Gideon Rachman: On the crisis in Iran, I have the feeling that people are beginning to think that the economic consequences are about to hit, that prices are going to surge unless we fix it. So I’m just wondering how worried you are about the economics of it?
Kyriakos Mitsotakis: I think we should all be quite worried if this crisis continues for the foreseeable future there will be significant implications in terms of persistently higher inflation, lower growth, and it will force us all to sort of readjust our economic plans. It’s an issue I had raised at the level of the European Council, although I don’t necessarily want to predict the worst possible outcome. I think it is our obligation as Europe to prepare for a negative eventuality. Of course…
Gideon Rachman: Are you seeing it yet though?
Kyriakos Mitsotakis: We’re seeing it in terms of much higher inflation than we thought we would be dealing with. And of course this is important because for all European governments, the cost of living should be the number one priority. When it comes to Greece, we are using whatever fiscal space we have. We have delivered very impressive primary surplus numbers for 2025, so we have some additional fiscal space. We’re using this fiscal space for targeted and temporary relief measures, but of course we know that this is not going to be enough.
Gideon Rachman: And do you get a sense of when shortages are going to hit, whether it’s food or fertiliser or oil?
Kyriakos Mitsotakis: For the moment, we see no shortages when it comes to oil products, which is important to us. For example, when you look at jet fuel, Greece is a big exporter of jet fuel to the rest of Europe. So I don’t anticipate any physical shortages. I think the problem is going to be the level of prices.
Gideon Rachman: Right
Kyriakos Mitsotakis: And of course, the persistently high inflation, which already feeds into an affordability crisis we had to deal with even before this war started.
Gideon Rachman: And of course, the longer it goes on, the worse it gets. And I gather you were this weekend at a meeting in the Peloponnese with people from Saudi Arabia, Bahrain, I mean, senior ministers and some of the Europeans. Did you get any sense out of how this is going to be resolved?
Kyriakos Mitsotakis: I think it is difficult right now to make any specific predictions. I think we all understand that the medium to long-term implications for the global economy are going to be quite severe if this war continues. But of course, we are not part of the negotiations. We have always, as Greece, advocated for a negotiated settlement. We’re particularly concerned – we were very concerned about the question of freedom of navigation even before this war started. This was a big priority for Greece historically as a leading shipping…
Gideon Rachman: You’re like 25% of the world shipping.
Kyriakos Mitsotakis: We are 25% of the global shipping industry, and that’s the reason why we’re also present in the Red Sea. Operation “ASPIDES”, which is a European-led operation to facilitate the freedom of navigation in the Red Sea, is led by Greece. Unfortunately, very few European countries decided to participate in this operation. So when we make the case at the European Council that Europe needs to be more active in the Gulf at a time when it is imperative for Europe to build a strategic partnership with the Gulf countries, we also need to…
Gideon Rachman: But what does the operation do? For those who are not aware of it.
Kyriakos Mitsotakis: It’s an operation that escorts commercial ships whenever the need is required.
Gideon Rachman: But not through Hormuz yet?
Kyriakos Mitsotakis: Not through Hormuz. This was an operation in the Red Sea and around the Horn of Africa. It was primarily directed towards defending commercial ships against Houthi attacks. And our ships, for example, have engaged and brought down, using our Greek-made anti-drone systems, we’ve brought down a Houthi drone. So it is a successful operation…
Gideon Rachman: And is it a potential model for…
Kyriakos Mitsotakis: It could be an operational model. And one of the things that could be discussed is the extension and expansion of the “ASPIDES” mandate to also include a different geographic area. But in order for this to be meaningful, first of all, we need a negotiated settlement. I think it is not realistic to expect that anyone is going to send ships to a geographic area that is still in a quasi-state of military conflict.
So we need, first of all, a negotiated settlement. And after that, should the need arise for a peacekeeping operation, we certainly as Greece would be willing to participate. We have the template, we’ve done it already, and I would encourage other European countries to also seriously consider deploying naval assets to the region.
Gideon Rachman: So, you said that freedom of navigation is an incredibly important principle to Greece. The Iranians have made it clear they want to charge a toll to go through the Strait of Hormuz, and some energy bosses I’ve spoken to have said, “maybe we should just pay, you know, it would be like $1 on a barrel of oil, everything would get flowing again”. What do you think?
Kyriakos Mitsotakis: Absolutely no. And I think categorically no. We would be setting an extremely dangerous precedent. I think this is something which would be completely unacceptable, not just to Greece, but to almost any other country that benefits from free trade. I mean, it’s an open blackmail. We cannot accept it. Europe cannot accept it.
Gideon Rachman: Right. And you think it would set a precedent? I mean, obviously Hormuz is incredibly important on its own, but it would set a precedent for the breakdown of freedom of navigation around the world.
Kyriakos Mitsotakis: This, as a country, again, that is at the forefront of the global shipping industry, that believes in free trade. We should not forget that 90% of global trade takes place through ships. So any additional cost to shipping, or even the possibility that the freedom of navigation can be used as a geopolitical lever, would essentially blow up what we’ve achieved over many, many decades of ensuring that freedom of navigation is a concept that should never be challenged.
Gideon Rachman: And do you see – I mean, I mentioned energy bosses, who’ve kind of floated that idea – do you see any governments tempted by it?
Kyriakos Mitsotakis: No. Frankly, I’ve seen no government interested in entertaining this idea, including the US, which has made it very clear that we need to return to the previous terms.
Gideon Rachman: Although President Trump at some point did sort of say, “well, maybe we could split the revenue”, although he seems to have gone off that.
Kyriakos Mitsotakis: No, I think every statement I’ve seen recently from the President makes it very clear that no toll or no surcharge, no payment can be accepted when it comes to the Strait of Hormuz.
Gideon Rachman: But if that’s the case, then how do you force the Iranians to open it?
Kyriakos Mitsotakis: Well, that’s part of the overall negotiation that is taking place between the US and Iran. There are two fundamental principles which in my mind are non-negotiable: Iran can never have a nuclear weapon, and we need to return to the status quo ante when it comes to the Strait of Hormuz. But again, I’m not the one participating in the negotiations, and I would imagine that those who are talking to the Iranians would know more.
Gideon Rachman: Yeah, I mean, there have been people, say, in my own country, politicians who’ve been pretty openly condemnatory of the decision to go to war in the first place, and, you know, saying that it was a mistake. I mean, maybe it’s too late to talk about that, but what’s your feeling? I mean, that things were more or less working before, at least in Hormuz.
Kyriakos Mitsotakis: Well, in retrospect one could draw many conclusions, but I don’t think it is my job right now to comment on what should have happened three months ago. We have a situation we are forced to deal with, and I just prefer to look into the future than dwell over decisions that were taken in the past, which we frankly can no longer reverse.
Gideon Rachman: Yeah. And can I ask you about Greece’s relationship with Israel? Because, you know, thinking back decades, I always sort of thought of Greece as on the more critical end with Israel. But these days you seem to have quite a close relationship. And yet at a time when Israel’s actions in Gaza are deeply controversial.
Kyriakos Mitsotakis: Well, first of all, we have a strategic partnership with Israel that goes back quite a few years, and it has been, I would say, a consistent foreign policy choice made also by previous governments, including some governments of the left. But because exactly we are strategic partners and we have a strong partnership, we also have the capability to speak our mind to our Israeli friends whenever we feel that they’re making mistakes. We were quite critical of what happened in Gaza. We were quite critical publicly of what was happening in Lebanon, and I do welcome the ceasefire and the direct discussions between the two countries. But this is a strategic partnership that has a lot of depth, and it has never…
Gideon Rachman: And what’s the basis of the strategic partnership? What’s the shared strategic interest?
Kyriakos Mitsotakis: A common interest in a stable Eastern Mediterranean, but also strong economic ties, strong defence ties, partnerships between our defence industry, lots of Israeli investment taking place in Greece, bringing together our tech ecosystems. So, this is a partnership that is not just limited to geopolitical priorities.
But at the same time, what I need to stress is that we have excellent relationships with all the other regional players. Greece stood by the Gulf partners in times of need. We honoured our strategic partnership with the United Arab Emirates. We have strong partnerships with Saudi Arabia, with Qatar. We were present in Lebanon supporting the Lebanese Armed Forces. We have very strong ties with Egypt. We’ve delimitated our maritime zones with Egypt and have been at the forefront of strengthening the relationship between the European Union and Egypt.
So, our relationship with Israel does not come at the expense of our strong partnership with the remaining countries of the region.
Gideon Rachman: And yet, you know, in the other end of the Mediterranean, you have Pedro Sánchez, who’s kind of majored on accusing Israel of genocide and leading, making that really a central issue for Europe. I mean, when you meet, say, Sánchez in the European Council, what’s the conversation like on those kinds of issues?
Kyriakos Mitsotakis: I mean, we agree to disagree. Sometimes it’s easier when you are on the other side of the Mediterranean and you don’t feel the heat as we do to maybe look at foreign policy through the lens of domestic politics. I mean, this happens, it can happen everywhere, but we respectfully disagree when it comes to Israel with Pedro Sánchez.
Gideon Rachman: One striking contrast between Spain and Greece is that Spain is right at the bottom of the NATO defence… I think they spend about 2%…
Kyriakos Mitsotakis: Much less.
Gideon Rachman: Much less. You have been right at the top for a long time. Is that essentially because of the historic threat from Turkey?
Kyriakos Mitsotakis: Greece has been meeting its NATO obligations even during the times of crisis, because we are in a challenging neighbourhood and because we always felt that we needed to invest more in our defence capabilities. And since I came to power seven years ago, one of my main commitments was to strengthen our deterrence posture.
We’re contributing to NATO. We’re contributing to the European Union by doing so, and I’m very happy when I look at the results of our overall investment. This is taking place without jeopardising our overall fiscal position, but it is a necessary price to pay when you are in a more complicated neighbourhood.
We have a very ambitious 12-year plan in terms of our defence spending. We are, of course, all drawing lessons from the conflicts that we’re currently observing in terms of strengthening our domestic tech ecosystem. I previously mentioned that we already have our own anti-drone capabilities which have been operationally tested in the Red Sea, and by doing so, we’re also contributing to NATO, but we’re also contributing to what I think should be an important priority for all Europeans, which is a concept of European strategic autonomy and how do we create a more sort of Europe-focused defence space.
Gideon Rachman: And why is European strategic autonomy necessary? Is that essentially because you buy into the idea that the US is – well, I mean, they’ve often said that they’re going to do less in Europe, that that’s now inevitable.
Kyriakos Mitsotakis: First of all, if we want to better engage with the Americans, we need to recognise that President Trump was right when several years ago, many years ago, he actually said that we’re not doing enough to take care of our own security and that we have essentially outsourced our security to the United States. He was right.
Now that we are doing much more, we can also talk to the United States from a position where we have also more diplomatic leverage.
At the same time, we should not forget that there are EU member states that are not members of NATO. Look at, for example, Cyprus. Cyprus was attacked by Hezbollah drones. Greece stood by Cyprus. We immediately sent two frigates and four F-16 planes. Five other European countries joined us. So essentially we demonstrated our commitment to defending an EU member state which happens not to be a member of NATO.
Gideon Rachman: So when you talk about European strategic autonomy, it doesn’t necessarily mean in your mind that that’s synonymous with the EU.
Kyriakos Mitsotakis: It certainly would have the EU at its foundation because we have an article in our treaties, Article 42, Paragraph 7, which is a mutual assistance clause. It is actually phrased in a much stronger language than Article 5. Yet in Europe…
Gideon Rachman: Article 5 of the NATO treaty.
Kyriakos Mitsotakis: Yes. Yet in Europe, Until recently, we never spoke about it. So I’m very encouraged by the fact that we are taking our first tentative steps to discuss how this Article could be made operationally relevant. It’s a very early…
Gideon Rachman: That would essentially mean turning the EU into, as well as a single market, a defensive alliance.
Kyriakos Mitsotakis: Well, that’s – isn’t it in our treaties? It is.
Gideon Rachman: But is it a defensive alliance that people would actually act upon? I mean, people are asking that question about NATO now. I remember being at the Munich Security Conference where people were talking about Article 42.7 because of all crises in US-EU relations, and one of the Americans said to me: “Oh, the EU always talk about it, they can never agree on what it means, it’s meaningless, it’s not going to amount to much.”
Kyriakos Mitsotakis: Well, maybe it’s time to agree on what it means. And I can tell you that what happened in Cyprus was essentially a de facto but not a de jure activation of that Article through a coalition of the willing. We had a number of European countries that offered their tangible support to Cyprus, and we should draw lessons from this example, and we should build upon it.
I’m not talking about replacing NATO or anything, but we need to understand that at some point having some rudimentary coordination capabilities when it comes to decisions that we should take at the level of the European Union is something which will be useful to our own concept of strategic autonomy and will also send a signal to the US that we take our defence seriously. So I think it’s a win-win proposition.
Gideon Rachman: Do you think there’s enough of a sort of common European view of what our security interests are for the Europeans to really act as a unit in defence? Because I mean, obviously Greece has its own particular concerns, but we were saying Spain is an outlier in some respects. Βut if you talk about Russia-Ukraine, the Poles, the Balts take it incredibly seriously. Further West, maybe a bit less.
Kyriakos Mitsotakis: We talk in Europe – this is euro language – 360-degree concept of security. What does this mean? We look at, for example, Russia and Ukraine, and I do understand the concerns of my Baltic friends, and I supported Ukraine, and I tried to put myself in their shoes. What does it mean to live close to a large aggressive neighbour?
I do expect them to also understand my concerns, to look at the Eastern Mediterranean, to look at the security challenges in our region. To look at Turkey, a country with whom we’re trying to build a functioning relationship, but Turkey in the past has spoken in a strongly revisionist language, to understand why migration and what’s happening in Libya could be a security concern for the entire European continent.
So it is important for all of us to understand that what happens at the external borders of Europe eventually impacts all of us. So taking a more holistic approach of the world and the challenges of Europe beyond the main challenge of Ukraine, I think is quite important.
And again, you asked me at the beginning about our relationship with the Gulf countries. I think this is an area Europe should invest significantly more in terms of strengthening our strategic ties, our economic ties, because at the end of the day, we have probably more in common than many people realise.
Gideon Rachman: Do you think the Europeans have been too passive in the Gulf? I mean, they’ve allowed themselves to almost be written out of the story. It’s a sort of, you know, okay, Trump sucks up the oxygen, but, you know, Trump goes to Riyadh, it’s a huge deal. And the Europeans somehow, even in the diplomacy now, are kind of on the sidelines. And yet it’s much closer to us than it is…
Kyriakos Mitsotakis: You could argue that that is the case. We’re a medium-sized country within the European context, but we’re doing our fair share in terms of making sure that we strengthen these partnerships.
Gideon Rachman: And do the Gulf really take us seriously? I mean, I’ve spoken with some Americans.
Kyriakos Mitsotakis: You know when they take you seriously? When you deliver. Yeah, because I’ve sent a Patriot battery to Saudi Arabia. It’s been there since 2021, at the time when they asked for assistance to defend against Houthi attacks. And Greece was there, and we’re present, as were some other European countries.
So they will take us seriously when we go beyond words and when we actually put our money where our mouth is. And this, when it comes to our security, means standing by our friends and allies in times of need. And I think when we’re going to reach that point, and some European countries have clearly taken important steps in that direction, I think they will take us more seriously.
Gideon Rachman: Right. You refer to Ukraine as the main conflict. Interesting things happening there. The Ukrainians are now hitting Russian oil refineries, Moscow itself. I mean, I don’t know whether one feels good about that. It’s an escalation of the war. But do you have – we said, we’re talking Iran context – any prospect of an end? Do you see any prospect of an end to the Russia-Ukraine war?
Kyriakos Mitsotakis: Well, first of all, I’m happy about the fact that we have finally managed to unblock the commitment that we have made to Ukraine when it comes to the 90 billion funding, which they desperately need to keep their government functioning and to support the war efforts.
I think what they’ve done in terms of developing their domestic defence capabilities is truly remarkable and should be studied in great detail by our defence departments.
And I do believe that a just and fair peace can only take place when there is some sort of military parity between the two involved parties. So in that respect, It is clear to me, and it should be clear to everyone, that Russia is no longer winning this war. And this is the only way to actually bring Russia to the negotiating table.
Gideon Rachman: Do you have any optimism that we could see an end to this war in the next year or so?
Kyriakos Mitsotakis: If the price for Russia is too high and if the benefits from continuing the war are negligible, which seems to be the case from a military point of view, possibly yes. If they lose, you know, between 35,000-40,000 soldiers a month and they realise that they are no longer benefiting from continuing this, they will probably have additional incentives to return to the negotiating table.
Gideon Rachman: Presumably in the past you’ve met Putin, yeah?
Kyriakos Mitsotakis: Yes.
Gideon Rachman: A while since you’ve spoken to him, I guess?
Kyriakos Mitsotakis: I have not spoken to him since the war started.
Gideon Rachman: Right. Do you have any sense of where he is intellectually, whether he’s ready to make a deal?
Kyriakos Mitsotakis: No, I don’t have, again, any further insights into his thinking beyond what is public knowledge. But I would hope that at some point Russia realises that it has nothing to gain from continuing this war. And Ukraine has made it very clear that it has the capability with significant European and American assistance to defend itself and to achieve a success that clearly was, I think, beyond what Russia expected.
Gideon Rachman: Yeah, I mean, you’ve mentioned that Europe’s now finally -partly I guess, because of the change in Hungary- able to deliver the €90 billion. Should there be other things that Europe’s doing, like being a bit more kind of urgent about trying to bring Ukraine into the EU?
Kyriakos Mitsotakis: Look, I think there’s a clear sense of urgency when it comes to European priorities. And to my mind, this really relates to implementing the strategic priorities that we have set out as Europe. I was in Aachen last week honouring Mario Draghi, and I had an opportunity to speak again about the urgency with which we need to address the issues related to European competitiveness.
You know, Draghi had his “whatever it takes” moment back in 2012, which saved the euro. And I ask the question, what is the “whatever it takes” moment now when we’re faced not with an acute crisis but with a gradual erosion in our competitiveness?
And my call is to address this challenge with the same sense of urgency. And this requires strategic priorities we have clearly defined: completing the Savings and Investments Union, making the single market function, making the “28th regime”, which I think is a brilliant idea, especially when it comes to our new startup companies, actually operational.
Gideon Rachman: It’s a brilliant idea that I don’t know about. What is the “28th regime”?
Kyriakos Mitsotakis: Well, the “28th regime” is the idea that you can have one European legal entity which could operate and function in any European country without getting permits and licences from 27 different regimes.
So I would argue that these should be our priorities right now: bringing down the cost of energy, unifying our energy market, which clearly has not happened. So when it comes to Greece’s agenda, and Greece will also be assuming the presidency of the Council in the second half of 2027, these are important issues which I consider to be of absolute priority for the European Union.
Gideon Rachman: And Ukrainian membership, less so?
Kyriakos Mitsotakis: Ukrainian membership is a topic we are discussing, but it cannot also come at the expense of the enlargement process which is taking place and which also involves our neighbourhood. And I’m speaking about the Western Balkans. So there is a process. We have laid out the roadmap for Ukraine. I think important reforms have been made in that direction.
Gideon Rachman: Could there be a kind of “membership light”? Because obviously there are some difficulties with, you know, the Common Agricultural Policy and so on. And some people talk about, well, given the political importance of giving them something, that you could have a kind of a halfway house.
Kyriakos Mitsotakis: These ideas have been floated, but I think they are still quite immature. I’m not ready to comment on those ideas publicly. What I can say on the record is that we have an enlargement process which has very, very clear guidelines. We’d like countries which are candidate countries to join as quickly as possible. But the process has to be respected.
Gideon Rachman: Yeah. I mean, you talked about the need for European competitiveness, and it’s very interesting for me to be back in Greece, you know, having come here. I think it’s never a great sign when journalists come to your country a lot. I came a lot during the crisis, and now things, you know, Greece is in a very different place. Do you believe that you’ve really put all the damage of the crisis behind you, or are you still haunted by it a bit?
Kyriakos Mitsotakis: Well, what I can tell you is that Greece is a very different country today than it was in 2015 or even 2019. Just look at our overall fiscal performance. We have brought down our public debt as a percentage of GDP at the fastest pace of any country in the history of the eurozone, and it continues to decline. By the end of 2026, we no longer will be the most indebted country in Europe. And this is a huge legacy for the next generation, because we were always haunted by our debt and by our inability to put our fiscal house in order. We’re producing healthy primary surpluses. We’ve been able to do so while at the same time having high growth rates, cutting taxes, bringing in investments, bringing down unemployment.
So, I think, when you look at the macro performance of the Greek economy, we’re clearly in a good place. Having said that, there’s still a lot of unfinished business. We need to make sure that the macro performance translates into truly better living standards for Greeks. We still have the big persistent problem of inflation.
And for me, should I be able to win a next term, the real challenge is going to be to continue this path towards real convergence with Europe, complete or continue with the necessary reforms, some of which are still a work in process, especially when it comes to changing the efficiency of the Greek public administration, and prepare the country for the huge megatrends which will affect all of us: changing demographics, the emergence of AI as a disruptive force, the challenge of the climate emergency. So still a lot of work to be done.
Gideon Rachman: Yeah, I mean, do you think, you know, in the crisis, a lot of the other European countries were fond of telling Greece what to do. Are there now some lessons that people could learn from Greece? Because I think of my own country struggling with a big debt and a deficit that we can’t close. France hasn’t run a balanced budget since the 1970s, I think. What are the lessons from Greece that you can run a primary surplus and still have growth? How does that happen?
Kyriakos Mitsotakis: First of all, don’t allow yourself to face an existential crisis before you decide to implement difficult reforms. Because that’s the problem I see with many of our European colleagues. We almost went bankrupt in order to make the necessary changes. And not only that, back in 2015, at a time when we were emerging out of the crisis, we entrusted the country in the hands of populists and we had another four years essentially and a completely unnecessary third programme until we fully recovered.
So I think the lesson of Greece is that reforms do pay off, that you have to make the difficult reforms at the beginning of your term. For example, at the beginning of my second term, I decided to aggressively address the problem of persistent tax evasion. It was very difficult politically to do so, but now we see the results. One of the reasons why our fiscal performance is so strong is because we have been able for the first time to address tax evasion, also using technology as a main driver.
And the only way to address the populist resurgence is to first of all accept that some of the grievances upon which populists feed are real, but the solutions that they offer are quite frequently completely unrealistic.
And of course, when it comes to fiscal discipline, if you keep on having primary deficits, eventually it will come to haunt you. And I will never ever allow Greece to find itself, as long as I have the responsibility of leading this country, of finding itself in this position. Because when you run a healthy primary surplus, the temptation is there. You know, spend more. I mean, that’s what the opposition is suggesting. I will not do so. I will respect the fiscal rules. The European guidelines when it comes to our fiscal performance are very, very clear. And I will only spend whatever fiscal space I can create above the targets that I have committed to respect with the European Union.
I think the markets appreciate that, and that is one of the reasons also why we’ve had record foreign direct investment, just because at the end of the day this is about creating more jobs. Unemployment was 18% when I came to power. It’s dipping under 8% now. And we still have an investment gap to close with the rest of Europe. But no one would invest in a country if they did not feel comfortable that the fiscal foundations are solid. And trust me, they are quite solid.
Gideon Rachman: Okay, let me finish, if I may, with a hometown question from Britain. As you’ll have noticed, Keir Starmer has been challenged. That’s kind of opened up the European debate in Britain. One of the candidates, potential candidates, Wes Streeting, has said he thinks Britain should rejoin the EU. What do you think of that? Do you think that’s even realistic as a prospect? And would the other EU countries welcome it?
Kyriakos Mitsotakis: I think we were all quite traumatised by the UK leaving the European Union. My first European Council was the last European Council in which a UK Prime Minister participated. Well, I still have this memory of Boris Johnson storming out of the room and waving us all, “goodbye and good luck”. That’s, I think, what he told us. I’m not sure if that’s worked out very well for the UK, frankly. But this obviously was not my decision.
We’re looking towards a constructive relationship with the United Kingdom. Whether, in a generation, the UK would rejoin the European Union, that’s not up to me to say. The rules are very, very clear, and if the UK wants a strategic partnership, a stronger partnership with the European Union, it needs to be a win-win partnership, because at some point I think the UK thought it could have its cake and eat it too. It didn’t turn out that way.
Gideon Rachman: Okay, thank you very much indeed.
Kyriakos Mitsotakis: Thank you.
