Prime Minister Kyriakos Mitsotakis participated in conversation with Enrico Letta, President of the Jacques Delors Institute and former Prime Minister of Italy, at an event organized by the Hellenic-American Chamber of Commerce. The discussion was moderated by journalist Katerina Panagopoulou. Kyriakos Mitsotakis’ remarks follow.
In his introductory remarks, in response to a question on US President Donald Trump’s announcements and the future of Euro-Atlantic relations, the Prime Minister stated:
Well, first of all, it’s a real pleasure to be able to share the stage once more with Enrico, and congratulations again on an excellent report. We’ll talk more about it in a bit because I think it has made a significant contribution in our discussion regarding further European integration.
It’s a very interesting coincidence that this event is taking place one day after the swearing in of the 47th President to the United States, who also happened to be the 45th President of the United States. Let me start by saying that it is important to let the dust settle and distinguish between what seems to be still a repeat of some campaign declarations and see what exactly the policy of the United States is going to be vis-a-vis Europe.
Europe is approaching this new reality, I think much more aware and much more geopolitically mature. But I do need to point out that similar statements were also made by President Trump back in 2016. The worst, at least in terms of a full-blown trade war between Europe and the United States, was avoided. I still do hope that this is going to be the case.
But I do want to point out that this is very much an awakening call for Europe. If indeed it is the case that the new global environment will move more from a values-based or rules-based international order to a more transactional way of dealing with international problems, that I think places even more burden on us to take very seriously topics which we have discussed, topics that were presented by Enrico in his report, but in particular, the issue of defence, where we clearly need to do much more and we need to be much smarter in terms of how we protect our own European continental security. We can talk more about this in a bit.
If you choose to do so, I do need to point out that we have an extraordinary Summit that will take place outside Brussels on February the third, devoted to this topic. One could argue that this election is indeed maybe the last trigger that we needed in order to move from words to actions. By actions, I don’t necessarily mean a confrontational stance vis-a-vis the US. We have been traditional allies. We’re bound by history. We have fought world wars together. I mean, this strong partnership is not going to be undone. I’m very optimistic about that. But we need to explore. If the art of the deal is about win-win solutions, it’s exactly those win-win solutions that need to be explored.
Asked about Greece’s role in Euro-Atlantic relations and the possible increase in defence spending within NATO, Kyriakos Mitsotakis noted:
First of all, let me point out that Greece and the United States enjoy an excellent relationship. I don’t think that the relationship has ever been better than it was over the past five years. We have a comprehensive security and defence agreement that has been signed. Our relationship goes way beyond defence and security. We’ve seen increased interest by American technology firms to invest in Greece. Of course, we have traditionally very strong cultural and educational ties. We see a lot of interest by American educational institutions to come and partner with our public universities. This is a very strong and, I think, sturdy relationship.
Of course, I had the honour to speak and address a joint session of Congress. We know that we have very strong ties in Washington, both within the Republican and the Democratic Party. This is a very strong partnership, and I don’t expect any changes in terms of how the US views Greece as far as the bilateral relationship is concerned. But of course, I think it is also important that we look at our relationship with the United States, not simply through our bilateral lens, but to make sure that we can come up with a unified approach in terms of how we will deal with a new administration.
I think President Trump, in 2017 or 2018, I’m not sure when it was, it was before I came in, I had the privilege of leading the country, went around the table at the NATO summit and literally called out every single country, highlighting the fact that they were not spending 2%, most of them were not spending 2% of their GDP on defence.
I think he was right. The truth is that the European continent has been, and certainly some of the big countries, have been extremely complacent in terms of outsourcing our security guarantees to the United States without paying up and picking up our fair share of the bill.
This is done. This is history now. This is no longer going to be acceptable. I think what will happen, I am absolutely convinced that the 2% threshold for NATO is also going to be history. We will, I think, agree to a higher threshold. I don’t know what it will be. It won’t be 5%, but it will be certainly higher than 2%.
Greece is approaching this discussion, I think, from a position of strength because we already spend more than 3% of our GDP on defence. We have traditionally been spending more than 2% because of the particular geopolitical concerns that we have regarding our neighbourhood, which means that also compared to other countries, we never benefited from the peace dividend that many countries took advantage of after the collapse of the Berlin Wall, where they could afford to spend 1% on defence and channel the surplus defence spending into all other policies. We never had this advantage.
We will need to spend more on a national level, and then we need to see how we’re going to spend more on the European level.
One topic which I will raise again at the European Council is how do we tweak the fiscal rules of the European Union in order to gain more flexibility to spend on defence? Let me explain what I mean. If a country such as Greece currently exceeds its expenditure benchmark because it spends more on defence. It will be put in the excessive budgetary procedures. Most probably after this process takes place, we will get a green light by the European Commission because there is a specific exception regarding defence spending. The problem is that many countries cannot afford to go through this process.
My suggestion is very simple: what would happen ex post, Enrico, the idea is it should happen ex ante. We should have more fiscal space strictly for defence investment above the expenditure benchmark in order to encourage countries to spend more on defence. That is, in my mind, the quickest way to encourage countries to increase their defence spending.
Again, it would have to be a reasonable number because we’re all aware of the fact that we also are watched by the markets and we don’t want to endanger our fiscal position. Then, of course, the next question is going to be, okay, national budgets will do whatever they can, but do we need a European pot funded by European money to spend on defence. My answer is “yes” to the second as well. If we did it once, we did it once with the “ΝextGenerationEU” after COVID, we were bold. But we need to recognise that we are at a geopolitical inflexion point with a war in Ukraine going on and with uncertainty regarding the nature of the transatlantic relationship. If we don’t do it now, I don’t think it will ever happen.
And I’m sure that this discussion will start in earnest at the European Council on February the 3rd.
In response to a question on the rise of far-right parties and the debate on the woke agenda, the Prime Minister noted:
Yes, I happen to believe there are two genders, male and female. This is also my personal opinion. This is what biology dictates.
But every country is different. There have been various explanations offered regarding the resounding return of Donald Trump to the presidency. Certainly, I’ve commented on this, the extremes of US wokism have resulted in maybe the pendulum swinging in the other direction. I would like to point out that those extremes, which are very, I think, prevalent when you go to the liberal campuses of the top American universities, have not appeared in Europe. I don’t think we have that problem in Europe to justify a counter reaction against this agenda. This has been primarily a US phenomenon.
As far as Greece is concerned, I think we have demonstrated that you can have a strong center-right alliance that pushes the fringe parties into what should be their natural space, which is them being small parties that do not profoundly affect the public debate.
Of course, as Enrico pointed out, we are currently one of the few politically very stable European countries. Stability is a very valuable currency in today’s world. It is what allows us to quickly implement our electoral programme. It permits us not to lose time in coalition discussions.
Enrico was right to point out that the three-party coalition, like the one you had in Germany, was a “recipe for inaction”, which eventually brought down the government. So, having a single-party majority in this world where quick decisions have to be made and where Greece is really embarked on a project to catch up with the rest of Europe, in my mind, is a great advantage.
When we talk to foreign investors, the politics, not just the economic situation of a country, are probably as important as the overall fiscal stability, to know that there is predictability and to recognise who the counterpart is at any given step of a possible significant investment.
So undoubtedly, there is a tendency in Europe and in the US towards what we call the “hard” right or the “extreme” right. I think in Greece, we have been able to contain it. This doesn’t mean that there isn’t a significant percentage of people who vote parties that are to the right of Nea Demokratia. But these parties, in my mind, are still fringe or marginal parties. They’re certainly not part, and they will not be part of any future coalition, possible coalition-building exercise.
That’s not the case in Austria, where you have the far-right now leading the coalition. It used to be a junior coalition partner. Now, the far-right in Austria is the senior coalition partner. That is not going to happen in Greece.
Asked about European competitiveness and the role that Greece can play in Europe, Kyriakos Mitsotakis said:
Add to what Enrico said, which I think is incredibly important, we clearly need to revamp our competition rules. They were designed at a time when we were primarily concerned with internal European competition. The end result was that it was difficult for cross-border mergers to create big players that could compete in this cutthroat global environment.
This is something which I think is also realised by the new President of the Commission, and I would expect quick initiatives in this direction. For example, it should happen in defence. We talk not only about how much money we will spend, but also about making sure that we have bigger and more efficient players that can streamline standards and create economies of scale.
Let me touch upon one other point which I think is particularly important because it was mentioned in Enrico’s report. It’s what we call the “28th regime”, the idea of having one legal structure, especially for young companies, for startup companies that would allow them to operate in all 27 European countries.
This would be a true game changer because when we talk to our startups and we tell them, “but you have a market of 450 million customers”, this is quite frequently a mirage. It’s not true because they still have to adhere to different standards, get different permits in all different member states.
One of the reasons why startup companies are not as successful in Europe, and many choose to move to the US, is exactly the fact that they really don’t have access to a unified market of 450 million customers.
Now, as far as Greece’s role in Europe, I think we have tried very hard to leave behind us the years where, and I think we have succeeded, where Greece was perceived as a country that is only concerned with dealing with its own problems and burdening the European Union with its own internal failures. This period is way behind us. I think our goal as a government is to play a meaningful and constructive role in the broader European debate.
This is always what we try to do, what I try to do at the European Council, what ministers try to do at their Council meetings.
I think this is really, again, a time for bold ideas and for bold initiatives. I am now into my sixth year at the European Council, so I’m becoming one of the more experienced leaders of the European Council, it’s still extremely powerful and able to forge these types of consensus. For example, I was talking about defence two years ago, and at the time, no one really was listening. But now the discussion is gaining a lot of traction.
We also need to be aware of the fact that in Europe, rarely do things move in a completely linear manner. You may have periods where not much is happening, where we discuss and we talk and we talk. For example, capital market union, another topic which has been highlighted both by Enrico and by Mario Draghi in his report. We can’t compete with the US capital markets because our capital markets are completely fragmented. Every year, it’s not that we don’t have savings, we have savings of €1.2 trillion, but every year €300 billion of savings are moving primarily towards the US. Capital Markets Union is absolutely imperative in order to create the momentum that we need.
I think we’re at a point where a lot of these discussions need to materialise into bold decisions. We’ll try to do our best to contribute. Of course, we wear two hats. I think it is important to realise that at the European Council, you wear your national hat, but to also wear your European hat. When you wear your European hat, we all need to make sometimes small compromises. This is particularly true, especially sometimes for the bigger countries.
My last point, the memory of the five days that we negotiated the “NextGenerationEU” is still very vivid. Three or four months ago, Germany was dead against it, until it was for it. At some point, and that’s why I think you were right when you said that maybe the Trump election is this inflection point, it’s maybe, I don’t know, we call it “a geopolitical COVID moment”, where something big happens and we realise that we cannot keep on doing things the way we have done them until now. This is not to underestimate the fact that over the past five years, important things happened in Europe, but clearly, it has not been enough.
Asked about the impact of the Green Deal on the competitiveness of European businesses, the Prime Minister stated:
If you are really suffering from insomnia, you can also read the Draghi report. But actually, both reports are really very interesting. I could talk for ages on this topic, but let me just try to focus my answer.
What is a green transition? Αn effort to bring down carbon emissions and get to carbon neutrality by 2050. Why are we doing this? Because we want to contribute to the general effort to make sure that temperatures don’t rise to a level where life on our planet is going to be unbearable. Can we solve the problem on our own? Absolutely no, because we only account for what is 6% or, I think, 7% of global emissions.
Should we do the green transition at the pace which is going to destroy our industry and make it less competitive and burden it with unnecessary regulation? The answer, again, is clearly no. Although at some point we risked sending signals to the market that this was our number one priority, and maybe we were too voluntaristic in our thought in the sense that “if we do it, everyone is going to follow us” and “we will be the leaders” towards a much brighter future. The world has proven to be more complicated than that.
I think the discussion today is the green transition, yes, but at a pace and in a way which does not destroy our competitiveness and does not hurt those who are the less privileged. You’re absolutely right. This is exactly the rebalancing that needs to take place, especially when it comes to regulation. Many of these sustainability directives are just way too onerous, not just for small companies, but also for larger companies, and they need to be reassessed. Ursula von der Leyen has committed to an omnibus legislation that will address and try to cut unnecessary regulation by 25%.
Having said that, when we talk about the green transition, the key driver is energy. The truth is that Europe has been a leader in clean energy, not necessarily the leader I expected in clean tech, because we’ve been overtaken by others, especially the Chinese. But again, when we talk about green energy, wind and solar, the end result should be lower electricity bills. The end customer needs to see that there is a clear benefit of this.
This is not happening yet for many reasons, but one of the reasons it’s not happening is because our electricity market in Europe is completely fragmented, if not broken.
Normally, you would want to see electricity flowing across Europe and the cheapest electricity being sold to those who actually need it. The reason why this is not happening is because we don’t really have a single European electricity market and because we have huge problems with our grids. This is also highlighted by Mario Draghi. This is another European public good that will benefit all of us. But no one is doing the planning looking at Europe as a whole. We’re looking maybe at our neighbours, but no one is looking at the big picture, what exactly would benefit Europe as a whole. This is another big challenge that we will face.
My last point regarding the green transition is, let us not forget adaptation. We have put a lot of money into mitigation. If you look at “NextGenerationEU”, for example, it has launched new housing retrofitting programmes or changing your heating systems. This is your typical small-scale public-private partnership. An incentive, a financial incentive by Europe to add to your own spending in order to upgrade your home and make it more energy-efficient.
But adaptation is right now the problem that we don’t really talk about.
But climate change is already here. You saw what happened in California. We have to spend more on protection. We have to rethink the way we build, we design our cities.
Of course, we also need to be aware of the fact that there are risks today which may simply be uninsurable. This is something which happened in the US. In Europe, usually, it’s the government that is the insurer of last resort, not even the insurer of last resort, that will step in and pay. But for how long and for what types of disasters? Because we know that the trends in CO₂ emissions are not going to change from one moment to the next.
If you ask me, am I optimistic that in 20, 30 years this problem would have been solved? Yes, because there is so much private money directed towards clean tech, that I’m sure that there are solutions out there which we don’t yet know, but they will be discovered. The problem is what will happen between now and 2040 or 2050 when the solutions will be clear. That’s also why we need to be technologically neutral. It’s a big mistake right now to say, ‘“this is wrong -I mean-, this technology is good, this technology is bad.”
You know, I’m very frustrated by the fact that sometimes, even in the European Union, we treat gas as something which is horrible. Yes, but we got off coal, which is much worse than gas. But we all know that we will need gas for the next 30 to 40, maybe 50 years. If we need gas for the next 30 to 40 years, some investments in gas need to take place. We, for example, took the decision to bring in two US majors to look for gas reserves because we don’t want to be dependent on countries that, for example, like Russia, that can cause us big geopolitical headaches, and it costs us a fortune to import the gas.
I would encourage more pragmatism and a better understanding of what really is happening and not to set very strict rules. Just let countries pick their own path, their own technologies, look at the end result rather than being very prescriptive in terms of the European regulations, in terms of exactly what it is we have to do.
