Greek PM: coronavirus crisis has discredited populists
Greek prime minister Kyriakos Mitsotakis discusses his country's surprising success in containing Covid-19, in an interview with FT editor Roula Khalaf and Europe editor Ben Hall
Produced by Petros Gioumpasis. Filmed by Petros Gioumpasis and Rod Fitzgerald
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I'm Roula Khalaf, editor of the FT. And I'm joined by Ben Hall, the Europe editor. We're interviewing Kyriakos Mitsotakis, the prime minister of Greece, a country that surprised many with its deft handling of the Covid-19 crisis. I'm going to dive right in and just start off by asking you about your Covid-19 experience. Because a lot of people have been just watching Greece and wondering, how did you get it right?
Well, it was certainly a very, very intense period, as you can imagine. And looking back to what happened over the past four months, I think we took some difficult decisions very early on. We clearly listened to the experts. It was very, very obvious to me that, at some point, we needed to go into full lockdown mode. And my political decision was to do it earlier rather than later.
And I think we convinced the people that we needed to demonstrate collective responsibility in order to, essentially, protect what is the most valuable asset that we have, which is our public health. And, of course, I also knew coming into the crisis that we had a relatively small number of ICU beds. Coming out of a 10-year austerity, we had an underfunded public health system.
So we could not afford to have our health care system overrun by Covid-19 cases, which we could not deal with. I made it very, very, very clear that we needed to sacrifice the potential for economic growth in order to get this crisis under control. And my argument was also relatively simple. The more successful you are in quickly flattening the curve and bringing the crisis under control, the more vigorous the recovery afterwards.
The second part of the hypothesis hasn't been proven yet. But by intervening quickly, I think we have, essentially, set the foundations for a more robust recovery. And we've also helped the Greek brand, of course. Because what you describe came as a surprise to many. So we got a lot of good press. And a lot of people were pleasantly surprised by what they call the Greek success story.
And a lot of people, obviously, are looking forward to spending a summer holiday in Greece. And you have just opened up the tourism sector again, although not for everybody. The UK is still an exception. Is that going to come soon?
I think it will come soon. If things continue to go according to plan, we should be able to welcome visitors from the UK as of July 15 - maybe for the first 15 days, just in a couple of our airports. So they may have to fly through Athens. We're still looking at the data. But we want to make sure that people who come to Greece do so in a safe manner for themselves, but also for the local population.
And we've put a lot of effort in making sure that the experience is as safe as possible. What does this mean? As far as I know, we're one of the very few countries, if not the only country, that actually still does random but targeted screening of visitors who actually come to Greece. So we have a very complicated algorithm that, essentially, allows us to identify those tourists who will be screened upon arrival.
We don't force them to go into quarantine. We just ask them to be careful for a day until the results come back. In case they are positive, they, obviously, need to self-isolate. But so far, from the data that we have - because we've been testing people coming into Greece for the past two months - a very, very small percentage of people actually test positive. And we do hope that this trend is going to continue.
You told the Cabinet recently that the tourist season was going to be very difficult. Yet earlier in the crisis, your government was a bit more upbeat and thought that it could salvage the season. So what's made you more pessimistic? How much of the season do you think you can actually save this year?
The very honest answer is I don't know. Most of our tourists come during the summer. What we've seen recently, which is optimistic, is we've seen a lot of bookings, last-moment bookings, even for the month of July. So I think as long as people understand that we've done what needs to be done, that Greece is a safe destination, I do expect people who want to travel to have Greece as their top choice.
And we hope that the trend, the positive momentum, is going to build during the summer. Look, last year, we welcomed 33 million visitors. It's going to be a fraction of that. I can't give you an exact number. But probably by the end of July if things go well, I do expect a much better August and a much better September. And, hopefully, we can actually extend the season into October and, why not, November.
Your recovery after the financial crisis was driven by tourism. And now, for this year, tourism will not perform the way that you wanted. And it has become, in some ways, a liability. Because you rely on visitors from abroad. How are you thinking about the diversification of the economy? How do you make up for that?
We have a very, very aggressive reform agenda. And our plan is a long-term reform plan. We really want to transform the Greek economy into an economy that is going to focus on the green transition, on the digital transition. My challenge is to make sure that we do crisis management, and at the same time, we don't forget about long-term planning and long-term reforms.
We still have three years in our mandate. I'll be celebrating my first year in office on July 7. It feels like it has been - I don't know - a century in terms of how much has happened really since I became prime minister. But I'm very much aware of the fact that there are long-term reform projects that will actually change the fabric of the economy, make it more open, make it more extrovert, make it more competitive.
These are reforms that, essentially, were never done in Greece. During the programmes, we had the troika asking us, forcing us to do reforms. And there was never really any domestic buy-in. I think this has changed. I think Greeks have matured a lot. And we want to do our own reforms.
And do you think that the management of the Covid-19 crisis gives your government more credibility, more legitimacy to take even tougher decisions?
I think, yes. I think certainly what emerged out of the Covid-19 crisis was a renewed sense of trust in politics, in institutions, in technocrats. As you know, Greece has gone through various waves of populism. And the first who are always attacked when the populists come into power are the technocrats. I view myself both as a politician and as a technocrat. I think you can actually combine both roles. So we certainly are much stronger today.
Let's talk about the EU recovery fund. What are you expecting for Greece? And you go into the summit in a couple of weeks with optimism?
We need to make sure that by July 20, we have a deal. And the deal needs to look very similar, in my mind, to what the commission has proposed. What has the commission proposed? A bold, next-generation fund, 750bn - 2/3 grants, 1/3 loans - financed through the commission, which is going to be able to raise money on the public markets on behalf of member states, a clear focus on reforms and on addressing the Covid-19 crisis. In my mind, we need a longer-term horizon. We need at least four years for this fund to actually do the job.
Are you prepared to accept some quite tough conditionality in return for this money? Or is there a way that it can be organised that will be politically acceptable to Greece, as well as to the Frugal Four?
No. I'm not prepared to accept any additional tough conditionality beyond what I consider to be perfectly natural, which is the framework of The European Semester. We have a framework in place to monitor the performance of national economies. And to the extent that this will apply to everyone, I don't think any additional strict conditionality is actually necessary.
And, Ben, at some point, we need to trust each other here. And this is also even at the level of the council. Again, the reason why we want to do these reforms are because in the long-term or even in the medium-term, they're going to be good for our economy. If we just go out and spend the money - the easiest thing is to go and spend money today. The question is, what is going to be the impact of these policies?
We did spend a lot of money to make sure that we support jobs during the Covid-19 crisis. But we don't want to use the recovery fund in the same way that we occasionally, in the past, used EU structural funds. Because if I look at the overall footprint of EU structural funds for Greece, I'd say we've done an average job in taking advantage of what was offered.
If the fund is not agreed, what's at stake for the eurozone and for Greece's place inside it?
This is not just relevant just for Greece. I think, literally, the future of the eurozone, of Europe, of the integrity of the European Union as a whole, is at stake. I think market reaction in case of a disagreement is going to be rather negative. And, of course, the victims are going to be possibly the weaker, the countries that are perceived to be the weaker links. I don't think Greece, if you look at it structurally, is a weak link today. But it certainly has a lot of debt. You can't argue with that.
You mentioned the debt. And the recovery fund won't make an enormous difference to Greece's debt burden, which, according to the commission, should climb up to nearly 200 per cent of GDP. At some stage, potentially relatively soon, the whole question of debt sustainability comes right back into play, doesn't it?
Not necessarily. Why am I saying that? If you look at our debt repayment profile, as you know, until 2032, it's extremely benign. Greece is able to tap the capital markets regularly with interest rates that would have been inconceivable a year ago. So our debt profile has very, very specific characteristics. Obviously, we're hit, because our GDP has dropped. But if we return to a robust growth path, as was the plan before Covid-19, I don't consider debt sustainability to be a real issue for Greece. Until 2032, in terms of our debt repayment schedule, we're absolutely fine.
Greece enjoyed a certain amount of Chinese investment, which helped it to propel it to recovery. But the geopolitical context is changing quite a lot, and attitudes are hardening towards Chinese investment. Do you think that Greece will still open its arms to Chinese investors in the near future?
We are open to all credible investors. The big challenge for Greece is to attract foreign investment, be it through assets that are being privatised. And we intend to continue with our privatisation programme despite the Covid-19 hiccup or in terms of greenfield investment in the country. We know we need to attract - we need to increase investment as a percentage of GDP. We are not overly dependent on Chinese investment.
They've made one big investment in the Port of Piraeus, which has been a very successful investment. And we have an agreed plan with Cosco in terms of how they will proceed. And, of course, we will honour our agreement. And I'm sure they will honour their agreement. Now, of course, the situation regarding how the European Union deals with China - and I think we need to speak with one voice with more confidence - has suddenly emerged as an important geopolitical challenge for the European Union.
But I don't see other European countries stop doing business with China or, in principle, putting a direct ban on Chinese investment. So China is, obviously, important for us. It's also an important market for Chinese tourists. China is probably the biggest up-and-coming tourist market for the next decade.
Let's talk about Turkey. You had a recent call with President Erdogan. How did that go? And what can you do, and what are you doing to ease tensions?
Let me point out that when I first met President Erdogan as new elected prime minister back in September of 2019 at the United Nations General Assembly, I told him very openly that I'm looking forward to opening a new chapter in the Greek-Turkish relations. But this would mean that we need to stop the sort of aggressive behaviour, and make sure we follow basic good-neighbourly relations, and rely on international law to solve whatever differences we may have.
Unfortunately, Turkey's response on the ground hasn't been the one that I was hoping for. Turkey is increasingly behaving aggressively in the Eastern Mediterranean. It signed what we consider a totally illegal memorandum of understanding regarding the delimitation of maritime zones between Turkey and Libya.
It is very, very active in Libya in complete violation of what it agreed to do at the Berlin Process. It is illegally drilling within the exclusive economic zone of Cyprus. And, essentially, what we've said is that this behaviour can no longer continue. On the other hand, we need to make sure that channels of communication with Turkey are being kept open.
The trend that's been observed in the last few months is that more mainstream parties like yours have done much better than governments led by populist leaders. Does that suggest to you that we've reached a turning point? Or is this more of a passing phenomenon and that the rise of the populists will continue?
We were the first country that elected a populist government to power. And we paid a very heavy price. Five years ago to the day was the dramatic week when the Greek banks closed, when we held the referendum, when we came very close to the precipice. And thank god we made sure that we avoided the worst. Because the government realised that it had to perform a U-turn.
But it cost us three years of growth. But I think Covid-19 did a lot to discredit those who believe that there are easy and simplified solutions to complicated problems. And those who always want to hold somebody else accountable for their own shortcomings, this doesn't work when you have to save lives on a daily basis.
Well, Prime Minister, thank you so much.