Prime Minister Kyriakos Mitsotakis’ conversation with Børge Brende, President of the World Economic Forum, in Davos, Switzerland

Børge Brende: Good morning. Warm welcome to Prime Minister Mitsotakis. He has been in the US twice the last weeks. He has also been back to Greece. It is a great pleasure for us to have you back with us in Davos. Thank you for your leadership on behalf of your country. Transforming Greece’s economy has been key, and I think confidence – I know confidence now is back in the economy of your country, not an easy task. Someone had to do this job. And also in the EU, we know that you personally and Greece is again very much listened to and seen as a critical partner in the European Union. And also your recent visits to the US show real partnership between you personally, Prime Minister and President Biden, and also your leadership after the war in Ukraine. Maybe let’s first say two words on the war in Ukraine. How much of historic change is that for Europe and for the EU? The time of our meeting is at the historic turning point. And will this change Europe forever?

Kyriakos Mitsotakis: It is a historic turning point, and I think a whole period, which essentially started in 1990 with the collapse of Communism, is clearly coming to an end. It has already changed Europe. Europe has proven to be extremely united and quick in imposing unprecedented sanctions on Russia. It has rekindled the transatlantic relationship. It has given NATO a new purpose. And it is also pushing Europe to think much more strategically about this concept of strategic autonomy, which I was a big fan of before the Russian invasion into Ukraine. If you look at energy, for example, we were already the most ambitious continent in terms of reaching climate neutrality by 2050. Now we have an additional reason to do so, and that is to reduce our dependence on Russian hydrocarbons as quickly as possible. So we have to focus more on renewables. We have to diversify our sources of hydrocarbons in the short-term. And Greece has a very important role to play in that discussion, given the fact that we are a key partner in the Eastern Mediterranean. And the Eastern Mediterranean in itself is an area of strategic interest both for Europe but also for the United States.

Børge Brende: So, Prime Minister, your presence in DC was historic. I don’t know when was the last time a Prime Minister from Greece addressed joint sessions for the US Congress?

Kyriakos Mitsotakis: Never. Well, it was a first and certainly it was an honor for me, an honor for the country. As you know, these speeches in front of a joint Session of Congress don’t happen very frequently. But it was an opportunity for me, first of all, to celebrate the paths of our two democracies, to speak about the past, the influence of Athenian democracy on the founding fathers of the American Revolution, and also the influence that America had on our War of Independence. But, of course, we also spoke a lot about the present and the future. We have a very strong strategic partnership with the United States, which is not just focused on defense. It is expanding to energy. For example, the Port of Alexandroupolis in northeastern Greece is acquiring a very profound strategic importance for the diversification of energy supply, not just for Greece, but also for the Balkans. If we want to replace Russian gas in the Balkans, the easiest way to do it is to bring LNG into Northern Greece and then pipe the gas into the Balkan markets. And, of course, this trip was also about the economic partnership between our two countries.
It was an opportunity for me to explain how Greece has changed over these past three years to make the case that the Greece that many remembered, the Greece of “big deficits”, the Greece that was actually still sort of controlled by programs no longer exists. And it was funny because when I went to Washington to meet President Trump in January 2020, we were still discussing when and how I should visit the IMF. Now, there was no discussion about me visiting the IMF. It was unnecessary because Greece has repaid its loans to the IMF two years ahead of schedule. So maybe this is the best indication of how the country has actually changed over the past few years.

Børge Brende: How could this economic miracle happen so fast? I think it was said that it would take decades before the Greek economy could really rebound. What measures were taken, and how was it accelerated so fast?

Kyriakos Mitsotakis: First of all, it was a drastic change in policy. We always made the argument that the previous government had overtaxed the real economy. And the more you tax the real economy, the more you drive down growth. Our job was to put Greece on a high growth trajectory and do it primarily through investment – domestic and foreign investment. And we have succeeded on that front. I was looking at the recent OECD numbers, which show that Greece has had the largest reduction in terms of the tax wedge in the OECD countries over the past years. But we were doing this without endangering our fiscal sustainability path because the economy is growing much faster than we had anticipated. This is also providing the state budget with more revenues. At the same time, we completely transformed the regulatory environment in Greece, and we digitized the state. So we reduced bureaucracy. Greeks are very happy that they can now interact with the Greek state through their mobile phone or through their computer, rather than standing in queues and being “harassed by Greek bureaucracy”. S&P has upgraded the Greek economy a month ago, after the Ukrainian invasion. We will be done with enhanced supervision in August, a very important milestone. The decision has been taken.

And we hope that Greece will reach “investment grade” at some point in 2023. And that will be the final. That’s the final nut that we need to crack! No one is concerned about Greece now. If you compare Greece ten years ago in 2012 to Greece in 2022, we are a confident country, a resilient country. We fought populism. We defeated the populist rhetoric because we proved that we can do the job much better.

And as we will be entering – we’ll have elections in 2023 – this is the case we’ll be making to the Greek people. We actually delivered. We delivered on our commitments. We created jobs. We increased disposable income. We increased the minimum wage by 10%. We still recognize that wages are low in Greece. So we want to make sure that the growth we drive is a growth that reduces income inequality. I’m very preoccupied with this issue. We cannot go on and tell our young people that they will live a worse life than their parents. And if we don’t offer the young people the opportunity to participate in this growth, we will end up repeating the mistakes of the past.
Børge Brende: So you were able to reduce the taxes that were hurting growth and investments the most. Credit growth. And then you could still secure redistribution of wealth and also wealth trickling down. Talking about tax reductions. One of the challenges in the past at least, was also that the taxes were there, but they were not being paid. Is it more understanding now with a more competitive tax system that at least you have to pay the taxes?
Kyriakos Mitsotakis: Two points on this. This is interesting. We offered the companies a lot of support during Covid. And we did so I think in the proper way. Because our main priority was to make sure that we protect the jobs. And we succeeded in doing that. Unemployment was 17% where it came into power. It’s going to be under 12% very soon. But the way we did it is we looked at the reported income of companies. So companies that were tax evading were not getting help from the government. And when they complained, I told them, well, “tough luck”. Maybe you’ll learn your lesson for the future. At the same time, the more we drive digital, the more transactions take place electronically, the less tax evasion you have. One of the important reforms over the past decade was that our revenue service is now completely independent. They have much better know-how. They use technology much more effectively to go after tax evaders. So this is also allowing us to be able to increase revenues and fight tax evasion, which was always a big problem in Greece.

Børge Brende: And coming back to the more regional politics and global politics, you went to Washington, DC, and also met with President Biden. But I just read in the news that your neighbor, President Erdogan, doesn’t want to pick up the phone when you call him.

Kyriakos Mitsotakis: Well, I remember after March 2020 when Turkey tried to weaponize migration and sent tens of thousands of desperate people across the Greek border, and we said no when we defended the border of Greece and we brought the leadership of the European Union to the Greek-Turkish border. President Erdogan was saying the same things. He doesn’t want to talk to me. So, maybe he’ll change his mind. But again – at the end of the day, on a more serious note – we’re neighbors. We always need to talk and we always want to keep channels of communication open.

We’re never going to be the ones who will not talk to our neighbors. On the other hand, if President Erdogan thinks that I will not defend the sovereignty and the sovereign rights of Greece and I will not make the case to the international audience that Turkey is behaving as a revisionist power, then he’s wrong. Because what we’ve seen, unfortunately, over the past two months? I went to Istanbul and had a meeting with President Erdogan. I thought it was a good meeting, but then a month later we saw an unprecedented number of overflights over our Greek Islands. And this behavior is completely unacceptable. And I will raise that issue whenever I can until Turkey changes its behavior.

Børge Brende: It had real consequences for the Russians when they flew over Turkey, didn’t it?

Kyriakos Mitsotakis: Well, we’ve been dealing with overflights for many years now. Many of our colleagues in Sweden and Finland realize how problematic this type of behavior is. And speaking of Finland and Sweden, I want to be absolutely clear. We’ve supported from the very beginning unequivocally their membership into NATO. And I think it is a mistake if Turkey continues to use these negotiations to extract sort of benefits for its own national interest. This is a time when we all need to be united. It is important that NATO is going to be strengthened by the addition of two countries. And frankly, the last thing that we need now within NATO is another source of geopolitical instability in the Eastern Mediterranean. So that’s why it’s important to have a period of calm and stability. But we’re never the ones who raise tensions.

Børge Brende: I think you were in DC almost at the same time as the Swedish Prime Minister.
Kyriakos Mitsotakis: Yes, I was there two days before the Swedish and the Finnish President was there.
Børge Brende: You also have been talking about the role of Europe now post the Ukrainian war. I just listened to Prime Minister Rutte that spoke in another meeting and he said that Europe cannot stay as the playing field. We have to start to be the players and Europe should be on a par with China and the US, we are the largest market in the world. Do you agree on that?

Kyriakos Mitsotakis: I do, but then we need to think smartly about what that means. On defense, we need to do more. We have been, as I told you, proponents of the concept of European strategic autonomy before the Ukrainian crisis. We need to spend more, but we also need to spend more smartly. We need to look at our defense systems and have more interoperability. The defense industry in Europe is frankly, too fragmented now. And there will be times when it is necessary for Europe to act on its own, without possibly the participation of NATO. NATO will always be the bedrock of transatlantic stability, and it is the most successful Alliance in the world. And if we strengthen our strategic autonomy, we’re strengthening NATO. The more we invest in our defense capabilities, the more resources we put at NATO’s disposal. But we also need to look at what we’ve done in terms of the Strategic Compass, which is an important document, and be aware that we will have interests of our own as a European Union. And then, of course, energy, I think, is going to be the critical battleground in the short-term, in the medium-term, in the long-term. We can be leaders in terms of the energy transition.

We can be leaders. We should be leaders in renewables. We should be leaders in the new technologies around Climate Change. In the short term, we need to diversify away from Russian gas, but we also need to be aware of the fact that currently we are getting squeezed. We’re paying to Russia prices of gas, which are exorbitant. And they do not reflect the fundamentals of the gas market. And that is why I’ve been a proponent of the idea of some sort of wholesale price cap for the gas market in Europe.

And I will bring back this suggestion at the level of the European Council. We need to do it, of course, by working also with the Americans, because they’re big providers of LNG. And they have smart ideas on how we can actually do this. But I don’t want to put ourselves in a situation where we spend more and more, subsidizing our electricity and our gas bills domestically and the European Union does not support us in this effort. It’s important to invest in the future. And that is why the RePowerEU initiative is, I think, a great addition to the NextGenerationEU as a financial tool that will help us invest in the green transition.

But we also need to look at what we’re going to do tomorrow, the next month, the next three months. What are we going to do in the winter in terms of being able to support our people? We’ve come up with – what I think – is a very strong domestic package to support households and businesses when it comes to electricity prices. But frankly, Europe should do more on that front.

Børge Brende: But it will end in Europe having to close down several industry plants, aluminum, fertilizers, etc if there is no electricity there I guess.

Kyriakos Mitsotakis: I mean, of course, we need to prepare for the worst case scenario, but what you described is pretty dramatic developments. Because we use gas for three reasons. We use gas for manufacturing, we use gas for heating. That’s going to be very important in the winter. And we use gas for electricity production. In Greece, we use more gas in the summer than we do in the winter simply because we have more air conditioning requirements.

Børge Brende: But I’m also thinking about the huge business opportunities that are related also to the green transition. I think those so-called freedom fuels, new renewables. There is still huge potential there. But as you said, Prime Minister, we also have to prepare for the short-term and medium-term. It’s not built overnight.

Kyriakos Mitsotakis: You are right to point out that renewables are right now the cheapest form of energy we can produce. Maybe for the first time in Greece, in April at some point, we reached the point – it was a sunny day with lots of wind and with energy consumption not being that high – when we produced our entire energy electricity supply from wind and solar. And this is the future. So we will add renewable capacity. But we need to accelerate the permitting process. It cannot take us five years to set up a wind farm or a solar plant.
And that is why the European initiatives in terms of streamlining permitting, the idea of having “go to” areas where you can actually go and build renewable capacity at a much faster pace are so important.
But that’s not going to do the trick on its own. You need storage and storage technologies. We need to really invest in storage technologies. We can look at pumped storage, which countries such as Greece – which have the geography to support it – are placing significant funds from the RRF to build the first pumped storage capacities. Of course, batteries and then grids. Our grids right now are not able to support the influx of renewables and interconnectivity.

We want to build an electricity cable that will connect Greece and Egypt. It’s going to be a 3 gigawatt cable. That’s very important because we can bring in the European markets very cheap solar electricity that’s going to be produced in Egypt. So if you want to have a properly functioning European market, we need to do all of those.

And, we need to focus on energy savings, because little changes in our habits, if all of European consumers do them, they really add up to a lot. And sometimes there is skepticism when we talk about energy saving. Tell people.. Maybe you raise the temperature and your air conditioning by one or two degrees. It does actually make a big difference. They will end up paying lower bills.

For example, we’re launching a program now where we’re subsidizing the replacement of old air-conditioning units for houses and businesses. The new electricity units are 50% 60% more efficient when it comes to their electricity consumption. So I really would like us to place more emphasis on making sure we spend less energy than we currently consume at the European level.

Børge Brende: Τhank you so much for this. I also heard you last night speak about energy. And I think it’s very comforting to know that we have leaders in Europe that do know the field. It is a complicated field.

Kyriakos Mitsotakis: None of us knew a lot about energy before we came into office. But this is complicated. The energy market. Every country has different priorities. But I will really sort of urge our colleagues to look at the big picture right now. We did it with Covid. We did it with NextGenerationEU. So we did it with vaccines. We’re doing it with REPowerEU. But let’s also look at the short-term problem which we have because we may have a difficult winter ahead of us.

Børge Brende: We’ll move to some other topics. But just reflecting on the energy situation that Europe is in now – 40% of the natural gas came and comes from Russia. In hindsight, how much of a cardinal mistake was it to put that many eggs in the Kremlin basket? When we saw Georgia, we saw Crimea, we’ve seen all this and we took a high risk. Actually, the Secretary General of NATO Jens Stoltenberg said yesterday we had made a priority of the economy and we should have put freedom and independence first.

Kyriakos Mitsotakis: Yes, that’s true. And in retrospect, it was a mistake. But we should not also forget that for many European countries, especially big manufacturing countries, having access to very cheap Russian gas made a difference in their competitiveness. And what we also know now is that not all of us were paying the same price for the same gas. At least if we were paying all the same price, we could argue that we all had the same benefit. This was not the case. So that is why it is important that these decisions are actually taken at the European level.
Børge Brende: So coming back to the geopolitical role of Europe and the EU, you said that Europe has to take more responsibility for its own security. 80% of the military capacity of NATO is outside the EU.

Kyriakos Mitsotakis: Well, Greece has been spending more than 2% on defense for quite some time for obvious reasons, because we have legitimate security concerns. So the first thing we need to do is to make sure that we raise our overall level of spending. But again, we need to do it in a smarter way.
And there are clear areas where we can cooperate, but we need European capability. Cyber is one of them, for example, space, maybe another, where it just does not make sense for a medium-sized country such as Greece to invest on its own.
So what you describe is very much a reality. And that’s why NATO will continue to be very important. But if at some point we need to take a decision at the European level, will we be able to deliver. And of course, there are also other issues which have to do with our security. Let me just raise one. Border management. This is very important. We cannot have a properly functioning Schengen zone, if we don’t make sure that we control who comes in and out of the European Union. And we’ve done so with full respect to human rights.

But we are defending our borders and we want to make sure we attack the criminal gangs of illegal smugglers that are benefiting from human pain and suffering.We want organized migration. There is a labor shortage now in Europe. There is a labor shortage in Greece with 12% unemployment. So if we need, for example, agricultural or construction workers and we can get them, let’s do organized deals with other countries rather than encouraging people to cross the Aegean in horrible and very dangerous circumstances. This is also a critical element of our security. We don’t talk much about it, but I can tell you, as a border country, we’re very preoccupied with this issue.
Børge Brende: And you saw the same situation unfolding between Belarus and Poland, too.

Kyriakos Mitsotakis: Βecause the playbook was written by others there and we’ve seen how dangerous it is to weaponize migrants and refugees for geopolitical purposes. And we simply cannot allow this to happen again.

Børge Brende: At the end of this conversation, I wish we had more time to talk about European values and also the journey that Greece has been on. When it became a member of the European Union, maybe not everything was perfect. But the European Union wanted to integrate Spain, Portugal, Greece, and it’s been very successful. I know these countries are leaders. And as you also mentioned, Prime Minister, the travel of Greece has been into a real democracy. It has been tough during the last ten years. But one thing is. In the neighborhood of the EU, there are challenges, but there’s also conflicts inside the EU, because not all EU countries do stick to all the key accords and the principles of the EU. Do you think one has been too complacent about that and needs to be tougher in the years to come?
Kyriakos Mitsotakis: First of all, the European Union has been transformative for Greece. Since we joined, we’ve benefited tremendously financially. We also became complacent at some point, and we paid a very heavy price.
But Greece stayed within the Eurozone and it was the right decision. And now we’re happy that we are again doing rather well. But the European values and the Democratic values are part of who we are as a country.
And that is why this concept of sort of reinventing democracy in the 21st century is so important. And that is why there can be no discount when it comes to issues of rule of law, of making sure we confine to the European acquis.
This, at the end of the day, is who we are. That’s what we signed up to when we joined the European Union. At the same time, we need to recognize that many of the grievances that fuel populism and add to the toxicity of the public debate are legitimate grievances.
Income inequality is a huge issue. We cannot afford to ignore it. And that is why when we think about Greece’s, sort of, long-term growth, we don’t want to repeat the mistakes of the past.
We want an inclusive growth and we also need to see how we moderate the political debate in the public space. How we reduce toxicity. We’re leaders when it comes to regulation of the digital ecosystem, but we can do more to work also with the big tech companies to make sure that hate speech, misinformation, disinformation, does not become a part of the online dialogue because, unfortunately, that is what we’ve to deal with and sort of one last point. If the political dialogue is so toxic, if it’s all about personal attacks, think of the next generation of leaders. Who will want to join politics if they have to go through this, to deal with character assassinations? We risk really sending a signal to the next generation of leaders that it is not worthwhile to enter politics. Because simply the price you pay is just too high.

Børge Brende: Thank you so much Prime Minister. No discount when it comes to basic values. And thank you again for your leadership, the rebounding of the Greek economy, but that has also meant the rebounding of Greece not only in the European Union and Europe. But also after your historical speech in both the Chambers of Congress. Happy to see and I am grateful for this great conversation.

Kyriakos Mitsotakis: Thank you