Francine Lacqua: Prime Minister, you have a second mandate from the Greek people. What is your intention on how that will unfold in the coming years?
Kyriakos Mitsotakis: Well, first of all I’m very happy, very honored and very proud to be able to secure a second mandate. We actually got a higher share of the vote than we did in 2019, something which is unusual for incumbent governments in these difficult times. And I want to make sure that I use this strong mandate to drive forward an aggressive reform agenda and to make sure that Greece makes up for the lost ground of the crisis and actually converges with Europe at a very fast pace.
So a high growth rate is for me my number one priority. This will give us also the fiscal space to drive through important changes in health, in education and other policy areas I deeply care about.
Francine Lacqua: Prime Minister, you’re very confident that you’ll get investment grade. When you get investment grade, what does that mean? What does that change in terms of possible extra investment coming into the country?
Kyriakos Mitsotakis: I think it changes a lot of things. There is currently a lot of capital that cannot invest in Greece simply because we’re not investment grade. As you know, we are already trading as if we are an investment grade country. But we also need the official stamp of approval by the rating agencies. I think it will further lower our cost of borrowing, which of course is important in a high interest environment.
We’ve been able to defy the trend. The Greek economy is going to grow significantly in 2023. And this is also giving us the fiscal space to further reduce our debt. We will be able before the end of the year to actually repay, ahead of time, our GLFA facility for the next two years. And I think this will also send a positive signal to the markets that not only are we focused on growth, but we also want to make sure that our debt to GDP ratio continues to decline at a very rapid pace.
Francine Lacqua: And is this a promise to investors?
Kyriakos Mitsotakis: Yes, and it’s a commitment to investors. We will accelerate the reforms and we will make sure that whatever reforms we implement will be done in such a way not to compromise our country’s fiscal position.
Greece went through a lot, through a very painful period. We will never ever relive these difficult times. But I think we’ve proven that you can drive high growth, you can reasonably reduce taxes while at the same time maintaining very healthy public finances and I do expect our debt to GDP to continue to decline significantly. And of course, again, this will also give us the fiscal space to make sure that we ensure markets that we’re serious and actually repay part of our debt ahead of time.
Francine Lacqua: Prime Minister, how difficult is it to do all of this with the cost of living crisis?
Kyriakos Mitsotakis: The cost of living crisis is very concerning to us and of course it has hit the poorer segments of the society disproportionately hard. Two points. First of all, we have lower inflation than most European countries and I think we were successful in using targeted measures to help those in greater need. We resisted the temptation to lower VAT and excise taxes. And now I’m happy to see that lots of the studies that are coming out now point out exactly the fact that lowering VAT does not lead to a reduction in inflation. This gave us a fiscal space to use targeted measures. We will most probably continue these targeted measures, especially when it comes to the supermarket. We’re concerned about food prices and I prefer a direct cash transfer to more vulnerable Greeks to help them with the supermarket bill than a horizontal cut in VAT which will drain my public finances and probably will not be effective in terms of containing inflation.
Francine Lacqua: I don’t know how much this has to do also with the war in Ukraine, but when do you expect food inflation to come down?
Kyriakos Mitsotakis: It’s been persistent. I wish I had a crystal ball, but what I do know is that it is coming down faster than other European countries, although it is still an area of concern. And, of course, interest rate policies are not driven by us, so we have to adjust. But it’s good news that, for example, increased consumer confidence, the PMI has been growing, whereas in the rest of Europe it’s been on a downward trend. So we seem to be defying the trend. Not only will we avoid a recession, but we will grow by more than 2% this year, which given the circumstances, I’d say is pretty good.
Francine Lacqua: Prime Minister, if you look at actually your opposition, you almost have none in parliament, but you do have the rise of three far right parties. What can you tell us about them? Are they pro Russia?
Kyriakos Mitsotakis: Well, first of all, we have a comfortable majority in parliament and essentially we have a 23% gap from the opposition. I mean the left Syriza suffered a strategic defeat in these elections and I’m happy because essentially we prevailed through politics of competence and reason, we moved the party towards the political center. So yes, there is future beyond populism and we’ve proven that if you run a competent government you can actually make it possible to get re-elected. So I think this is a good message for everyone fighting an election against populists, whether they come from the left or from the right.
Now, as far as the extreme right is concerned, yes, we have three small parties in parliament. We have a 3% threshold. They managed to be right above that. In total it’s probably 12 or 13% of the electorate. For two of these parties, we have no idea what they stand for. It will make parliament probably louder and more, I don’t know if it’s going to be more interesting, but no, the extreme right is not organized in the way it is in other countries and we certainly don’t need the extreme right to govern. We managed to govern on our own. This was always a strategic choice by moving the party to the center while making sure that we attract enough people to have an absolute majority, so we’re able to do that.
So these are fringe parties? Yes, some of them are sort of pro-Russian, not very explicitly, but indirectly, but they’re not a big factor in Greek politics.
Francine Lacqua: You don’t think it’s a warning of something to come, even for other European countries?
Kyriakos Mitsotakis: I always take the grievances of people who vote for protest parties seriously. And it is true that some people do feel marginalized, they feel threatened, they feel that maybe the world is moving at a faster pace and they’re being left behind. But in Greece, because we went through a crisis, I think there’s been a process of Greek society really maturing and maybe, actually in terms of the political development, leap-frogging what is happening in many other European countries.
So we won a second mandate which is even stronger politically than the first one. I think this says something about Greek society and in that sense it also gives the necessary political predictability to investors. Because I always said that you need two terms to really do a big transformation project. So I think investors are also looking at Greece and they look at -four years until the next national election- a stable government, a safe pair of hands. So I’m sure that they like what they see, in terms of the politics of the country.
Francine Lacqua: Prime Minister, what kind of relationship do you want with China?
Kyriakos Mitsotakis: I’d frame my relationship with China within the context of the European Union as a whole. We can work with China on various issues, but they’re also a competitor, they’re also a rival on many other issues. But I’ve been advocating for a comprehensive European approach, vis-a-vis China. So we don’t want to decouple, and frankly, we cannot decouple, but we want to de-risk. This means a more measured, a more intelligent approach vis-a-vis China, which is also relevant for us.
China is an important market for our agricultural products, for example, it could be an important market in terms of bringing in Chinese tourists. It’s much less important as a source of capital. For example, when you look at the big infrastructure projects and how we funded them over the past years, no capital practically came from China. But we will certainly align our policy with the overall European approach when it comes to China.
Francine Lacqua: And when you say it’s impossible to decouple, is that because the co-dependency is too big on certain chips and manufacturing?
Kyriakos Mitsotakis: I do think that in a globalized economy -and I’m not so much talking about the Greek economy, I’m talking about the global economy. The globalized economy is a reality. We want more independence over supply chains, but there’s a limit to how much we can actually do that.
Francine Lacqua: What do you worry most about your economy in Greece? When you look at tourism, it’s booming, but it also means some of the islands are overcrowded. Is there something that you can do about that?
Kyriakos Mitsotakis: Thank you for asking this question, because I want to make sure that in five years from now we will not have sacrificed the beauty of our natural environment at the interest of a very rapid growth. So that’s why I’m really focusing on sustainable growth, that’s why I will always push for quality over quantity, very strict in terms of standards.
We are actually looking at our local and regional sort of planning legislation across the country to make sure that we know exactly what we can build and where we can build it. There are parts of Greece which have reached a saturation point, and if we have to place restrictions, we will, in order to protect especially islands, which are more sensitive.
Francine Lacqua: Does that look like a tax? If you go on an island…
Kyriakos Mitsotakis: Restrictions in terms of building. There’s only that much we can build on certain islands, I don’t want to single them out. We’re not there yet in terms of thinking of taxes, that’s not something that is currently in the cards. But I’m more concerned with how many people we can actually get on an island and make sure that the island is still functioning, but also for tourists to have a positive experience. Because at the end of the day, when something is overcrowded, people don’t necessarily appreciate it. So it’s not rocket science. For example, we’re beginning to do it and planning it to make sure that when you have cruise ships, they don’t all need to come at the same time. So you can manage the berths in a smarter way to make sure that you get more cruise ships, but also that the island doesn’t overflow with visitors certain hours a day.
Francine Lacqua: Prime Minister, how much time are you going to spend tackling tax evasion?
Kyriakos Mitsotakis: A lot, because this is an important issue for us. It’s not just a question of equity, but it’s also a question of making sure that we have additional revenues for our schools or healthcare system.
We’ve made good progress in terms of reducing the VAT gap. We’ve been very diligent in terms of making electronic transactions more attractive. COVID also helped us in that direction and we saw tangible results. And as we sort of digitize the entire sort of supply chain, make it also easier for our tax authorities to be more targeted and smarter in terms of going after tax evasion. So for me, this is a big priority.
Francine Lacqua: Are you frustrated that it wasn’t as fast as you thought it would?
Kyriakos Mitsotakis: To a certain extent, yes. Although, again, in terms of the VAT gap we’ve made good progress. We had a legacy of tax evasion, but this is also something which is very much related to collective trust. People feel that they get quality public services, they will be more inclined to pay their taxes. But we’ve also proven that if you actually lower taxes in an economy that has sort of a tradition of tax evasion, that it can actually bring in more revenues. Not true always, for all countries. In our case, this was actually very much true. So our strategy of gradually lowering taxes has actually worked with that and has actually brought in more revenues.
Francine Lacqua: Prime Minister, Coast Guards, of course, have not been portrayed in the positive lights recently because of migrant boats that have sinked. Are you taking action to make sure that doesn’t happen again?
Kyriakos Mitsotakis: We’ve been implementing a migration strategy that I’ve always described as tough and fair. Our number one priority is for people not to drown at sea, but also to protect our borders. My theory is very simple: the less people you have at sea, the less likelihood that you may have a tragedy like the one that unfolded in international waters, but off the Greek coast. And we’ve been able to make this strategy work in the Eastern Med. We’ve broken the smugglers’ networks.
And it’s very unfair, when I look at, for example, NGOs or part of the international press, I mean they place emphasis on the Coast Guard, but they don’t talk about the smugglers who put these desperate people on a boat that was obviously not seaworthy. Every time there’s an incident, there’s always an investigation. And regarding this tragedy, there is an ongoing judicial investigation. Obviously, I cannot comment on it. But pointing the finger at the Coast Guard? Our Coast Guard has saved tens of thousands of people. It’s unfair, it’s unjust, and it’s also wrong as a strategy, because at the end of the day, what we don’t want is, we don’t want a pull strategy.
So we have to be vigilant in protecting our borders. But we also need legal pathways, either for humanitarian reasons, so for refugees, or also for economic migrants. One of our goals in Greece is to sort of expand labor market participation. And when I look at certain jobs, for example in the agricultural sector, we have difficulties finding people to actually do these jobs. And I would much more prefer, as we were and we already put in place these types of programs, for example, to have an arrangement with countries such as Egypt or Bangladesh, where we offer work visas for people to legally work here. And they will come and work and they will be insured and they don’t need to embark on a dangerous trip. But we will control the policy. We cannot let this policy be controlled by the smugglers.
Francine Lacqua: But, Prime Minister, do you feel let down by the European Union? Should they be helping you more in trying to deal with the situation, also the refugee camps that have come under criticism?
Kyriakos Mitsotakis: Look, I mean, the European Union, to be honest, first of all, it’s changing its approach at the level of the European Council. It is placing much more emphasis on the external aspect of migration, which is essentially border management. They’ve also funded a lot of our camps. If you go to the islands now, you will see ultra modern facilities. Five years ago we had the horror of Moria, under a socialist government which supposedly was progressive and “cared” about the human conditions of migrants. So there has been support by the European Union. Yes, I would like them to be bolder and also openly finance barriers, or what we call fences, but other measures to help us protect our border.
And of course, we’re also working with Frontex. Frontex is not an NGO. Maybe some people in the European Parliament think that Frontex should be an NGO, but Frontex should not be an NGO. It’s a border protection unit, heavily sort of funded by the European Union. And we’re always working with Frontex and whenever issues arise, we always try to cooperate and try to resolve them.
Francine Lacqua: But there’s no change in policy on refugees that you see or, again, some of the refugee camps…?
Kyriakos Mitsotakis: There has been a gradual change of policy at the level of the Council, which is most welcomed and we lobbied a lot about it to make sure that we place the external dimension of migration front and center. Because we’ve been talking a lot about the internal dimension, which is, how do we move people once they enter the European Union. Who should be responsible, for example, for welcoming, are we going to have quotas?
These are difficult topics, but unless we reduce the number of people who enter the Union illegally, we will not be able to address this problem. But, again, this is not sufficient. We need to offer legal pathways, and we also need to be much more effective when it comes to returns.
Francine Lacqua: Prime Minister, you’ve also done a lot of work on LGBTQ rights. How much will that continue?
Kyriakos Mitsotakis: It will continue. We have an LGBTQ equality strategy that we’re putting in place. It’s a work in progress, but we’re happy about some of our initiatives, which also mean a lot to me. Homosexual people couldn’t even give blood before we came into power, we still had horrible conversion therapies, which were technically legal, for gay teenagers. I mean, really, we banned all that and we will continue to implement our strategy.
It’s a long term project, but I think Greek society is much more ready and much more mature. It’s interesting that all these initiatives have been launched by a center-right government and not by the previous government, which theoretically again belonged to the left. And I think this is also testimony to the fact that we are a truly progressive government.
Francine Lacqua: Will you only reach true equality when you have same sex marriage?
Kyriakos Mitsotakis: It will happen at some point. It is part of our strategy. It is a work in progress. We have civil union already, and at some point this strategy will come to its end.
Francine Lacqua: Prime Minister, how would you describe yourself as a leader? I mean, you’ve delivered on a lot of your goals, you’ve done better than expected in the polls. What drives you?
Kyriakos Mitsotakis: I don’t like too much to talk about myself, but I would really like to look at Greece after eight years and say, “yes, we’ve made big changes”. So this is not just about management, it’s not just about playing defense. It’s really about changing the country.
I mean, this country, if you look at its 200 year history, has gone through spells where really big changes happened. And I hope that I can make my own contribution in making sure that we completely break out of this sort of spell that really dragged us towards, essentially towards the bottom during the second decade of the 21st century. We lost 25% of our GDP. This was the biggest contraction since -people forget about it- since the Second World War in any OECD country. But it’s an opportunity to really change the country.
And essentially what I’d like to do is make sure I release the creative forces. I mean, Greeks are incredibly talented and I want them to be able to prosper in their country rather than move abroad.
Francine Lacqua: So what’s your biggest dream actually for Greece?
Kyriakos Mitsotakis: To become a protagonist, a global protagonist in those areas where we can be a protagonist and to be able to catch up in those areas where we’re still laggards. And to address what I consider to be the three big challenges, which is the environment, the digital challenge, and the opportunities and threats of AI, but also for me, probably the most important challenge is inequality, income inequality.
At the end of the day, I want to look at the growth that we delivered, and I’ll be happy if I see less inequality rather than more. It is always a risk in rapidly growing economies, that you actually have more inequality. We’ve been able to lower inequality over the past four years because we’ve actively supported those in need. And at the end of the day, it’s about giving opportunity to those who are less privileged. This is what really excites me and makes me work harder when I feel tired.
Francine Lacqua: Prime Minister, do you think that’s why people voted for you or is it because they didn’t have a real alternative?
Kyriakos Mitsotakis: I think that maybe in 2019 people voted for us because they were fed up with the previous government. In this election, I’m pretty sure people voted for us because they bought into our story, in our vision for the future. Again, it’s unusual to see this level of support in a Western democracy, in a multiparty system, so I think they placed their trust in us and we have to reciprocate.
So, you know, a big victory, it gives us cause of celebration, probably lasts for hours, rather than days. And then suddenly you have the weight of people’s expectations on your shoulders, the weight of the office on your shoulders, and you tell yourself, “look, people have given you a mandate for big change, and you better deliver”.
Francine Lacqua: Prime Minister, thank you so much for your time today.
Kyriakos Mitsotakis: Thank you, Francine. Thank you so much.