Prime Minister Kyriakos Mitsotakis’ conversation with members of the Council on Foreign Relations in New York

(Dimitris Papamitsos / Greek Prime Minister's Office)

Robert Rubin: And on behalf of my colleagues at the Council, we are deeply honored to have with us this morning the Prime Minister of Greece, the highly respected Prime Minister of Greece, Kyriakos Mitsotakis. In accordance with the practice of the Council, I’m not going to recite from his resume, but it is truly distinguished. You’ll see it in your materials. Greece, as we all know, is an active member of the EU, is an active member of NATO, is an important member of the global community. And we are very fortunate to have the Prime Minister with us today, to help us lead through issues surrounding Greece and give us a better understanding of Greece’s economic situation, the politics of Greece, and very importantly, because the Prime Minister is very involved in this, the Western response to Russia’s brutal invasion of Ukraine. Mr. Prime Minister, why don’t we start with the economy? Then we’ll turn to the politics of Greece, and then we’ll turn to Ukraine.

Kyriakos Mitsotakis: Okay.

Robert Rubin: All right. In Covid year 2020, the Greek economy declined by about 9%. It rebounded nicely last year, 8%. I think you’re expected to grow this year about 3.5%, maybe 1% next year, or something like that.

Kyriakos Mitsotakis: More than 5%, I would expect this year.

Robert Rubin: Okay. We’ve already gained from 3,5 to 5%. Terrific. Okay. As you look forward, Prime Minister, why don’t you give us your views as to the outlook for the Greek economy, both in the shorter term but also in the intermediate term. And if I could suggest in that context you might want to discuss, you might want to touch at least on competitiveness where you’ve really improved, although still lagging others, your debt to GDP ratio, that’s to say your fiscal situation, unemployment, which particularly youth unemployment is -I gather- a problem. And then there’s a tremendous plus, which is I think it’s something like €70 billion that you have access to through the EU, through the Recovery Fund, and their regular budget. So with that lets move forward.

*Kyriakos Mitsotakis:*Thank you for having me. It’s always a privilege to be back at the Council. As far as the Greek economy is concerned, as you probably know, we went through an extremely challenging and difficult decade, which essentially started in 2010 when we had to sign our first program. And I’m happy to report that a month ago, towards the end of August, we have finally succeeded in exiting what we call the enhanced surveillance mechanism of the European Union. And there’s only one main goal left, and that is to attain investment grade in 2023. We were able to do that because we’ve implemented a policy of significant reforms that have really addressed structural problems of the Greek economy, while at the same time making sure that we don’t endanger fiscal sustainability because we have a very high debt to GDP ratio and we know we have to bring it down. Of course, we also had to deal with the pandemic, which was an extraordinary event that forced all countries to significantly expand their scope of fiscal support. But we are fully committed towards returning to a path of reducing our primary deficit -this year it will be around 2%- and achieving a primary surplus in 2023.

We’ve done all that while we reduced taxes across the board while still managing to bring in more revenues for the state because the economy has been growing much faster than we had anticipated and because we’ve been rather successful at tackling a historical problem with the Greek economy, which is tax evasion, primarily by pushing very aggressively along the path of electronic transactions. We’ve been able to make Greece a very attractive destination for foreign direct investment. We’ll again have a record year this year, investments across sectors.

Just yesterday it was announced the biggest hospitality deal in Europe, acquisitioned by a big fund from Singapore of a majority stake in one of our leading hotel operators at a valuation that exceeds €2 billion. Unthinkable numbers even a couple of years ago. And in general, there is a sense that Greece is finally moving in the right direction and is able to buck the trend. You remember the north-south divide that was so pronounced over the past decade. Greece has been outperforming many northern European countries. This year, as I told you, our GDP growth will exceed 5%. I expect growth next year as well, I’m pretty sure we will avoid a European recession.

And I think we have reasons to be optimistic. Debt to GDP is coming down very, very rapidly, faster than any other European country, also because of inflation, but also because of high growth. And in general, I sense that there is no real nervousness about the fiscal path of Greece. Markets, I think trust this government and one of the reasons why we have been able to drive through these important reforms has to do with politics. We are a stable government. We have an absolute majority in parliament. We’ll be entering our election year in 2023 and we expect to win the next election. And I think investors look at that and they understand that there is no significant long term political risk for Greece. So in spite of the turbulence and I’m sure we’ll talk about the big difficulties because I spoke about the good things that have happened, I think there are reasons to believe that Greece could be a pleasant surprise in Europe. It has usually dominated the headlines for the wrong reasons over the past decade. Maybe it’s time to change that.

Robert Rubin: You made an interesting comment, Prime Minister. You said you think that Europe will avoid a recession.

Kyriakos Mitsotakis: No, I think that Greece will avoid a recession. Even if Europe has a recession, which I think is likely given the impact of energy on growth, I am convinced that Greece will avoid a recession in 2023.

Robert Rubin: And you also mentioned your fiscal situation. Your debt to GDP ratio is about what now?

Kyriakos Mitsotakis: 170. But it was at 210 just two years ago.

Robert Rubin: Right. And what is your plan for moving down and what are the politics around those plans?

Kyriakos Mitsotakis: Well, we always made the case that the best way to bring down your debt to GDP is if your growth exceeds the trajectory that many people have predicted for you.

In order for this to happen, you need to reform the economy. I think people in the past, when you looked at all the debt sustainability analysis, they were skeptical about Greece outperforming in terms of real growth.

I think we’ve convinced a lot of people that we can leverage long term comparative advantages of the country and really grow the economy and move it to a different growth trajectory. At the same time, we know we have to produce primary surpluses to help that effort to repay our debt.

So I think that when you look at all the debt sustainability analyses that are done, we have a reason to feel good. There’s also an additional reason. A lot of our debt is locked in fixed interest rates. So we’re not that susceptible to sort of market movements. While at the same time we still sit on €40 billion of cash, which is a buffer that we have built over the past years. To make sure that if – for whatever reason – we choose not to access the market for a few months, we don’t have to roll over short term debt as other European countries have. So that makes us feel rather comfortable about the fiscal situation.

Robert Rubin: Prime Minister, what worries you most about your economy, say, over the next year or next few years?

Kyriakos Mitsotakis: There’s only one thing on our mind, and that is the price of energy. And that is true for all European countries today. If you look at the price of gas in Europe and compare it to the price of gas in the US or in Asia, it’s absurd what is happening.

We’ve been making the case that the gas market in Europe is broken for quite some time. What we call the TTF index, which is the price at which gas is traded in Europe, has risen ten times over the past three years. It really no longer reflects the forces of supply and demand. It is a function of Russia weaponizing natural gas to put pressure on European economies. But the one topic that’s on everybody’s mind these days is energy. How can we support households and businesses during this very difficult winter? How do we ensure security of supply? And how do we, as rapidly as possible, diversify away from Russian gas, no matter what happens in Ukraine, even if the war could miraculously end tomorrow, I think we’ve all made up our minds that Russia is no longer a reliable supplier of gas and we want to move away from Russian gas as quickly as possible.

Robert Rubin: Let’s turn to the politics of Greece, actually there’s an economic issue I’d like to raise. Let’s go to politics first. In 2019, you had a landslide victory over a leftist coalition. What would you say accounted for that and now look forward, you have to have an election by July of next year. Most analysts seem to think that you might have a difficult time getting a majority in that election, whenever it takes place before July. Also, why did you win by landslide in 2019? And what are the factors -you think- will determine what happens in the next election?

Kyriakos Mitsotakis: I think we won for two reasons. The first was an intense disappointment with the politics of the previous government. You remember in 2015 we elected a radical leftist populist government. Of course, they had no difficulty teaming up with a party of the extreme right to govern, which says something about the fact that populists have much more in common, whether from the left or from the right, that many people think it was a very disappointing period for Greece. We were forced to sign a third unnecessary program. Taxes increased across the board. The economy was not performing well. So there was disappointment with the previous government. And I think also people bought into our reform agenda. I think what’s different now is that we’ve delivered. In 2019, there was still some skepticism. They wanted to give us the benefit of the doubt.

But now I think we have a track record that makes me reasonably comfortable that we can reach the target of winning again with an absolute majority. There is an intricacy in Greece that we may have a double election because we’ve actually changed the electoral law back to a system which, in my mind, works well for Greece.

To explain it very simply, the first party gets a bonus in terms of seats, which means that if you get up to 37%-38%, you can form a government on your own, without needing to enter into coalition politics. I would say the polls predict that we will win the next election and also by a significant margin and we will struggle, but I think we will finally manage to reach the target of being able to govern our own. If the Greek people decide that we should not govern on our own, then we will govern, of course, through a coalition government.

Robert Rubin: Let’s divert for one second, from Greece to Europe. You’re pretty much involved with. How would you evaluate the force of populism in Western Europe more broadly, as well as in Greece right now?

Kyriakos Mitsotakis: Populism is a challenge everywhere. It’s still a challenge in Europe. And again, we have the populism of the right, you have the populism of the left. And of course, in times of hardship, it’s very easy for people who have nothing to lose to promise essentially everything to their electorates, without really explaining how they will achieve their targets. Again, we saw that in Greece, and it was a big disappointment.

In that sense, Greece was maybe the canary in the coal mine. We were ahead of the curve. We were the first to elect a populist government. We were the first to elect what I call a post-populist, sort of reasonable, more technocratic government. So maybe, we can serve as an example to point out the risks of actually electing populists into power. Of course, we have an election in Italy that is extremely important. It looks like the Right will come back into power. A lot of people will be watching this election very closely. But at the end of the day, if we don’t want to fuel populists’ parties, we have to understand that all the grievances that populists feed upon are actually real grievances. Income inequality is a real problem. Supporting our households to make sure that we manage to get through a difficult winter.

These are real problems that need to be addressed. Does Europe have the capacity to address them? I think, yes. If you look at our Covid response, it was remarkable. We managed for the first time to pull together resources at the European level to borrow at the level of the Commission. We have €750 billion. Still, most of the money has not been spent to support governments.

You mentioned that in your introductory remarks. Greece, just from what we call the RRF, the Recovery and Resilience Fund, stands to receive more than €30 billion over the next four to five years. So there was an extraordinary European response to an extraordinary crisis, which was Covid. When it comes to energy, we have not, in my mind, stepped up to the plate with the same aggressiveness, but it’s never too late. And we hope that the European Union can actually do more on that front, because I cannot stress how difficult the winter could be in Europe with the prices of energy where they are. We in Greece have put in place a rather sophisticated mechanism for reclaiming windfall profits of the electricity producers at the source and then feed them through a special fund into subsidies for electricity and gas.

The European Union has looked at our scheme. It is working. We’ve put it in place for three months now, and they’re actually recommending to other countries to do the same, in terms of making sure that windfall profits are actually captured and recycled back to businesses and households. So I think we’ve been ahead of the curve in terms of implementing policy solutions that take the pressure away from the budget, because otherwise you have to spend the money from the budget. And we don’t have that ability because we’re talking about exorbitant sums. So the majority of our support comes from this mechanism, and we chip in from the budget to the extent that we can without, however, compromising our fiscal targets for this year and next year.

Robert Rubin: Prime Minister, you have -if I remember correctly- about €70 billion or something like that, of euros coming from the two EU programs.

Kyriakos Mitsotakis: Yes. So we have the €30 plus billion of the RRF, and then you have the structural funds, which work in six to seven year cycles, which is the “traditional” instrument for social cohesion. And then you add to that also the money for agricultural subsidies, which is a standard common agricultural policy of the European Union. And you’re talking about a sum that is actually exceeding €70 billion over the next years.

Robert Rubin: Two questions related to that. One, what, if any, conditions do you need to meet in order to get that? And secondly, what are you going to do with it?

Kyriakos Mitsotakis: First of all, the conditions for the RRF are very strict, both in terms of making sure that we propose to Brussels mature and tangible projects and in terms of making sure that everything we do is related to sustainability, to digital, to job creation, to skills so that we can do whatever we want with this money. But because these areas of policy intervention are very close to our heart, we have a series of mature projects and initiatives that can be supported from this significant pool of money. Let me just give you one example. Retrofitting of houses in order to reduce their carbon footprint, reduce their consumption of energy, and also reduce the cost of energy. Extremely successful programs that create lots of jobs because every single house has to use technicians to do that work. It’s a very good example of a successful program with European money that also drives change and improves our path towards sort of a sustainability, which we have already charted.

Robert Rubin: Let’s turn to Ukraine for a moment. Prime Minister, you have spoken very forcefully on Ukraine. You also acted forcefully. Greece has been a very constructive participant in the effort to counter Russia. How do you think Western Europe will react as we get into the winter? Gas shortages create pressure.

*Kyriakos Mitsotakis:*We have to stay the course.

Robert Rubin: Okay, but what do you think the probability of that happening is? And what are the problems going to be in staying the course? And where do you think, if you feel like commenting on this, what do you think the weaknesses in that may be?

Kyriakos Mitsotakis: Well, I think the weaknesses have to do with the fact that we need to maintain social cohesion. And that is why I’m so forcefully, I’ve been forcefully advocating about a bolder European intervention in the gas market, because we should really be in a position to impose a cap on all gas coming into Europe right now. If you look at the divergence of price, it doesn’t make any sense. And right now, in my mind, this is a one way street. More and more European countries are coming along and understanding the necessity of such an intervention. But even if we don’t do that, again, the most important issue is to be able to support our societies with the cost of living problem. If that spirals out of control, it is almost certain that we will start losing support within our societies. And of course, it will also make it easier for Russia to play its disinformation games and try to destabilize democratically elected governments in Europe, because they have not shied away from doing this and they may even speak almost openly about it. So I think in order for us to stay the course, we have to make sure that the pain we suffer is not significantly higher than the pain we impose upon Russia through the sanctions.

So we need a more organized European response. We could repurpose some of the funds that we have already allocated to the RRF. There is still a significant amount of money available because as you probably know, the RRF has a grant component and a loan component. Many countries were not interested in picking up the loan. So there are still around €200 billion in unallocated loans from the RRF. So there is a pool of money that potentially could be used. And if this money needs to be used for support, for income support, it has to be done because otherwise the political pressures on all governments will be substantial.

Robert Rubin: And is your sense, Prime Minister, that your fellow leaders in Europe have an equal commitment to doing what is necessary, including, as you just said, using those funds, if need be, for income support?

Kyriakos Mitsotakis: I think we’re getting to the point where we understand that this winter is going to be critical. I think we have more or less, I think we will be able to address security supply issues because gas storage is already very high. We sort of all booked as much LNG as we can. But of course this is a difficult winter. But the next winter is also going to be difficult because for those countries that rely on gas storage, they still need to refill their storage for next winter. The truth is, and we have to be honest about this, that we were too dependent on Russian gas. We’re talking about 155 bcm of gas coming through pipelines. For some countries this was extremely beneficial because they bought this gas at a very cheap price. It helped them become more competitive. But I think now we pay the price for decisions that were made decades ago, which also forces us to think strategically about what European strategic autonomy really means when it comes to energy. And for me, the one thing that it clearly means is making sure that the push towards renewables is accelerated even further. Because even though we are one of the top ten countries in terms of electricity production from renewables, we literally need to overcome all sorts of bureaucratic problems in terms of installing wind and solar panels.

This is no longer an environmental problem, it’s a geopolitical issue. We don’t want to be dependent on countries that we cannot rely on for our energy supply. And again, it’s obviously not going to happen from one day to the next. But I don’t want us in five years to be faced with a similar problem. So the push towards what we call “Fit for 55” targets to reduce our emissions by 55% by 2030, if anything, is going to be accelerated as a result of this crisis. And different countries will explore different options. For example, nuclear will be an option for certain countries. We don’t have nuclear, we’ll probably never have nuclear, we don’t have a tradition when it comes to nuclear. Other countries do. And they will probably have an incentive in investing more, in upgrading their nuclear capacity.

Robert Rubin: This sort of is the same question, but in a different form Prime Minister. You really have been extremely forceful and I think correct in arguing that what Putin is doing is a real threat to democracy. You think the populists, not the leaders, but the populists of the Western European countries share that?

Kyriakos Mitsotakis: We know that there was also a lot of money that was directed towards parties, journalists in Western Europe, to play that game. And we need to be vigilant if it means calling out those who are being funded by Moscow. This is part of what we have to do.

In Greece we know, for example, for a fact, because it is actually in a US indictment against a person who was involved in distributing Russian money, that $10 million in 2016 were directed towards the effort to set up a network of pro-Russian media stations in Greece. We know this has happened. We know who the people who received the money are. It is our obligation to call them out and to make a case that what’s at stake here is also the functioning of our democracies. We cannot be naive about what is happening in our part of the world.

Robert Rubin: Again, I’ll just go back to the same thing, but again, it’s like, you’ve been terrific on this and I know in your remarks to Congress you were terrific. When you get together with your fellow leaders, do they all express the same level of concern and commitment that you do?

Kyriakos Mitsotakis: Yes, I think we’re all concerned about this and making sure that we build an institutional defense in terms of identifying fake news and protecting our democratic process, making sure we protect the integrity of our elections. I think every country is moving down that path. As European, as a European Union, we have an interest in doing that and making sure we promote an open sort of democratic and transparent debate.

But we need to be aware that in this difficult world, there are countries that use all sorts of hybrid warfare against us. And we haven’t discussed the issue of Turkey yet, but we know something about that problem. For example, weaponizing migrants is a hybrid sort of threat that has been used by countries, not just against Greece, it was used against the Baltic countries, by Belarus. So these are real challenges. So I don’t think this complicated and difficult work will reward those who remain naive about the practices of those countries that don’t like the way we conduct our own businesses.

Robert Rubin: Two more questions, then we’ll turn to our members. Question one. Turkey, Erdogan, seems to be in a somewhat, let’s say, aggressive mood with respect to Greece, for whatever domestic or other reasons. I guess the question would be, what is your evaluation of all this? And do you have any notions of how to calm this down?

Kyriakos Mitsotakis: I’ll have a chance to comment on this during my speech today at the UN. What I can tell you is that I’ve always sought to have a constructive relationship with Turkey. My first meeting with President Erdogan at the UN three years ago, I told him, we need to make a new start. If you look at the Turkish reaction ever since, two months later, Turkey signs a completely illegal memorandum of understanding with Libya regarding the delimitations of maritime zones that completely disregards the existence of Greek islands, as if they don’t exist.

A geographical absurdity. If you just look at the map, Libya and Turkey don’t have opposing coasts. I mean, with the same logic, they could sign a deal with Morocco. And then we had the weaponization of migrants in March 2020. A lot of aggressive posturing in the eastern Med, challenging the sovereignty of our islands. This is not a constructive approach and frankly, it’s very difficult to envision how the relationship between the two countries is going to get back on track as long as Turkey behaves this way. A lot of it is domestic politics. I think Turkey needs to understand that if it continues down that path, it will alienate itself, not just from Greece, from Europe, from the United States.

And if it’s Turkey’s choice to pivot geopolitically towards other spheres of influence, so be it. But Turkey is also a member of NATO and they’re the only country within NATO that is not imposing sanctions on Russia. So it is a complicated situation. I’m always open to resolving it through dialogue. I’m not the one who has claimed that I don’t want to talk to President Erdogan, he’s the one who doesn’t want to talk to me. But I’ve heard these stories before and we always end up sitting and talking. That’s the way countries resolve their differences. And of course, I will keep insisting there is only one playbook, one rulebook, and that is international law. We have a difference regarding the delimitation of maritime zones. There are ways to resolve these differences. You could even resort to an international court if you agree on the conditions to reach such a settlement. But you don’t resolve your differences through aggressive posturing and through recalling sort of imperial fantasies and sort of using a rhetoric that is inflammatory.

Robert Rubin: You sound like a very reasonable man. Let us hope he is.

My final question is this, Prime Minister. You have both your undergraduate and your graduate degrees from this country, so you know our country well. How do you feel, what is your view with respect to the United States today in terms of its role in maintaining, I guess you’d say, a rule-based order, economically and geopolitically? And do you feel relatively confident, based on what you see of the United States, that it’s likely to be something that the world can rely on? Or are you troubled by it?

Kyriakos Mitsotakis: When I spoke to Congress, I made the case that it is not an option for world peace and stability for the U.S. to retract from its international obligations, just too big, too important, and, of course, a country with which we share a common democratic tradition and a commitment to a rules-based international order. At the end of the day, it’s only the rules-based international order that can protect the weak, you know, at the expense of the strong. And it has served us very well post-World War II.

And again, I don’t want to comment about, you know, domestic politics in the U.S. But what I can say is that we’re very happy about the fact that the U.S. is reengaging on important files, the most important one being climate. Very happy about what happened, the recent legislation in the U.S., I think is a watershed moment for all of us who believe that the climate problem cannot just be solved by Europe. We need the big players, the biggest players, on board; and, of course, very happy about the fact that the U.S. recognizes the strategic importance of the eastern Mediterranean and the fact that, you know, the Greek-U.S. relations are, in my mind, at an all-time high. I think this is important for the stability of the region.

Robert Rubin: Prime Minister, you were terrific, which is exactly what everybody says you are. Now, we would be delighted to take questions from the audience. Please. If you have a question, raise your hand as people are doing. State your name, your affiliation, and be brief so we can call as many people as possible. Yes, sir. And we also take questions both here and virtually.

Andrew Gundlach CEO of Bleichroeder: Prime Minister. My name is Andrew Gundlach CEO of Bleichroeder. I’d like to ask a question on the sanctions that you referenced with respect to Turkey, but my question is on the broader European sanctions outside of NATO. There is essentially unanimity to increasing the sanctions. The Germans and the Poles say there are two countries that haven’t agreed to that. One, we all know, is Hungary. And the second is yours, supposedly because the Russian oil is being shipped on Greek flag tankers. My question, though, is how do you get, if that’s true, if you agree, how do you get the Greek domestic situation to back you on your clear statements about increased sanctions? And then how do you get Hungary so that Europe can be unanimous? Thank you.

Kyriakos Mitsotakis: First of all, I’m surprised by this comment, because this is plainly not true. I want to be on the record that Greece has never objected to an eighth package of sanctions and that we’ve always done our part in making sure that we will use whatever means at our disposal to put more pressure on Russia. Having said that, we already have seven packages of sanctions.

There are no longer unlimited options in terms of what we can do. When we look at shipping, we’ll be the first to agree, provided there is no leakage. So we need to bring other countries on board if we want to use shipping as an instrument to make it more difficult for Russia to export its oil. What would not make much sense is to shoot European shipping in the foot and just pass on the business seamlessly to other countries who would be very willing to do that trade. So very clearly on the record, we have never -I’ve also read these articles, they’re not true-, and we were never sort of a holdout when it came to these issues. But we do want to point out that sanctions are effective if there’s no leakage. And partly this has been a problem with the previous packages of sanctions we have imposed.

Robert Rubin: Yes, ma’am. OK, we’ll take you first, and you second, OK.

Kay Boulware-Miller, John Jay College of Criminal Justice: Geia sas, Mr. Prime Minister, Mr. Rubin. My question is for the Prime Minister. Would you comment on the success of the land ownership registration that has accelerated in recent years? Sort of goes to your first remarks about investment and the economy. And also, for the benefit of families in Greece, particularly the younger generations who may inherit land, and have some family or moral obligation, or legal obligation, to oversee and…

Kyriakos Mitsotakis: Thank you. That’s not a question I usually get but thank you for pointing it, but thank you for pointing it out, because we had a big problem historically. We had no properly functioning land registry, which is a huge problem if you cannot, you know, ensure your property rights. Happy to report that this issue is finally being resolved, something that should have taken place, you know, decades ago. But these are sort of the legacy problems that we have to deal with in Greece. And of course, we’ve also made it much easier for property to be passed on to the next generation because we scrapped most of the taxes that are related towards transfer of ownership of assets, up to a certain limit, from parents to children. So we want children to take, you know, the ownership and develop their properties.

And part of this also is related to another issue. One of the side effects of a growing economy is that for the first time we actually are beginning to have a housing crisis in Greece, which was never an issue. This has never been an issue. But, you know, rent’s been increasing so much there is pressure, especially on lower-income households that don’t own houses, when it comes to the cost of actually renting a property. On the other hand, we have many properties, especially many apartments in the big cities, that are currently closed and that need retrofitting in order to become available and enter the market.

So one of the programs we’re designing is an incentive program, where we allow young homeowners to actually repair their apartments, so that they can either use them themselves or rent them, in order to increase the supply of available housing in the market. But thank you for that question, because it is very important.

Robert Rubin: We’ll go to a virtual question next. Then we’ll come back.

Operator: We’ll take our next question from Allan Goodman. Mr. Goodman, you may go ahead. Apologies, we’re having some technical difficulties. We’ll take our next question—oh, you may go ahead.

Allan Goodman: Yes. So, if I’m unmuted now, I wanted to thank the Prime Minister for hosting the largest delegation ever in the Institute of International Education’s history that will come to Greece in November. Because interest in Greece as an international education destination is clearly growing. Prime Minister, where would you like to see education and scientific cooperation as a result of this trip and future relations between Greek and American institutions take us?

Kyriakos Mitsotakis: Well, thank you for that comment. I’m very happy about the fact that we have passed a landmark reform law of our higher education, essentially opening up our public universities to international cooperation, and making it easier for Greece to become a destination for international educational efforts. And you’re right to point out that we’ll be having, I think, around thirty top American universities visiting us in November in Greece. I’ll be happy to host you and make the case of why Greece can actually become an international education hub. And there’s so much we can do, so much interest in various fields, not just the obvious ones -you know, classics or history- but we have very high-quality public educational institutions that until now have underperformed because they were not sort of allowed to pursue these types of cooperations.

I can’t imagine, you know, Greece is a great place to visit, of course, as a tourist but also to study, and we have a lot to offer and my vision is to really become a regional education center. And as American universities look to expand in our part of the world, you know, what better destination than Greece? And many top American universities are looking at setting up, you know, centers, dedicated centers in Greece to pursue, you know, specific areas of research and academic work.

For example, we are a hotspot for climate change. It’s an issue very close to our heart. There’s, you know, great interest on these topics, great interest on the topics of migration, just to name a few, that go beyond, you know, the obvious interest in classics, archaeology, and history, where, of course, Greece can be unrivaled in terms of these disciplines.

Robert Rubin: There’s something very appropriate about that, Prime Minister. Greece is, after all, the cradle of Western culture. So that it’s appropriate that this—at least, to me, appropriate it should be happening. Yes, ma’am?

Megan Greene: Can you hear me? Yeah. Megan Greene. I’m a senior fellow at Brown University and chief economist at Kroll.

It’s my understanding that Greece’s primary deficit is, roughly, 2 percent of GDP now and that you’re looking to achieve a primary surplus of, roughly, 1 percent by the end of next year. That’s a really aggressive adjustment -it’s about 6 billion euros- against a backdrop of a rapidly slowing economy. So I’m wondering how you plan on achieving that swing.

I’m also wondering why you plan on achieving that swing, particularly, other than that Greece would like to have investment grade status but, particularly, given the IMF Article Four consultation, effectively, said, take your time. Everyone’s kind of in this position. There’s no need.

Kyriakos Mitsotakis: Well, that’s a very interesting question. Let me point out that our deficit was 7 percent two years ago during COVID because we decided to spend a lot of money, and it was the right choice. It was the right choice because we supported jobs. We continued on the path towards reducing our unemployment. We’re at 11 percent now. We started at 17 percent. But we’ve been able to reduce, to make this adjustment because we have been able to grow the economy faster than we had anticipated.

For us, I think it is important and for the rating agencies it is important to have a primary surplus next year, and investment grade is important for Greece. It’s still a thorn in our side, and although I think people will, may understand that if we slightly deviate from that path, for example, you know, we started with a deficit of, initial estimates were for a deficit of 1.5 percent. We’ll be up to 2 percent. I think this is within the margin of tolerance.

But, at the end of the day, I also want to keep, you know, us honest in the sense that we know that there is not unlimited money to be spent. We have to be careful and we have to be targeted. I really place a lot of emphasis on targeted measures. We have resisted the temptation of broad horizontal measures such as, for example, cutting VAT on fuel or cutting excise tax on fuel.

We try to be very targeted in terms of really helping those who are in greater need but also encouraging changes in behavior. So when you look at our electricity subsidy mechanism, if you reduce your electricity consumption by 15 percent compared to where we were last year, and we can measure that, you will immediately move up into the higher bracket of support.

So we tried to explain to people we’re in this together. We’re here to help you. But you also need to help yourself and help the country by making small changes in your behavior because especially when it comes to energy consumption small changes can actually make a big difference.

For example, in Greece where -you know, every time you come to the U.S. you’re used to the air conditioning being, you know, at freezing levels. You know, the difference in consumption between having your air conditioning used in Celsius degrees, you know, 21 degrees versus 25 degrees is huge. So small changes in behavior help households in terms of their bills, also help us because we have to import less gas.

Robert Rubin: : Prime Minister, in the context of that question, do you have a commitment to the EU to have a primary surplus at some point?

Kyriakos Mitsotakis: We don’t have, you know, a fixed commitment. The answer is we have, you know, an agreed sort of fiscal path with the European Union, and part of what we have told the European Union for ’23 is that we will move back to a surplus. We’ll be able to do that assuming, again, there is no colossal recession in Europe. If the recession is mild, it is perfectly doable. But if things really spiral out of control, then I guess all bets are off, not just for Greece.

Adam Silverschotz: Thank you. Adam Silverschotz. I run an investment firm.

Could you please comment on Greek-Chinese relations? You know, COSCO has put a billion dollars into the Port of Piraeus, very prominent position, tons of real estate investment into Athens, and, you know, just broadly increased cooperation between the two countries, which is maybe leaning in, on a relative basis, to the rest of Europe. You know, multiple countries have pulled out of the 16+1 format. I think it’s down to 14 or 13+1 format. I think broad European perspectives towards China have turned much more rivalrous, much less, you know, conciliatory. There’s a notion of secondary sanctions related to Russia and Ukraine, the Taiwan question, and so just please comment on your perspective on, you know, what the path will be forward and why it should be the way that you expect it to be.

Kyriakos Mitsotakis: Yeah. I think the path is going to be more challenging; there’s no doubt about that. The COSCO investment in the Port of Piraeus took place at a time when nobody was interested in investing in Greece, a decade ago. It has been a successful investment; the port, you know, has done well as a result of this investment. I don’t anticipate any other significant, you know, Chinese investments in Greek infrastructure in the foreseeable future, nor is there such a big interest in terms of real estate. I think this is slightly exaggerated. And of course we’re also very sensitive when it comes to issues of technology, in terms of who does what with our 5G networks.

At the same time, you know, this challenging relationship with China at the global level also presents opportunities for Greece, especially when it comes to reshoring and bringing your supply chains closer to home. Greece is a country that actually has a pretty solid manufacturing base. If you’re looking to move production closer to, for example, the European market, why not come to Greece and do that? And this is also true for other countries that may be facing, you know, where you have a geopolitical risk. It could be countries such as maybe Turkey.

So I think we have a case to make that we can actually benefit from the supply chains coming closer to home, but Greece and China have a relationship that is, I would say, on a bilateral level good but it will not come at the expense of our broader geopolitical orientations; they will always sort of dominate the way we see Greece and the way we position Greece in the international context.

Operator: We’ll take our next question from Thomas Miller.

Tom Miller: Yeah, hi. I’m Tom Miller. I’m chairman of the board of the International Commission on Missing Persons and a former U.S. ambassador to Greece.

And my question is about diversifying the economy. As you saw during COVID, tourism crashed; it’s now come back very, very strong. It could happen again with a health crisis. And what steps are you taking to make Greece a more diversified economy, not as exclusively dependent on tourism as it is today?

Kyriakos Mitsotakis: Well, thank you for the question, Tom. Tourism is important for Greece. It’s going to bring in more than 18 billion euros of revenues this year. But it’s not the only source of growth in Greece. The Greek economy has the ability to diversify away from tourism.

Look at other sectors, such as renewables. Greece is becoming an energy hub, especially when it comes to the transport of liquified natural gas. We’re building a lot of infrastructure when it comes to our ability to bring in gas through Greece, not just to serve the Greek market but also the Balkans, Eastern Europe. I’ll be in Sofia in a few days to inaugurate the pipeline that connects Greece to Bulgaria. Geopolitically incredibly important for Bulgaria to be not exclusively dependent on Russian gas, because now they can also bring in Azeri gas through the TAP pipeline. Lots of scope, as I told you, and more investments in manufacturing.

Our agricultural sector is producing extraordinary products of very high quality and can benefit from a true leap in productivity. And overall, what has happened over the past five years, I think—as an economist, I think you would really appreciate this—is the fact that Greece has really become a much more extrovert economy. Exports as a percentage of GDP are reaching Portuguese levels. And this is not just tourism. So it’s also exports of goods. It’s not just services. If you add to that Greece as a regional hub for services—we spoke about education, healthcare. We can really do a lot on that front.

And of course, tech. What you see is an emergence of a tech ecosystem in Greece with lots of startups being very active. We’re not Israel, but it’s really booming. And all the big tech companies, the big American tech companies, are investing in Greece. So, you know, Microsoft was the first to announce a big investment for three state-of-the-art data centers in Greece. And I think that, you know, tech in five years could contribute close to 10 percent of GDP. So all this is creating a more diversified economy.

But having said that, I think the need for people to travel and experience is always going to be there. And it’s not just about, again, traveling to Greece. It’s about working from Greece. It’s about retiring in Greece. It’s about spending your winter in Greece if you’re in Germany and don’t want to spend a fortune on your gas. So tourism, in my mind, shouldn’t be just narrowly defined as Greece as a destination for the beach, you know, in July or August. We can offer much more in terms of our tourism or products.

Robert Rubin: : It sounds like in addition to being Prime Minister, you’re Minister of Commerce….

Mark Vlasik: Thank you for joining us this morning. My name is Mark Vlasic. I teach Ιnternational law at Georgetown. I’m also a TV producer in Hollywood.

I spent years helping return cultural heritage items to Greece with your colleagues, which has been a joy for me. I’d love to hear your comments on the restitution of your cultural heritage from museums around the world back to Greece. Thank you.

Kyriakos Mitsotakis: Well, first of all, speaking of, you know, Hollywood, Greece is becoming a production destination. Which is great, because I think we just did the obvious. We benchmarked our incentives to that of other countries. And because Greece is a country where not many films have been filmed, so it still has lots of pristine scenery. Actually, production in Greece is really booming, which is great.

I mean, cultural restitution is very close to my heart. And of course, there is a holy grail. And the holy grail is the return of the Parthenon sculptures to Greece. We’re not going to let go until this happens. And I think there’s a much better chance that it will happen at some point, because U.K. public opinion is clearly shifting in that direction. And there’s a case to be made about the unity of the monument, because it’s essentially one monument that was cut in half. And half of it is in Athens, half of it is in London.

But we’ve also been active on other fronts. We’ve been able to pass a piece of legislation which is very important about a very important and completely unknown collection of Cycladic artifacts called the Stern Collection, which will end up, you know, eventually in Greece, after first being presented at the Metropolitan Museum. And so we’re thinking out of the box in terms of how we can actually reclaim parts of our cultural heritage. And we’re doing so in a, I think, more effective manner than it has been done in the past.

John Paulson: Yeah. Thank you. And good morning, Prime Minister. My name is John Paulson. I’m the president of Paulson & Co. The transformation, the growth in Greece between the previous administration and the current one has been substantial in GDP and debt reduction and employment gains. Can you highlight some of the principal reforms that you made that led to this turnaround in growth?

Kyriakos Mitsotakis: Thank you, John. You’re someone who has followed Greece carefully over many years.

When we came into power, we had three main priorities. The first is to change the fiscal mix and make sure that we don’t overtax production and labor, which was a strategy of the previous government. We’ve been able to do that. COVID also helped in the sense that we could deviate from the hard fiscal targets that we had inherited from the previous government.

The second and most important reform has to do with changing, you know, the fabric of the economy in terms of making it a business-friendly economy, while at the same time having, you know, a labor-protection framework that makes sure that we can offer salaried employees the protection that they need, while still offer businesses the flexibility that they require in order to operate.

And overall the experience of foreign investors in Greece has been rather positive in terms of overcoming traditional bureaucratic obstacles. And there’s been a whole host of reforms. Probably the most important one is digitizing our state. So now you can literally do many things through your application. And that was unthinkable three years ago, and it has really helped us. It’ll boost productivity and make the interaction between citizens and businesses and the state easier.

And, of course, the last point is addressing what was a big problem for Greece, which was the NPL overhang of the banks. When we came into power, NPLs were, you know, out of this world. We managed through, I think, a smart securitization scheme to bring it down under 10 percent, and our banks are doing well now. No one seems to be talking about, you know, a banking crisis in Greece, which was very much the case three years ago.

So I think we’ve delivered on all three fronts. And, of course, what I want to point out is that this project is still -I mean, there’s still so much to be done in terms of change in the country. That’s why I think we have a convincing case for a second mandate. We always said that we need two full terms to really change the country. It cannot all be done in one term, especially when you also have to deal with all sorts of crisis. And I’m convinced that, at the end of the day, we can make it. And we’re going to make a good case to the Greek people.

Robert Rubin: Let me build on John’s question for one second. As you say, you’ve done a tremendous amount. But it takes, as you said, another term. If you look at what political analysts say, many of them seem somewhat skeptical about your being successful in the next election. But you have a much more positive attitude.

Kyriakos Mitsotakis: Look, I’m a realist. But I also look at the polls. And I believe in the polls, because that’s the only datapoint we have. I also have a good sense when I move around the country, because I’m in a continuous campaigning mode with the mood of the country. Of course there are big difficulties, and people are concerned about the winter. But I think we’ve managed to build a level of trust that sort of breaks from the previous practices of governments that used to overpromise and never delivered.

So if you look at the polls, there’s never been a history, I think, of a government in Greek politics post-1974 where, you know, three years in our term, with everything that has happened, we still have the same lead we had when we won the elections. We’re still ahead by 7, 8, 9 percentage points. I’ll take that anytime if you told me three years ago that we would be in this position. It’s a good starting point.

So we’ve said from the very beginning that we’d like to govern with an absolute majority. This is the case we’re making to the Greek people. If they reward us, fine. If they don’t, we’ll enter, we’ll have to form some other, you know, government. One way or another, the country will be governed.

Robert Rubin: Prime Minister, you’ve been terrific. We always adjourn on time. I must say, my overall reaction is: Why don’t you run for president of the United States? We have a slight constitutional problem, but we don’t pay that much attention to the Constitution these days anyway. So maybe…

Kyriakos Mitsotakis: I’m happy where I am.

Robert Rubin: You’re happy where you are. That’s a very good answer.

Kyriakos Mitsotakis: Thank you.

Robert Rubin: Prime Minister, you were terrific. Thank you.