Prime Minister Kyriakos Mitsotakis participated in a conversation with John Micklethwait, editor-in-chief of Bloomberg, in the context of the Bloomberg New Economy Forum in Singapore. The entire discussion follows:
John Micklethwait: Prime Minister, thank you for talking to me, yet again, this time a different continent.
Kyriakos Mitsotakis: Thank you, John. Thanks for having me.
John Micklethwait: The Greek economy has done extremely well compared with other European economies. You’ve got a debt upgrading last week, which is something of an exception compared with certain other larger European economies which seem to be heading in the opposite direction. A lot of investors here might be very impressed by Greece but worried about Europe. How would you reassure them?
Kyriakos Mitsotakis: Well, first of all, I think it is important to point out that Greece has staged over the past years what I consider to be a pretty remarkable comeback. If you look at our public finances now, they’re incredibly solid. Greece is producing a sustainable primary surplus. Our debt is coming down as a percentage of GDP at the fastest pace of any OECD country. Our growth rate is significantly higher than that of the Eurozone, and we constantly keep attracting significant amounts of foreign direct investment. I think we have proven that the Greek crisis belongs to the past.
I would say that Greece is also indicative of a broader trend where Southern European countries are doing better than the traditional powerhouses of Europe. Of course, I think this is also a promising story for Europe as a whole, because in Greece we’ve demonstrated that from a political point of view, the centre can actually hold, that a competent, credible government, first of all can win a re-election and can deliver reforms that address what I consider to be the primary problem in the European economy, which is a lack of competitiveness. Our story, I think, is helpful also in the broader European context to address some of the challenges that the continent is facing.
John Micklethwait: It is quite a change, though, because France and Germany at one time must have been a little dismissive of Greece. Do you feel the same way about them now?
Kyriakos Mitsotakis: Well, I certainly don’t, because at the end of the day, let me take a cue from what the President of Singapore said yesterday in our private dinner looking back at what Morgenthau said after the end of the Second World War, ‘prosperity is indivisible’. And that is also true for Europe. If Germany and France don’t do well, this will inevitably also impact the Greek economy. We have every interest in ensuring that these countries also address their structural issues.
Of course, some of the solutions that we need to offer have to be European. But at the end of the day, the difficult reforms, John, are the responsibility of the national capitals. If there are political problems in European countries, these cannot be resolved in Brussels. What we have achieved is, to a certain extent, a result of the fact that we have a stable government. We’ve managed to win two elections. We have an absolute majority in parliament. We’re not engaged in complicated coalition discussions, which means that we can move very fast in implementing our programme.
John Micklethwait: That’s one of the few doubts about Greece, the fact that you look at the polls at the moment, you are on course at the moment to still come ahead in the next election, but perhaps as part of a coalition government. When investors look at Greece, they trust you. They’re not quite sure about the people you might have to end up in a coalition with.
Kyriakos Mitsotakis: Well, first of all, our elections are not till 2027. We’re still more than 15 points ahead in the polls compared to the score of the second party. I would point out that we had exactly the same discussion before the 2023 election. At the time, people were still doubting our ability to win with an absolute majority, and we succeeded in achieving exactly that goal.
I’m quite optimistic about the performance of the Greek economy over the next 18 months. The number one problem that all European governments are currently facing is the cost of living crisis. But exactly because our performance has been good, we have the ability to actually deliver on our commitment to cut taxes for the middle class. We will have a new budget that’s going to be voted in a few weeks from now that’s going to deliver significant tax cuts for families with children and for young people. I do expect that these tax cuts will trickle down the real economy and will help us address the cost of the living crisis.
So unlike other governments which are currently forced to take austerity decisions, our fiscal performance allows us to support the middle class and help people with the cost of living crisis.
John Micklethwait: Do you think that people who are struggling in the middle, a bit like Keir Starmer or Emmanuel Macron, the key is to sort out the fiscal position and everything else begins to fall into line?
Kyriakos Mitsotakis: Yes, and of course, one should not forget that in Greece, as a result of the fiscal crisis, we had to implement very difficult, very painful reforms, especially with regard to our pension system. Our retirement age is already at 67…
John Micklethwait: Slightly higher than France.
Kyriakos Mitsotakis: When I look at what is taking place in other countries, I’m surprised by the fact that these countries have not been able to address these underlying challenges. In the case of Greece, there was a big bang, which was essentially the country going bankrupt. There was then a political big bang because we were the first country to actually vote into power the populists, back in 2015, but that didn’t end very well. In a sense, we may be ahead of the curve also when it comes to the political developments.
John Micklethwait: Do you think that’s one of the things that countries need to go through to go back to reality? You need to have a dose of populism?
Kyriakos Mitsotakis: I would certainly…
John Micklethwait: You wouldn’t wish it on them?
Kyriakos Mitsotakis: I would not wish it on anyone. It was ten years ago that Greece was on the brink of being kicked out of the eurozone. Faced with what would have been not just a political catastrophe, but a generational tragedy. It didn’t happen. The Greek people proved to be extremely resilient. But the truth is that in democracies, people don’t notice the gradual erosion.
This is exactly what Mario Draghi pointed out in this report. You look at the competitiveness figures today, compared to over 20 years ago, and we notice gradually we’re losing ground to the US and to China. We should not wish for a big crisis in Europe to address these challenges. Covid was a big crisis. The end result was that we decided to borrow €750 billion euros at the European level to support our economies.
Now we’re faced with a big crisis. We have a security crisis in Ukraine, but we have an underlying competitiveness crisis that needs to be addressed very boldly. So far, we have not moved at the speed that I would like in terms of implementing some of the suggestions of Draghi made in his report.
John Micklethwait: Just to push you on that, if you look at the history of Europe, it’s tended to lurch forward in terms of the single market, in terms of other things when there is a crisis. But Europe has come through these things like Brexit, a large member leaving, without much really changing in the middle.
Kyriakos Mitsotakis: First of all, when you look at defence spending in Europe now, the Ukraine war was a rude awakening. We’re spending more on defence, but we also need to do it in a more coordinated manner. We need to learn from the Ukrainian lesson to support our ecosystem of defence startups because the war theatre has changed dramatically. We’ve taken some important decisions in that direction. But at the end of the day, the battle is going to be won or lost on the competitiveness front.
When you look at issues such as deregulation, simplifying the business environment, when you look at topics such as, which are very relevant to this audience, Savings and Investment Union, how we’re going to create a unified capital market in Europe, securitization, these are all files which are currently being discussed. We need to find a working majority at the level of the European Parliament, and we need to move from words to action.
I think the next year is going to be critical in terms of delivering on some of these reforms. Of course, the elephant in the room remains the next European budget, which needs to be agreed by the end of next year. It’s going to be a complicated discussion, but I hope that I can convince some of my colleagues who are traditionally in the ‘frugal camp’ that Europe as a whole does better and that their economies will also benefit if we align our lofty goals with our financial needs, and this means a bigger and more impactful European budget.
John Micklethwait: One way in which you have been slightly more impeccably European than some other countries is allowing foreigners to come in and buy Greek assets. The latest is Euronext, which I think earlier this week acquired the Athens Stock Exchange.
One industry that lots of people are looking at is energy. People look at things like your grid, IPTO, your big electricity company. Would you be prepared to let foreigners come in and get those?
Kyriakos Mitsotakis: Well, first of all, let me point out that when it comes to the financial sector, Greece has been open to foreign banks, acquiring stakes in Greek banks. We’re happy that we can be part of a broader European story and we feel that we can benefit from that. First of all, for a country that is still regaining its credibility, the fact that you have big financial investors looking at Greek banks is in itself a positive development. The fact that our stock exchange, which has been one of the best performing stock markets in the world, has been purchased by Euronext, that also plays into this broader theme of capital markets union.
When it comes to energy, IPTO will at some point probably require a share of capital increase. We still feel that this is an asset that should be controlled by the state. But when it comes to minority shareholders we are, of course, open to attract more capital from foreign investors.
John Micklethwait: Υou let people in to add capital but not control it.
Kyriakos Mitsotakis: Yes, the same is also true for the Public Power Corporation. When we came into power in 2019, it was on the verge of bankruptcy. Now, I think its stock has increased more than tenfold. It’s a regional player, but the Greek state still retains a blocking minority, and we intend to keep it that way.
But we want foreign capital. We want foreign expertise also for our infrastructure companies. I think we’ve proven that we can find a way to work with foreign investors while retaining important stakes in companies we consider to be critical for our national security.
John Micklethwait: The awkward one for you is the Port of Piraeus. We have this big struggle between China and America. You let the Chinese come into Piraeus and get that. Now, do you worry about the Trump administration saying, “We want you to push the Chinese out”?
Kyriakos Mitsotakis: For us, the deals that were done by previous governments need to be respected. We made that very clear.
John Micklethwait: That’s not something that Trump generally tends to think is a good idea.
Kyriakos Mitsotakis: But on the other hand, look at what happened in Greece over the past 15 days. Greece is becoming an energy hub for the Balkans, Central Europe, and Ukraine. A few years ago, we were really not on the energy map of Europe. Now we’re becoming an entry point for American LNG into the European market. We are leveraging our geographic position to strengthen our geopolitical stance. So, I think we can find a way to absolutely work with the Americans, and we want to do that. We’ve already signed deals to prove that we can construct win-win arrangements without in the process questioning investments that were made in the past and whose structure needs to be respected.
John Micklethwait: That’s a subtle way of saying to Trump, “Look, we’re doing all these deals with you on LNG, leave Piraeus out of it”.
Kyriakos Mitsotakis: There are also other ports in Greece that can be developed. There’s a way of, again, respecting what has already happened while inviting US capital and US interests to invest in Greece, and I think so far we’ve been successful in doing that.
John Micklethwait: A more problematic one. You just had President Zelenskyy visiting you in Athens. This morning, we’ve seen these details coming out of a US backed peace plan that seems to give Russia a lot of what it wants. How should we look at that? Is that just a surrender or is it just accepting the inevitable?
Kyriakos Mitsotakis: Well, I just looked at that report, so nothing has been officially communicated to us, us meaning European leaders. I think a lot of the points that I saw are quite problematic in terms of Ukraine giving up territory it still controls.
Of course, at the end of the day, we made it very clear that no deal can be done without Ukraine. Of course, the Europeans need to be part of any discussion regarding the future security arrangements of Europe.
I think we’ve also made it quite clear that at the end of the day, the most important security guarantee for Ukraine is a very strong Ukrainian army and that the Ukrainian armed forces need to take responsibility, in terms of ensuring that Ukraine, but of course, to a certain extent also Europe is safe.
John Micklethwait: That’s one of the problems, though, with what is being put forward that the Ukrainian army would be limited…
Kyriakos Mitsotakis: Yeah, so I see a lot of problematic points in this proposal. Again, we’re not seeing anything officially yet. So, I’m not going to make any other comments until something has been communicated to us officially.
John Micklethwait: Do you get the impression there’s a squeeze going on? These things arriving exactly the same time… there’s a corruption…
Kyriakos Mitsotakis: At the same time, we need to be aware that we need to continue to support Ukraine. We’ve actually just signed a deal with Ukraine to help them with their gas supplies. They’re going to be suffering during the winter. We should not forget that behind the negotiations, there’s a very harsh reality for the Ukrainian people. They’re fighting with great courage and to the extent that we can help them with their energy and their natural gas needs during the winter, we’re very willing to do that.
John Micklethwait: You’re really one of those people who supported the idea and you championed it, that the West should use the Russian frozen state assets sitting in Belgium at the moment. It’s still stuck there, because the Belgians are reluctant to let it go. That money could be used to rebuild Ukraine, help Ukraine if the war continues.
Kyriakos Mitsotakis: We’ll discuss this at the next European Council. Certainly, it’s an option to use the Russian frozen assets. There are still complicated legal issues that have to be resolved in order for all of us to feel comfortable to agree to such a solution.
We also need to be aware of the fact that we need to take into account the fiscal consequences of such a decision for our debt or for our deficit calculations. But certainly, we understand that as Europeans, we need to find a way to provide financial support to Ukraine in order to ensure that it can keep on as a functioning state.
John Micklethwait: Do you worry, in the Ukrainian situation, as you know, you’re doing well, Italy, Spain are doing quite well, but the core of Europe is so focused on its internal problems that it won’t rally to this cause.
Kyriakos Mitsotakis: Well, again, let me point out how important it is for every single European capital to sort out its own sort of domestic challenges. When you look at, for example, Germany and the reforms that the new Chancellor wants to put in place, I think they’re clearly moving in the right direction now. But at the end of the day, it’s up to the countries to deliver those reforms that will ensure that Europe as a whole is going at a faster pace than what it currently does.
John Micklethwait: As you know, and as we’ve just seen with perhaps Russia, President Trump can develop a strong affection for autocratic leaders. One target of his affections currently is President Erdoğan of Turkey. The point is, Trump is being very friendly towards Erdoğan. Do you worry about consequences for Greece?
Kyriakos Mitsotakis: Well, first of all, let me point out that we have a very strong relationship with the United States. It’s a strategic partnership. We’ve demonstrated that we can work very effectively with the Trump administration, when we did the energy deals that I talked about a few minutes ago, and that I don’t view our relationship with the US in the context of a “triangular” relationship with Turkey. I also want to point out that this strategic partnership between Greece and the United States has a lot of cross-party support in the US.
I think at the end of the day, not much is going to change.
My goal vis-à-vis Turkey is to ensure that we can find a way to discuss what we consider to be the only major difference we have with Turkey: the delimitation of maritime zones in the Aegean and in the Eastern Med without raising the thermometer of tension between our two countries. Over the past years, we’ve been able to do that. But at the same time, my responsibility is also to ensure that I strengthen our armed forces. We’ve invested significantly in upgrading our defence capabilities and that Greece always retains credible deterrence vis-à-vis any country that could in any way, shape or form threaten our national interests.
John Micklethwait: Very tactfully put. In our last conversation we had, you hinted that there was some movement among EU members about this issue of issuing debt to pay for defence spending, which you talked about quite a lot during this talk again. Do you think there’s going to be a change in that? Has it jumped forward since then?
Kyriakos Mitsotakis: I’m not sure we’ve made much progress on that topic. We have the SAFE instrument, but the SAFE instrument is essentially a loan facility. For those countries that are in debt or that need to balance their books, it doesn’t really help us much. I think the focus of the discussion is going to move to the next budget, which could also contain headlines related to defence.
I think our goal is to ensure that the budget remains ambitious enough to address the profound challenges that Europe is facing while retaining a focus on the core policies which have always sort of defined European assistance to poorer countries, and I’m referring to Cohesion and the Common Agricultural Policy. These priorities, which are also enshrined in the treaties of the European Union, need to be protected within the context of the discussion regarding the next budget.
John Micklethwait: Look at the way Europe is treated here. I mean you’re getting a good reception. But in many parts, in this part of Asia, Europe is often seen as something that’s lagging behind and not catching up. How do you think Europe changes that?
Kyriakos Mitsotakis: By implementing the suggestions in the Draghi report. We have the blueprint. There’s a general agreement at the level of the European Council that we need to move in that direction. We need to explain also to our Asian audience that sometimes the European institutional arrangement is complicated. It does take time for decisions to be implemented. We need to go through the Parliament, negotiations between the Commission, the Council, and the European Parliament.
But there is, I think, a general sense of urgency within the members of the European Council to deliver on commitments that we have made, especially when it comes to deregulation. Europe is a complex continent to do business, and this needs to change.
When it comes to energy, we need to lower our energy prices and we need to take important initiatives in that direction and we need to make progress on the Savings and Investment Union in order to ensure that European savings at least stay in Europe rather than be directed towards the United States or towards Asia.
John Micklethwait: The general theme in this kind of conference, and we heard it from various Singaporean officials and from other kind of Asian politicians, is the idea that maybe there is room in the current world for a ‘coalition of the willing’. On the one hand, you have America erecting barriers, you have China on the other side. But there’s this group of countries in between who could still gain by deepening trade between them. Do you agree with this thesis?
Kyriakos Mitsotakis: I absolutely agree with this thesis. I had a very constructive meeting yesterday with the Prime Minister of Singapore. Look at, for example, how our agendas are aligned. We’re both two countries which are open economies, very much dependent on free trade, who believe in preserving a rules-based international order and we’re not the only ones.
We look at Europe and the partnerships it can forge with the ASEAN countries or with emerging superpowers such as India. I do see room for closer cooperation between Europe and the countries that still believe that it is in our common interest to maintain parts of the sort of the old status quo, in terms of viewing the world as a more sort of integrated environment rather than breaking it up into regional blocks.
John Micklethwait: Who else, very quickly at the end, do you see as leaders in that? People like Mark Carney, and people like Singapore?
Kyriakos Mitsotakis: I think certainly Singapore has an important role to play. I think eventually we would want to see stronger ties between Europe and the ASEAN countries. Certainly Australia, certainly Canada. I would also include India in this discussion. I’m a big believer in strong relationships between Europe and India.
We happen to be the closest geographic continental country, to both India and the Far East. So if we can play a role as a bridge between Europe and India and the Far East and the ASEAN countries, we will be happy to do that.
John Micklethwait: Well, last thing. Do you think it’s sad, though, in some ways that that is a world being created either without America or because of what America is doing.
Kyriakos Mitsotakis: Well, at the end of the day, I’m not one who believes that the fundamental tenets of the transatlantic relationship and the role of the United States as a leader of a world order that would serve the common global good, I don’t think that this discussion is over. I still think that it is also in the long term interest of the United States to preserve tenants of this arrangement. I understand that this at present is a challenging discussion, but as someone who had been educated in the United States and who profoundly believes in the value of the transatlantic relationship, I will continue to work towards that direction, to the best of my ability.
John Micklethwait: A very hopeful note to end on. Kyriakos Mitsotakis, thank you very much.
Kyriakos Mitsotakis: Thank you. Thanks for having me.
On the sidelines of the New Economy Forum, the Prime Minister attended a dinner hosted by Michael Bloomberg.
