Prime Minister Kyriakos Mitsotakis spoke at an event in the University of Tokyo organised by the School of Public Policy for postgraduate and doctoral studies.
The speech by Prime Minister Kyriakos Mitsotakis follows:
Ladies and gentlemen, dear students,
Ιt’s a real pleasure, first of all to be back in the classroom and thank you for inviting me to speak today at this globally renowned institution. It is indeed an honor for me to be able to address you today at the tail end of what I think has been a very successful trip to Japan. 48 very sort of intense hours, which have given us, I think, an opportunity to completely reset the relationship between Japan and Greece. But you, our introductory speaker, posed an interesting question. He asked me to comment a little bit on what he called an economic miracle.
I want to be a little bit more discreet and call it an economic success story. But let me first start with a question. The question is, what is Greece to you? And I’m especially referring to our Japanese friends in the audience. Perhaps for most of you, my country is a remote location associated with beautiful sandy beaches, sunny islands, ancient monuments such as the Acropolis, rich mythology, maybe souvlaki, maybe sirtaki. And we are all of that, of course. But probably less known to you are the following facts: Greek shipowners control more than 17% of the world’s merchant marine fleet in terms of dwt tonnage, making Greece the leader of the global maritime industry.
Many of those shipowners started building their ships in Japan immediately after the end of the Second World War and in their own way, have contributed to what is today, I consider, a true miracle. And that is the rebuilding of Japan after the catastrophic war. Many of them continue to build their ships here as we speak.
Another fact that is maybe not so known to you about our country: Close to 50% of our electricity today is produced from renewables. Last October, for the first time in our history, for almost 6 hours, all of our electricity needs were met by renewable energy. And in 2022, we ranked 7th in the world in wind and solar power penetration in our fuel mix.
Last but not least, when we think of Greece, we just think of Greece as a location on the map. But the Greek communities abroad are the same size as the Greek population at home. Ιn total, people associated in one way or another with Greece, we’re talking about 10 million. This is why we can totally say amongst ourselves that Melbourne is the third largest Greek city in the world.
So the story of today’s Greece is indeed a story of dynamic economic transformation. I think a story that resonates beyond Greece’s borders. Our businesses have grown in confidence and dynamism. And this is precisely what I told some of the most influential business organizations and investors in Japan when I met them yesterday and earlier today.
I am the first Prime Minister to visit Japan since 2005. When my predecessor visited your country 17 years ago, it was in the wake of Greece’s successful organization of the 2004 Olympic Games. And also it was in the wake of our for those of you who are football fans of the greatest miracle in the history of team sports, which was none other that was a miracle indeed, which was none other than Greece winning the UEFA 2004 Football Championship. Back then, these were good days for the country. But we were very much unaware of the fact that a deep crisis was looming.
And as you pointed out, Greece underwent a decade long financial and, some would go as far as saying, existential crisis in the years that followed. Think of it. During the financial crisis, we lost almost a quarter of our GDP. A quarter of our GDP. More than 500,000 young Greeks were forced to leave the country in search of better jobs and our decline persisted longer than was necessary because at some point our populists came into power and kept promoting utopian solutions.
The result was that we had to sign a third bailout program back in July 2015 after my predecessor and his cabinet literally pushed Greece to the brink of disaster. We seriously flirted with being kicked out of the Eurozone which would have been a complete disaster for our country. Thank God we avoided the worst. But you could say that the country suddenly hit rock bottom.
But we are a nation that throughout our modern history we’ve been an independent nation. Essentially, our war of revolution started in 1821. We’ve been an independent nation since 1830. In our history, we’ve seen lots of triumphs and we’ve also had to deal with lots of disasters. Overall, the trend has always been positive and I think it is an attribute to the characteristics of the Greek people that we have proven to be extremely resilient. We were resilient during this decade old crisis and we managed to escape the worst.
So this is what I want to talk to you about. How did we succeed in making this turnaround happen? I, as you pointed out, became Prime Minister in July 2019, winning an absolute majority in Parliament. And I had made my vision very clear to the Greek people.
I told them that I wanted to restore confidence in the country, put the country on a higher growth track, restore macroeconomic stability, but most importantly, be the Prime Minister who unleashes the country’s true potential to become a reliable European and international partner with a proactive approach in helping to shape developments in our region.
My platform was very simple. I wanted to cut taxes without endangering the fiscal stability. I wanted to make Greece an attractive investment destination and create many well paying jobs. And I wanted to make sure that Greece was viewed as a reliable and strong partner in our region, a protagonist in European developments, not a laggard, a country that is focusing on solutions at the European level rather than just addressing its own problems and asking the Europeans for assistance.
And I think we’ve achieved over these three and a half years, many of these targets. Greece today is only one step away from regaining investment grade. This is something which is very important because it will unlock significant new pools of capital that can invest in the Greek economy.
Let me just give you one example which is relevant to Japan. When we were looking with our team at the statistics of Japanese investment into Greece, historically they peaked at some point in 2007 when Japanese asset managers committed around $10 billion to Greece. During the years of the crisis this fell to almost zero, simply because we lost investment grade and many more conservative asset managers could not invest in Greek assets. Imagine how much more capital we can attract just from Japan by simply regaining investment grade.
If you look at the performance of the economy in terms of growth, we overcame the COVID crisis, I would say much faster than many people had anticipated. The economy grew by 8.4% in 2021, it grew again by 5.6% in 2022. We expect growth close to 2% with very challenging headwinds in 2023.
This growth is significantly higher than the Eurozone average. In 2022 we grew at twice the eurozone average. In 2023 we may grow even faster than that because we have proven to be sort of very resilient.
We had to combine implementation of reforms, obviously with dealing with all sorts of crises that were thrown at us. None of our own making. Pandemic, Russian invasion into Ukraine, but also dealing with a difficult and complicated neighbor. But we’ve been able to do both. Crisis management while also addressing longer term issues and making sure that we legislate not just to address today’s problems, but to put the foundations for a more solid future and do it in a sustainable manner.
And maybe this is something that you will talk about sort of in your public policy classes. How do you combine your short term crisis management with long term planning? It’s not always easy, because when you have to deal with so many crises at the same time, you need to make sure that a percentage of your “bandwidth” is always reserved for longer-term initiatives and make sure that you distinguish between the urgent and the important.
And indeed many of the reforms that we have implemented, from labor reform to completely changing our higher education system, from pension reform to digitizing the public administration, are indeed reforms which will have a long-term lasting impact on the Greek economy. And, of course, we have sort of in that sense paved the way for what I think is a more promising future.
We also have access to significant European funds from what we call the Recovery and Resilience Facility, which was set up at the European level after COVID to help with the green and digital transformation.
Now, speaking of digital, this in my mind is probably the biggest success story of this government. The ability to harness the power of technology to simplify the interaction between citizens and businesses and the state. Greece was notorious for its paper bureaucracy. This is something which – I’m sure – maybe some of you in Japan may be able to relate to but we’ve been able to shift more than 1,000 processes and services online which means that you can actually interact with the state through the gov.gr application in a seamless manner.
And this is literally saving people hundreds of hours waiting in queues of unnecessary hassle, but also in the same way, same manner tackling petty corruption, which is always endemic when you have sort of unnecessary and redundant bureaucracy.
And of course, this digital transformation has also driven the emergence of a booming ecosystem of technology companies that is looking not just to serve the Greek market but also does business at the European, but also at the global level, which is also very encouraging for us to see.
So you look at the international ratings and it does give us some satisfaction to see that the Economist placed us at the top of its list of those countries which have seen the most significant improvement in the business environment. This is not something that was expected, let’s say three years ago, but it’s very encouraging to see and to have this validation by an important international publication.
And this transition to a new economic reality was also confirmed by the European Commission, which took the historic decision last August to end what we call the enhanced surveillance framework that Greece had been subject to for more than four years. So now we are essentially free of the heavy European supervision.
And yes, you are right to point out that we did repay back our loans to the IMF earlier than we had anticipated. It’s also an important symbolic gesture because the IMF has been associated in Greece with a very sort of heavy surveillance that really pushed the country – sometimes I would argue unnecessarily harshly – into a vicious cycle of austerity, out of which we are just coming out.
I need to point out that this economic performance was achieved without compromising the health of our public finances. And this for us is particularly important because we started this crisis with a high debt to GDP ratio. It’s been coming down incredibly fast, it’s the fastest reduction of debt to GDP of any country in the European Union.
But at the same time we are also changing the fabric of the economy. Our goal was always to make Greece a more open and extrovert economy, more focused on exports, on innovation. And we’ve been able to do that. Today exports account for more than 40% of our GDP, exports of goods and services. So it’s not just tourism and shipping, it’s also exports of goods. Which means that also Greek businesses are becoming more extrovert and are looking to serve regional but also global markets.
At the same time, if you look at the flow of foreign direct investments into the country, 2021 was a record year. 2022 was again a record year. Hopefully 2023 is also going to be a record year.
We’ve seen significant interest by foreign companies to invest in Greece. Let me just give you a couple of examples. All the big-tech companies, starting with Microsoft, followed by Amazon, Google, Digital Realty are setting up big data centers in Greece and investing in Greek tech. Pfizer has set up a big artificial intelligence center in Thessaloniki. GIC out of Singapore, invested in one of our leading Greek hotel operators, the largest transaction in the European hospitality sector that took place in 2022.
So I would argue that despite the global headwinds – and there are quite a few of them – we’re well positioned on a path of sustainable growth. We have clearly exceeded expectations. And alongside all the big economic data, probably the most important data for me has been the job-rich nature of the recovery. When we came into power, unemployment was at 17%. Now it’s at 11%. I think it will be in single-digits very very soon.
A lot of the jobs we created are jobs for young people, many more women. So we’ve increased women’s participation in the labor force. And there is no better social policy, no more equitable social policy than creating jobs. At the end of the day, it’s the unemployed who usually fall through the poverty trap. And my emphasis has always been and will continue to be on creating jobs and on making sure that these jobs are well-paid jobs.
If the first four years were about cutting taxes, the next four years – should the people place their trust again in us – will be about raising wages. I know this is also a discussion taking place here in Japan, but it is important because as the economy is growing, as businesses are doing better, it is important to make sure that there is a dividend to be shared with employees and not just with shareholders and employers. I really, really insist on that. And we will make sure that we have the appropriate policies to give businesses also the incentives to move in that direction. I believe that in times of crisis you have to be both radical, but you also have to be practical.
I lead a center right government, but I think we’ve been able to be both quite liberal in our economic policies but also rather progressive in our social policies without compromising the need to enhance our national security. And I believe that there are no inherent contradictions, ideological contradictions, in being able to deliver these policies. And public policy is frequently about coming up with innovative solutions to new problems.
For example, how do you deal with the fact that in an energy crisis you suddenly realize that there are many energy companies that are producing windfall profits? How do you tax them? How do you use the proceeds? We decided to put at the European level -and we’re also implementing it in Greece- an extraordinary tax on our refineries which produced very big profits as a result of fluctuations in the oil market in 2022. But we use these profits from two refineries to provide an extraordinary support for households with their supermarket bills. So we’ll essentially give them a coupon to help them with their supermarket bills and address the cost of living issue. And this is a one off measure because the tax is also a one off measure. So these two measures are, in a sense, very much aligned.
So let me pose the question: what is Greece’s place in the world today? Greece is the oldest parliamentary democracy in Southeast Europe and the Eastern Mediterranean. It is fully integrated into the Western community. We’ve been members of NATO since 1952. We’ve been members of the European Economic Community, what is now the European Union, since 1981. We have joined the eurozone. We’re members of the Schengen area of free movement of people. But we’re also active partners in the Western Balkans and aspire to play a leading role in what is happening in our region. But we’re also very close to the Middle East, close to North Africa. So we are literally at the crossroads of three continents. It is an advantage. We need to properly leverage it.
And of course, we’ve also in our part of the world had to deal with what many of us thought was unthinkable. And that is a war in Europe which has, I would say, changed everything. It has changed the global geopolitics. I think it has also brought Japan closer to Europe, because Japan was always close to the US. Europe was close to the US, but I think this is a good opportunity to bring Japan closer to Europe and Europe closer to Japan, not just for economic, but also for geopolitical reasons. So the war, as I told you, came on top of many other crises we had to deal with.
We frequently use in political science the term polycrisis. This is exactly what we have to deal with today. Hopefully at some point we will be able to sail through calmer waters. But for the moment we policymakers and politicians have to be prepared for this very complicated international environment. And when we were faced with the war in Ukraine, for us there was no doubt that we had to fully support Ukraine in its fight for independence.
I think many, especially Russia, was surprised by the unity that the European Union has shown, but also by the unity of the free democracies of the world in supporting Ukraine. This was particularly important for us, not simply because we have a moral obligation to support Ukraine, but I would say for two additional reasons. One of them is not very well known. We have a very vibrant Greek community center around the areas of Mariupol and Odessa. Mariupol, as you know, was one of the cities that was first hit by the Russian invasion. At the same time, we in our own neighborhood have to deal with a difficult neighbor and I’m referring to Turkey and we want to make sure that under no circumstance will we ever allow a precedent to be set that borders can be changed by force and that international law is actually not respected. We have an additional reason to be very supportive of Ukraine in its battle to make sure it stays an independent, free and sovereign nation.
But interestingly enough, every crisis presents opportunities. And this crisis, which highlighted the dependence of the European Union on Russian gas, presented an opportunity for my country to reposition ourselves in the regional, the European, but also the global energy map. How did we do it? First of all, by making sure we offered an alternative entry for liquefied natural gas not just into Greece but into Europe. Significantly investing in our regasification infrastructure in northern Greece, we’ve been able to supply gas not just to Greek consumers and Greek businesses, but also to many of our Balkan partners. And it is my commitment to make sure that we will be a provider of energy security for our neighbors.
At the same time, we are also becoming a much bigger player in renewables. As I told you in my introduction, we are a leader and we want to remain a leader and strengthen our position in renewables even further. We have ten gigawatts of installed wind and solar power with another three gigawatts of hydropower. We want to take that up to 25 gigawatts by 2030. We want to be able to export green energy and we have enough investor interest to be sure that we will be able to reach that target. And of course also develop completely new industries, such as offshore wind which is going to provide in 10-15 years the bulk of energy produced from wind farms simply because you can put much larger wind turbines in the sea and because the wind flows in the sea are actually steadier and more predictable than they are on land. So this is just sort of a small summary of what we have achieved and how we have also been able to deal with crises and turn these crises into opportunities.
So I want to leave you with a positive message before we turn in to any questions you may have. If we have time to answer them, I’d be very happy to do that. That turnaround stories actually can happen. There are certain specific preconditions for this to happen. I think we need stable and good leadership but you also need a necessary social consensus.
What is remarkable about Greece is that many of the difficult reforms we have implemented ended up being not so difficult, because we kept thinking in terms of what was difficult five or ten years ago. But Greek society has matured a lot. So, for example, ideas such as privatization or, you know, supplementary pensions with a personal investment vehicle, these were anathema 5 or 10 years ago, that is no longer the case. So when, for example, we go talk to our young people and we tell them, look, we want to open up universities to private partnerships which is obvious for any leading university, but we’re still considered something, quote-unquote, bad in Greece. Suddenly there is much more buying because most people understand that if the world is changing, we also need to change and we need to adapt.
So all these changes that we’ve implemented would not have happened, I think, if we were not able to explain why they are important and to be sure that we have enough support to actually drive them through. And I do hope that Japanese companies, Japanese investors will be able to also benefit from this Greek growth story. I will be leaving Japan very optimistic about, as I told you, about the state of our relationship. I think we have to the best of our ability explained that to people who may not necessarily be that knowledgeable about what is happening in our corner of the world, why Greece is an interesting turnaround story. And investors usually look for contrarian stories, not necessarily the most predictable investment destinations. And I am absolutely sure that something really good is going to come out of this trip. And for those of you who are students of public policy, as many of you in this class are, I think also for the students of tomorrow, our successes, our failures, but the Greek story provides a very interesting blueprint, I would say, an interesting case study of what public policy in action really means. I’m always glad when I have an opportunity to talk about our experience, as I had today in your prestigious university.
Thank you very much for your attention.