Prime Minister Kyriakos Mitsotakis was interviewed by CNBC’s “Europe Early Edition” and journalist Silvia Amaro. Here are the excerpts that were aired:
Asked about Greece’s recovery after the financial crisis and the transformation of the Greek economy, the Prime Minister noted:
Kyriakos Mitsotakis: Let’s explain that this is not a 10-year period which we should see as a block because four years, between 2015 and 2019, we still suffered from the consequences of this catastrophic negotiation by the previous radical leftist government. And at the time, until 2019, we had the lowest growth rate in Europe. These were good times for the global economy. Since 2019, I think at the core of our economic success was the fact that we reestablished confidence in the fundamentals of the Greek economy.
None of this would have happened had we not taken difficult decisions to put our fiscal house in order. But at the same time, we were bold enough to implement pro-growth measures, significant structural reforms that improve the competitiveness of the Greek economy. I think we pushed an attractive story to foreign investors, and foreign investment keeps coming in the Greek economy.
Of course, yes, I was one who negotiated on behalf of Greece, the NextGenerationEU programme. Greece is set to receive €36 billion on top of what it will receive from the structural funds and the agricultural funds until 2026.
But this was not just a story of European support. We took bold decisions and we managed to win a second election after demonstrating that you can actually deliver results through sound, moderate pro-growth policies.
We live in an era where populists challenge the competence of the more traditional parties. And in Greece we defied that story because in 2023, we actually increased our share of the vote twice in a double election by essentially convincing the Greek people that we can deliver on our electoral promises and we can offer them a better future.
This is going to be, again, the challenge in 2027. Are we going to be consistent? Can we rebuild trust? Can we focus on what people care about? The number one issue still in Greece is inflation and disposable income. We know we need to improve people’s lives. We know we need to further decrease taxes, increase wages, create more jobs. But we have to do it in a sustainable way. We cannot do it by endangering the fundamentals of what we have achieved.
Silvia Amaro: Very clear. I heard from your finance minister not too long ago, he gave an interview a couple of days ago, actually suggesting that Greece is in a position to repay some of the loans from the debt crisis 10 years ahead of the plan. Any colour you can give us on that? What is the plan?
Kyriakos Mitsotakis: Well, I will leave that to the experts. But the idea, again, was always to be able to pleasantly surprise the markets. If we can repay loans with a high interest rate earlier, we will do that. It is interesting that in this environment of global fiscal turbulence, where bond markets are jittery, that the performance of the Greek debt has been remarkably stable. This, I think, points to the fact that what we have achieved here is appreciated by the markets and that the markets at the end of the day place their confidence in our ability to consistently deliver primary surpluses and to consistently bring down our debt as a percentage of GDP.
So these are non-negotiable foundations upon which we built our entire policy initiatives. In that sense, we have an excellent public debt management authority. I have complete trust in them. If they can take initiatives that improve the debt profile of our debt and replace debt with a higher interest rate, with debt with a lower interest rate, of course, we will do that.
Silvia Amaro: Just makes financial sense. I would like to go back to the outlook here for the support from the European Union. The COVID funds are just one of the many elements of the recent recovery, but I’m wondering what is going to happen beyond 2026 when these funds no longer exist. What is your plan?
Kyriakos Mitsotakis: I think that’s an important point. First of all, we need to make sure that we make good use of the COVID funds. We are top performers in terms of absorbing the COVID funds. I need to point out to your viewers that there is significant conditionality attached to those funds. So this is not just an exercise in absorbing funds. There are many structural reforms attached to these funds, which we gladly put in place, not because they were imposed upon us by a “troika”, as was the case 10 years ago, but because we fundamentally believe that these reforms are necessary in order to ensure that we will keep growing in the long term when we no longer will have the COVID funds at our disposal.
I do believe that we’re now on a track to establish a long-term growth rate that is consistently higher than the Eurozone average, exactly because we are changing the fabric of the economy itself. We’re attracting more foreign direct investment. We’re focusing on productivity, on labour market participation, on ensuring that this economy is focused on innovation and exports, which was not the case in the past.
Silvia Amaro: The fabric of the economy is still very much focused on tourism and construction.
Kyriakos Mitsotakis: Less so than in the past. I need to highlight that. Of course, tourism is important, but even the tourism industry is changing. Focused more on higher-end tourism. I think you see that in Athens. Extending the season, opening up new destinations, and making sure that we grow the industry in a sustainable manner. These are non-negotiable preconditions for us.
But if you look at other sectors that are growing very fast: renewable energy. We’re leaders in Europe. We produce more than 50% of our energy from wind and sun. Logistics and infrastructure, just look at our geographic position. I’m a great believer in the potential of the IMEC corridor, connecting India to the Middle East, to Europe. Greece is a natural entry point, the first continental country on the IMEC road.
If you look at, for example, sustainable agriculture, we have excellent products. We need to improve the productivity of our agricultural sector. Services, healthcare, education, we’re liberalising education and tech. I really want to focus on tech because what you have in Greece is indeed very interesting. You have a booming ecosystem of tech startups that is doing remarkably well. We have our first unicorns because we have great talent.
Great talent, universities that produce very well-educated public universities that produce very well-educated graduates, but also a Greek diaspora, which is a tremendous asset. Some of them are looking to return to Greece and to work and live in Greece. The Greek economy is not a one-trick pony. For example, if you look at the recent important foreign direct investments, tech, data centres, we’re one of the protagonists, renewable energy, health care. Tourism is on track, but this is not just about tourism and construction. This is a broader and much more diversified economy than many people think.
Silvia Amaro: On the point of inflation, you’re suggesting that you actually believe that the worst is over. But is the worst really over when you might be facing new tariffs from the United States and the global economic picture is very uncertain?
Kyriakos Mitsotakis: You’re right to point that out. At the end of the day, inflation was a global problem. It was not just a Greek problem. We still have an issue with inflation in services that we need to address. Of course, we also need more competition, and we’re looking into this. Yes, there could always be systemic shocks.
I’m cautiously optimistic that the European Union will be able to strike a trade deal with the United States that will avoid the excesses of a completely unnecessary and detrimental to all trade war. I think it’s been clear by now, also by the reaction of the financial markets, that they understand that trade wars are essentially bad for everyone. I have confidence in our negotiating team, the European Commission negotiating team.
I think there is a landing zone. I think mutual compromises can be made on both sides. At the end of the day, I think transatlantic trade is too big and too important to blow it up in a trade war that will have no winners. I see some signs also from the US administration that they’re willing to engage and have a serious discussion about how we can scale down the initial announcements and come to an arrangement that is going to be mutually beneficial.
Silvia Amaro: But do you think that the arrangement is going to come within this 90-day pause?
Kyriakos Mitsotakis: I would hope so. And again, the 90-day pause is what we have today. But if we need more time, maybe we need to take more time. But at the end of the day, I think we also understand that there are some moves that we need to make.
Silvia Amaro: Like what?
Kyriakos Mitsotakis: In the past, before this started, we had 10% tariffs on US cars coming into Europe and the US had 2.5% tariff on European cars coming into the US. It doesn’t make much sense if you want to have a reciprocal and honest relationship. So there are things we can do. There are things which we cannot and will not do, for example, I don’t expect Europe to change its rules when it comes to digital services. That’s not going to happen. But there are other things, maybe also some non-trade barriers we can possibly look at in terms of reasonable access for some US products into the European market. So I think there is a portfolio of initiatives, and I think there’s a landing zone.
Silvia Amaro: Where is that landing zone? Because if we take the deal with the UK and the deal with China thus far, we seem to have this bracket, 10% as the minimum and the 30% as the maximum. Where do you think the landing zone could be for the EU?
Kyriakos Mitsotakis: I would hope it’s close to the minimum.
Silvia Amaro: Is that 10 or is it below 10?
Kyriakos Mitsotakis: I don’t know. Again, because we don’t have any competence, we meaning national leaders. Of course, we express our opinions. But I’m optimistic that we could do even something better. I don’t necessarily consider 10% to be the baseline upon which we need to build upon. 10% is still not insignificant at the end of the day. Let’s see what will happen. But I think there is in terms of, again, I’m not part of the negotiations, but if I look at the public statements, I think there is more appetite to do a deal on the US side.
Asked about European defence, NATO and the defence spending of the members of the Alliance, the Prime Minister replied:
We spend more than 3% for very specific reasons. We were also advocating very much for a change in European rules to encourage us to be able to spend more. We’ve seen movement in that direction in terms of the general, the country-specific national escape clause being applied. But of course, this still adds to our debt. I mean, there is no free lunch. That is why I think it’s also important to keep the discussion for some European facility to support defence spending, financed through European…
Silvia Amaro: Like bonds?
Kyriakos Mitsotakis: Yeah. Like, let’s put it this way, a “NextGeneration” for defence, smaller in scale. I know there are countries that object to it, but I also know that there are projects of common interest that could be financed through a European facility, because at the end of the day, our fiscal space is not unlimited, and we are, again, top performers. Let’s see how this discussion is going to shape up. Let’s see what this split between 3 and 3.5%, what are we going to count in the 1.5% bucket?
There are countries that are still not spending 2% and that are in a difficult fiscal position. So we need to be very much aware of the fiscal positions. But again, we approach this debate from the perspective of a country that has done its job, viv a vis Nato, for quite some time. We have contributed to collective security because we’ve been spending systematically more than 2%. There was never a peace dividend for Greece at a time when other countries were spending 1%. Because of our particular circumstances we always spent more than 2%.
Silvia Amaro: But do you understand what it’s like to have a tight fiscal position? Do you think you can make the argument to Donald Trump, to the President of the United States, that countries such as Portugal, such as Italy, might not be able to agree to 5% of defence?
Kyriakos Mitsotakis: I think 5%, frankly, is very, very difficult. Certainly, it could be a long-term target if we also include other spending, broader spending, because again, depending on how we define it, critical infrastructure could also be defense-related. It really depends on how we do the accounting. But if we’re talking about hard defence spending, I think 3.5% is probably the ceiling of what could be accepted.
But we also realised that we have to spend more. Donald Trump was right when in 2017, he said: “You’re not doing your fair share”, because we didn’t. So we understand that there is no free lunch, and we cannot free ride. We want the United States to be part of our NATO security arrangement, but we also have to do our own part. So Donald Trump was right in that respect.
