Prime Minister Kyriakos Mitsotakis participated this morning in the Greek Investment Conference co-organised by Morgan Stanley and Athens Exchange in London. Below are excerpts from the Prime Minister’s discussion with Morgan Stanley’s Vice Chairman for Investment Banking Luigi Rizzo:
On the course of the Greek economy:
“Thank you for inviting me back to what has proven to be a very successful event. Let me just offer some very quick introductory remarks. I remember when I was back here a year ago, we were discussing the prospects of the Greek economy, and I was pointing out to some important milestones that we needed to meet for 2023. The most important one being regaining investment grade and ensuring that we maintain a high growth but also remain focused on fiscal sustainability. I’m happy that we have been able to meet these challenges.
Of course, the important precondition for all of that was our political victory in the double elections that took place a few months ago. We have a strong mandate for reforms and we intend to move forward with an aggressive agenda to make sure that the progress that we have made will continue. I’m happy to see that the interest in what is happening in Greece is going from strength to strength and that Greece has been able to attract significant foreign capital and significant foreign funds are interested in being part of our success story.
Let me also pay tribute to the resilience of the Greek companies present in today’s gathering, because I think it is important to point out that this is not just a government success, it’s a business success as well.
I’m happy that the Greek companies are also buying into our vision for investing more in the country, investing more in their local talent, and expanding their presence abroad”.
“I think the first challenge is how do we maintain growth that is significantly higher than the rest of the eurozone. If you look at the forecasts of the European Commission, they are extremely encouraging. But then, I’m not just looking at the headline growth numbers, I’m also looking at the composition of this growth. Is this an investor-friendly growth rather than a growth focused on domestic consumption? Is it a sustainable growth? Is it a growth that harnesses the technological challenges that are currently present and views technology as an opportunity rather than as a threat? And is it a socially just growth that focuses on issues on inequality and ensures that we achieve true wage convergence with the rest of the European Union?
Fiscal discipline is at the heart of our policies. We need to achieve primary surpluses of 2% and we will do so because we have a track record of exceeding our targets and we will continue to do so going forward. Of course, there are important reforms that have to do with long-term productivity, which will be implemented by this government simply because we have a strong mandate to do so. And because I always recognise that the biggest threat for a government at the beginning of its second term is complacency.
One could argue that after our resounding political victory, we would allow ourselves a moment to pause and bask in our own glory. That would be a big mistake. I’ve made it also very clear to my team that I will tolerate zero arrogance or zero perceptions of political supremacy simply because the opposition is in complete disarray. Our biggest opposition are the real problems that we are faced with everyday.
For me, the most important message that I would like to communicate to you is our commitment to push forward with all the difficult and reforms that need to be implemented, even if those are perceived by some as being politically painful. Let me offer a very clear example: we’ve been talking in Greece a lot about the problems of tax evasion, especially among self-employed Greeks, and we have actually tabled a piece of legislation that is addressing this problem. Even those who are self-employed acknowledge that we need to do something about it. In spite of the resistance that we may be facing, we will continue and implement the reform with only marginal changes after the public consultation phase. This will bring to the Greek state half a billion in additional revenues”.
On startups and technology:
“But let me also point out that I’m particularly excited about what is happening in the high tech ecosystem in Greece. I remember, before I entered politics, it was more than 20 years ago when I was still in business and working for the National Bank of Greece -very happy with the success of NBG, by the way, also as someone who has worked for the bank in the past. But at the time I set up the first dedicated technology fund for Greece, we probably were ahead of our time.
But if you look at what’s happening now in the tech ecosystem in Greece, it is remarkable how many startups are emerging and how much talent is directed towards this space, and how much for the first time we’re able to bridge the gap between what is happening in our universities and what is happening in the space of applied technology.
This is a true breakthrough. We have tremendous human talent, but our universities were literally sealed off the market. This is changing. I welcomed the other day a fantastic group of young students, interdisciplinary, who came up with a diagnostic test for Parkinson’s, top biologists. They’re doing so well, all the Greek teams in all the international competitions.
This is an area where I’m very, very optimistic that we will be able not just to consume technology, but also to develop innovative solutions, not just for the Greek market, but for the global market”.
On climate change:
“Well, first of all, yes, we need to recognise that the Mediterranean is a hotspot for climate change. Although the climate crisis is already here -it’s exhibited in terms of extreme weather events, more intense wildfires, and of course, floods-, we didn’t really have big floods in Greece. But I’m afraid that after the experience of this summer we need to be prepared also for this eventuality. Why is this happening? Simply because the waters of the Mediterranean are getting hotter, which means that the possibility for Mediterranean hurricanes is increasing. And what we saw this summer was unprecedented in terms of the amount of water that actually fell in Thessaly.
We need to focus much more on adaptation. I will talk about mitigation afterwards and our initiatives in that respect. We’re spending more than two billion on ramping up our civil protection infrastructure. It is a necessary investment. We need to think about the resilience of our infrastructure and make sure that whatever we build or build back, we build it back better. When we talk at, for example, the big construction companies and we’re thinking about how we are going to rebuild the infrastructure in Thessaly, we need to ensure that the guidelines are different from the ones that we used in the past. We have a lot of construction experience in Greece to make sure that we can address these challenges.
Of course, we also need to make some important decisions which sometimes are difficult to implement. For example, when we look at water management in the Thessaly Plain, it is clear that we need to be aggressive in terms of having one authority that manages water centrally rather than have the system work in a very decentralised, fragmented, and frequently clientelistic. These are important changes, but they need to be implemented.
Now when we talk about mitigation, let me point out that Greece is a leader in green energy, and we can do much more, especially when it comes to combining the production of electricity with innovative storage solutions. We know that storage is not going to do the trick on its own. We still will be dependent on natural gas for electricity production for the foreseeable future. But we want to make sure that our natural gas units are state of the art so that they’re more efficient and more competitive. Of course, when we look at our overall CO2 footprint, carbon storage is going to become that much more important.
I think we’re ahead of the curve when we look at the other Mediterranean countries in terms of innovative projects that have already received European funding, but also in terms of our regulatory framework. Because when you look at big industry, it’s clear that decarbonization will require at some point some carbon solution, storage solution, and we want to be at the forefront of this sector. We want to be at the forefront of offshore wind, which is another source of renewable energy which we can exploit.
We want to make sure that we are also protagonists when it comes to investing in our grids and our interconnections with Europe. We could export much more energy than we actually do. We’ve been a net importer of energy. It has cost us a fortune, especially when it comes to natural gas. We spent €7 billion in 2022 for natural gas. But if we can produce our own natural gas and if we can at least give us the option to know what is there, I want to explore this possibility”.
On Greece’s position in the geopolitical field:
“Let me focus on the economics and the politics of geopolitics. First of all, when it comes to economics, globalisation is not going to be undone, but there is going to be a clear focus on security of supply, and on making sure that we bring critical elements of our supply chain closer to our home markets. Europe clearly has a role to play, from rare-earths -Greece is a country which has incredible mineral results, many of them are still completely unexploited, the production of gallium, which we could do in Greece and not many other European countries can- to ensuring that we support Greece as a state-of-the-art logistics centre for trade.
If you just look at our geographic position on the map, there are very clear opportunities, which has to do with our investments in our ports and our logistics infrastructure, to being able to serve the European market out of Greece for companies that would like to invest in Europe. For example, look at our pharmaceutical industry, we have a very dynamic pharmaceutical industry that is export-led. In a time when we realised, during COVID, that we don’t want to be completely dependent on China for basic pharmaceuticals. There are significant opportunities for investing more in this sector and to serve the European market out of Greece. I see many economic opportunities emerging from our geographic position”.
On countering populism and policy-making:
“Well, let me offer two remarks. First of all, we had our own experience with populism. We should not forget that. It was very painful. We elected a populist government way before other European countries experimented with populists. It was a government of the hard left that partnered with the hard right with the sole purpose of staying in power. We avoided the worst, but the collective trauma from this experience is still with us. But that is not enough to counter populism. You need to be able to deliver results.
I believe that at the heart of every populist insurgency, you will find two issues. The first is an issue of trust. Do we believe in politicians? Are they in it for their own good, or do they benefit the elites or their friends? You have to be consistent and you have to tell people the truth, and you have to do what you say. It’s very simple, very difficult at the same time, but we’ve been very consistent. The reason why I think we succeeded in increasing our share of the vote, which is difficult to do in these challenging times, was because people recognised that we did what we told them we would do. That’s why they believed us that we will do what we tell them we will do over the next four years.
The second is to understand that many of the grievances that fuel populism are real. The solution may be problematic, offered by the populists. But when you talk about disenfranchised people, poverty, social inequality, this idea that the world is changing and we’re left behind and we are feeling helpless, these are real grievances and they need to be addressed. That is why at the core of our policies, we place the reduction of inequalities.
Extreme inequalities are at the heart of the problem. That is why I placed so much emphasis on wage convergence with the European Union. I tell the business community: We’ve done a lot for you in terms of reducing taxes, bringing in foreign capital, increasing valuations of companies, making it easier for you in spite of the challenging, interest rate environment to raise capital, improve the business environment, reduce regulation. We want you to take care of your employees and to make sure that we pay good wages and that there is wage convergence that is in line with the productivity improvements that we make.
And wage increases in real wages is a key metric with which I would judge, against which I will judge my success at the end of our term. So again, if I have to offer any advice is be pragmatic, listen to people, never treat people with contempt simply because they may be tempted to listen to the populist rhetoric. And at the end of the day, focus on results. We are here to solve problems. And trust me, every day, there are many, many problems that need to be addressed from very small ones to very big ones. But at the end of the day, if we deliver results and we remain faithful to our electoral promises, we will build the necessary trust that is important to counter this populist wave that seems to be making its presence felt in many other European countries”.