A day later, we had to make the first drastic decisions to limit economic and social activities. And here we are today, in almost complete composition. Perhaps this, in its own way, signals that, despite the difficulties that we are still facing, we are now moving to the next stage and from now on, we will be managing the pandemic without substantial restrictions in the economic and social life.
To give you a direct answer, I believe that Europe has lived up to this unprecedented health crisis. Let me focus on two important European initiatives, which have demonstrated in practice that Europe, a Europe of solidarity, can offer security and prosperity to all European citizens.
First decision: the decision concerning the joint purchase of vaccines. Despite the initial small delays, this decision was effectively justified in practice given that all countries, large or small, poor or richer, finally had access to vaccines not on the basis of their size or economic strength, but with the sole criterion of their population.
Then, obviously there was a series of more initiatives, such as the European Digital Certificate, which have shown that Europe can, when it has the will, join forces and find solutions that are beneficial to all European citizens, at a European level.
The second major breakthrough that the European Union has made in the midst of the pandemic concerns the very important decisions we have taken to create the Recovery Fund (RRF). A decision that has essentially ushered Europe into a new era in terms of its ability to borrow at a supranational level and then channel the Recovery Fund’s resources into significant investment actions, in areas that are crucial to Europe’s future.
Which are these areas? These areas are digital technologies, green technologies, skills and in general investments that are the pillar of the Greek program of the Recovery Fund. We are talking about 32 billion euros, of which 19 billion are European direct transfers and the rest are low-interest loans.
Well, Europe has shown that it has the potential – when it is under pressure – to join forces and go the extra mile and possibly overcome stereotypes and entanglements of other eras.
I also had very interesting discussions with Chancellor Merkel. Germany changed its position on the issue of the Recovery Fund and accepted the need to be able to make this significant breakthrough.
It is up to us now – and when I say up to us I mean up to all Member States – to make the best out of the resources of the Recovery Fund in the right direction. It is up to us to launch these critical investments, to create jobs and if we do that, then I am absolutely sure that this initiative will not be a “flare” initiative, but it will be followed by others.
We obviously have major European challenges lying ahead – the integration of the Banking Union, single digital market, integration of the single market -as there are still shortcomings when it comes to the single market.
And of course, there is the most important debate, over the future of the Stability Pact. How will we be able to modernize a framework that is clearly outdated, so that on the one hand we can encourage investments that we all know we need to make, and on the other hand we can ensure fiscal stability in all Member States of the eurozone, so that we can guarantee that the European edifice will be resilient and able to tolerate more possible future crises.
Konstantinos Maragkos: So, you are absolutely optimistic. Moving now to more specific issues, Greece came across the recession of the pandemic, in the exact period when it was about to exit a 10-year economic crisis. Despite the fact that economic figures are impressive, there are still many structural weaknesses, while debt is still really high, which possibly blurs – I would say – the prospects of the Greek economy. Greece has created high expectations, will it be able to deliver?
Kyriakos Mitsotakis: I am confident that the future of the Greek economy is exceptionally optimistic. The Greek economy has managed to recover from the Covid crisis, at growth rates that – I think – exceeded the most optimistic forecasts that we may have made a year ago.
Let me remind you of the budget forecast and what levels growth rate is expected to reach in 2021. I do not want to proceed with any specific estimate. But I can tell you with certainty that the final growth rate will be over 7% in 2021. And it is not just about growth, but also about the quality of growth.
We now have the capacity to grow, without considering consumption as the only and exclusive axis of growth. Growth for us now focuses on private and, to an extent, on public investments.
Greece had – and still has – an important investment “audience”. What makes me happy is to see that our country is an attractive investment destination, not just in sectors that used to monopolize the interest of international companies or foreign fund managers.
So I believe that Greece has now turned a page. This Government has proven that it bears a reformative impetus that has not been blurred, not even during the pandemic. We managed to deal with the crises of the pandemic, the crises in our foreign matters, without at the same time making any compromise in our reformative rate and I think that this can be seen in the results.
And the result is not just some growth figures that, at the end of the day, don’t mean much to the citizens. The result is the de-escalation of unemployment, the faster de-escalation of unemployment in Europe at the moment, as well as the rise of disposable income.
The Government – in the midst of the pandemic – has been coherent in the materialization of the electoral program, especially when it comes to the reduction of taxes and employers’ contribution rates, making Greece more attractive not just for investors, but also improving the disposable income of employees.
Consequently, as I told you, I am very optimistic. To an extent, the pandemic has been a catalyst for important changes at a European level, the most important one of them being the Recovery Fund. It has been a catalyst for important changes at a national level.
The digitization of the Greek public administration has moved at even faster paces than the ones possibly scheduled.
The strengthening of the National Health System, which has been one of the priorities of the Government, moved to another level of priority. And of course issues related to the Green transition and the digital leap that the country must make. Therefore, because of the pandemic, all these issues got into the accelerator.
Konstantinos Maragkos: So, I would say that you do not consider this to be a bounce effect after the pandemic crisis. But I would say that this is a recovery that has depth and also consistency, is that right? And my question is: what will attract a foreign investor in Greece, especially a German investor? Why would an investor transfer his funds here and not to any other neighboring country? Which are our comparative advantages?
Kyriakos Mitsotakis: Look. The Greek economy is dynamically coming out from a 10-year crisis. This, by itself, creates opportunities. This is not just an ephemeral recovery. We don’t just recover the lost ground. We set the foundation for long-term quality growth.
Greece is today a country that has become an attractive investment destination. First and above all, I think, because it has political stability. I think that this is exceptionally important.
It is a Eurozone country, if you take a look at the wider Balkans region, with a government that demonstrates consistency in what it says and that is reliable. Its actions are consistent with its words.
And when it comes to what it cannot do, it says clearly that it won’t do them. I think that we have established the evidence of honesty and truth in our political discourse.
The investors know that they are interacting with a public administration that is trying to overcome the long-standing malaise of bureaucracy. If I am not mistaken, we have voted 16 bills related to growth, which are addressing the malaise of the past.
And I think that the outcome vindicates what we are saying. Because there have been very important investments in Greece and we have managed to attract the interest of foreign investors, who would not have considered Greece to be a potential investment destination in the past.
But I would like to point out something that has a special importance: It is not just our natural environment. It is not just the fact that there is sun and wind for the Renewable Energy Sources. It is not just our beautiful beaches that make our tourist product unique.
For me, it is also the quality of the country’s human resources. And I insist on that. This is why we have insisted on cutting down on taxes on labour, because I think that this is a comparative advantage of our country.
When companies come to invest in high-tech, they do it primarily because they realize that in Greece they can find exceptional human resources, with very dedicated young Greeks, with great expertise, who want to work with enthusiasm and prosper together with the companies for which they work.
And I think that this dimension of human resources of exceptional quality in many different sectors is what has attracted investors who may have not been interested at all in Greece in the past.
And of course, one last thing about the Greek German relations. Indeed, it is true what you are saying. Most German companies have stayed in Greece during the crisis and I am happy because they have significantly increased their investment portfolio in Greece, from now on.
I think that we have materialized what we had committed ourselves to with Angela Merkel, who back then served as Chancellor, which is to change the narrative of Greek German relations, that for a decade consisted in “what we owe to Germany” and “who is the bad guy and who is the good guy in the case” and to now move to a new era of mutually beneficial trade and investment relations and Greek exports to Germany, which interests us a lot. It is a big market for exports. But also Greece is a receptor of important German funds that are already being mobilized in our country.
And I think that if we engage in this fight even more, we can explain why German companies should look at Greece from a different perspective, and that German companies’ interest in Greece will rise even more.
Konstantinos Maragkos: Regarding the same question, specifically in the context of the strategy Greece 2.0, Industry 4.0., what would be these basic pillars of growth in which we will be able to expect large investments from the German market as well?
Kyriakos Mitsotakis: As I mentioned, within the framework of the Recovery Fund we have identified four central pillars to which significant resources from the Recovery Fund will be channeled, which are also cutting-edge priorities for the Greek Government.
Digital transition, the green transition, private investment in general, productive private investment and the issues of training and skills, to which I am pleased you have made a special reference. And I am pleased that in all these areas there is a strong German interest and we already have very concrete results to show.
Especially as regards the sector to which you made specific reference, the green transition, I think it is very important that the country has already given investors a clear vision of our intentions from now on.
I assume, Minister, that we will have submitted within the next month our climate law to the Greek Parliament, which sets specific binding targets on how to achieve climate neutrality by 2050 and the intermediate targets for 2030, for 2040.
And this means everyone knows that this transition to a circular green economy is a non-negotiable priority for the Greek Government.
I would also like to remind you that we took important decisions in this direction earlier than other European countries. In 2019 we took the decision, which at the time had also raised a number of questions of whether it was premature. It wasn’t premature. I believe that it was entirely appropriate to leave lignite earlier than we had planned.
And, of course, this is a decision which has enabled us to be able to speed up investment in renewable energy sources and to refute this argument that at the moment we may have increased gas prices, because we left lignite earlier than we should have.
Lignite is already – and has already been – very expensive and the more renewable energy sources we have, the cheaper the energy we produce will be.
That is why we want to offer companies the possibility to install, if they so wish, their own production capacity in renewable energy sources so that for self-production and for self-consumption, they can use the renewable energy that they themselves produce for their own energy needs.
Konstantinos Maragkos: Without wishing on behalf of the Chamber to express disbelief, I would say deliberately that we are trying to express any negative thoughts or reservations of German investors, I would like you to comment on the recent evolution of the Greek of the ten-year English bond which now exceeds 2.4%.
Perhaps it is something which, and in particular the fact that it is now higher than the Portuguese, the Irish, is perhaps something that can create controversy. Would you like to present your position on this topic?
Kyriakos Mitsotakis: I’m glad you’re asking me this question. I would like to refer to the following points: Firstly, it is true that Greece has a very high public debt, but this public debt has some very special characteristics and has fixed, low debt servicing costs for many years.
Consequently, we are not directly dependent to the extent that other countries may be on the movements of interest rates.
Secondly, Greece is not yet in investment grade. It is the last piece of the puzzle that we have to deal with, in order to say that we have definitively left behind the ten-year crisis that has shaken us so much. And it is a national goal for the Government and for our country, for Greece to acquire the desired investment grade in 2023, in the first half of 2023. I believe it is a realistic goal.
To be able to achieve this, however, we need a clear commitment to the fiscal targets that we have set for 2022 and then for 2023: The primary deficit of about 1.5% for 2022 and a primary surplus for 2023. And I have absolutely no doubt that these objectives will be achieved and possibly even exceeded.
Therefore, we must have a notion that financial stability cannot under any circumstances be called into question and the Greek Government has proven that any additional moves it has made to relieve social groups that need support from the Government, it has done so without endangering fiscal stability.
Therefore, I believe that these moves in the bond market have some conjunctural characteristics, but the credibility of the Government, the commitment to fiscal targets and the clear visibility we offer to investors on how to reach the investment grade, make me optimistic and make me not to worry too much about any daily fluctuations in the ten-year bond.
Konstantinos Maragkos: You touched on the issue of green growth and I would like to remind all those present that our Prime Minister is called in Europe “The greenest Greek Prime Minister ever”, right?
It is not by chance that you have given priority to the green transition, and you already mentioned delignification earlier. This transition, however, requires ensuring energy efficiency and competitiveness in energy costs for businesses and society.
How are we going to achieve these two conditions and not have, at European and Greek level, withdrawal of industrial units that will transfer their production for reasons of energy cost to countries outside Europe with much looser green transition goals.
At the same time, it is a fact that existing jobs will be lost, but the big challenge is how to create new ones by exploiting the human resources of Greece to which you referred to.
Kyriakos Mitsotakis: The question you raised has a European and a national dimension. The European dimension relates to Europe’s obligation to be able to protect European production from unfair competition from countries that do not have such ambitious targets for green transition and this is called carbon adjustment touch, it is something that is already being discussed at European level. We are obviously not naive and we are not going to go and shoot the feet of European production by exposing it to unfair competition – because that is what it would be – from countries that are lagging behind Europe in terms of the objectives we have set ourselves for climate transition.
Now, as regards our country. Our country is taking steps, which have been delayed in this direction, in order to have a real energy market and overcome the distortions of the past.
We have proven, however, that in the short term we have the ability to support the domestic business community, production, all Greek businesses, with extraordinary interventions, in order to deal with these very sudden increases that we have seen in recent months in the prices of natural gas, which have obviously also had an impact on the electricity bills.
Since January there is already a subsidy of 65 euros per megawatt hour for all Greek businesses, something that did not exist until December. Therefore, there will be a first relief in electricity bills and within our capabilities, as we have already done, we will continue to support households and businesses.
No country – I want to underline this – is in a position to fully absorb increases in energy costs. All countries face the same problem using different and often similar tools. So do we. And obviously there are issues concerning the proper and orderly functioning of the energy markets.
We are taking many steps in this direction. And obviously we want to be present in the “wider arena”, in the broader field of energy diplomacy. Greece is a country that can play a decisive role as an energy hub.
Whether we are talking in the first instance, for example, about gas imports from the wider Eastern Mediterranean basin, whether this is done by pipeline, or LNG.
We have taken many steps in this direction. Greece will be a de facto hub for the interconnection of the European network with the African grid in terms of electricity.
That is why we attach such great importance to both the Euroasia and the Euroafrica Interconnector to be able to connect with Cyprus and Israel on the one hand, and with Egypt on the other.
I am specifically referring to Egypt, because Egypt has great potential for generating electricity from renewable energy sources, especially solar energy.
And it is imperative that this can somehow reach Europe. Greece itself will at some point need to have a surplus in electricity generation.
This requires interconnections, better interconnections with the rest of the European network. And of course the big issue of hydrogen, which concerns us all, and on this issue I believe that the country will have an important role to play as a producer or as a hydrogen transit country towards the European markets. So there are many opportunities in the energy field and many investment opportunities. I can imagine that many of your members are already rushing to invest in the energy sector.
Konstantinos Maragkos: On the issue of hydrogen, we will have the opportunity with the Minister, Mr. Skrekas, to discuss it thoroughly because it is very important, we fully agree.
Finally, what would be your recommendations, how could the relations between the two countries become even stronger for the benefit of both?
Kyriakos Mitsotakis: First of all, as I told you, our relations with Germany have reached a very good level and I think it is very important that we have left stereotypes of the past decade in the past.
I believe that we still have work to do and the Chamber can certainly help us to present the country’s investment opportunities, not so much to large German companies as to lower-level.
Germany has a very dynamic market of medium-sized enterprises. I am not sure that everyone knows what is happening in Greece and I believe that we can work together through our international economic diplomacy, with the help of chambers, so that businesses that may still see Greece with some skepticism, can get to know the country.
Beyond that, what I can tell you is that at a political level we have excellent relations. I believe that I will soon have the opportunity to also meet with the new German Chancellor, so that we can discuss the wider issues of our political cooperation.
Therefore, to finish from where we started, I would like to stress that during the crisis, many of the objectives and investment plans that we had specified when we were at the Berlin Investment Forum are becoming a reality and this is extremely optimistic because it means that this Government likes actions and not words.
So now we are in a period when we already have very specific success stories that we can talk about. And of course nothing attracts more the interest of investors than the stories of other investors who came and expressed, as I believe, a satisfaction with the investment climate and the opportunities that the country presented.
Konstantinos Maragkos: We fully agree that the developments in Greece may be known in Berlin, but it is very important to transfer this to the level of the states, as the states are more connected, more close to the business world. And that’s where immediate decisions lie.
Kyriakos Mitsotakis: And of course, in order to be a little practical for the direct opportunities of the summer, let’s not forget that Greece is also a very important tourist destination for German visitors.
I had the opportunity to meet with the CEO of TUI a few weeks ago. There is a very strong interest in a significant increase in tourist flows from Germany to Greece.
A major challenge for us is the extension of our tourist season, which is linked overall to the review of what our investment destinations can offer.
Of course, I would like to stress once again that, for us, tourism development is unthinkable without the protection of the environment. Sustainable tourism development is a one-way street for the country. It is a claim of our times and I think that in this area, too, we can lead the way.
And I think that some projects that have been materialized, such as the Astypalaia project, give us the opportunity to explain what it means, especially on our islands, how quickly we can move towards climate neutrality in closed systems such as our islands, where we can see the circular economy as a whole from a completely different perspective.
I believe that all these are initiatives that allow us to look towards Greece of the future and not Greece of the past.
Konstantinos Maragkos: We will stand by you. In fact, to conclude this conversation, we refer to a silver economy which means that we would like the pensioners of Germany not to go to Spain but to come and spend the summer months in Greece.
Kyriakos Mitsotakis: We have given significant tax incentives for pensioners who will be able to be taxed, to transfer their tax residence to Greece.
And I would like to say that Greece is no longer a destination country for visitors. It is a country from which one can work, it is a country in which one can spend his pension time.
It is a country to which someone will be able to come to receive education services, health services and of course at a time when the distinction between work and leisure is beginning to become more nebulous, where someone can work, spend time in Greece, work in Greece for a few months, return to work. There are many large companies that approach us and tell us in this context: we want to give the opportunity to our employees to spend a few weeks in Greece and work from Greece.
I believe that many other opportunities are opening up that now place Greece beyond and above the framework of a country that was basically a summer destination for foreign visitors.
Konstantinos Maragkos: Thank you very much for your clear statements. I really think that although, I would say, they were quite provocative, the questions were asked deliberately, so that any clouds or thoughts that perhaps potential German investors have, could be clarified, from you personally. Thank you very much for being here.
