His proposal for the establishment of a European Defence Fund, financed by joint European borrowing, Prime Minister Kyriakos Mitsotakis.

As part of his visit to Germany, Mitsotakis was interviewed on the podcast “Table Today” and journalist Michael Bröcker, saying that member states cannot finance increased defense spending from national budgets alone.

Mitsotakis recalled the proposal he had made jointly with Polish Prime Minister Donald Tusk. “We have to do two things: we have to spend more at the national level, which is inevitable. Greece already spends more than 3% of its GDP on defence. We need to spend more both at the national and European level because, at the end of the day, it is our security that is threatened.”

About Energy

The prime minister also touched on the issue of energy, saying that energy prices are not only higher compared to the US but also have large price discrepancies within Europe.

“If we want to make the green transition a reality, we need to invest in our networks. Electricity networks should be treated as projects of common European interest. European funding could be required. But we must not only reduce electricity prices in Europe in general but also make the European electricity market work in a way that avoids large divergences in electricity prices within the EU,” he said.

For competitiveness

At the same time, he expressed concern about regulations that are getting in the way of business competitiveness. “We look forward to the proposal of the President of the European Commission for a multi-faceted legislation that will simplify regulations in all sectors” , he said.

Mitsotakis also referred to the government’s economic policy, noting that taxes were reduced without jeopardizing the fiscal position. “We have simplified the regulatory framework, we have digitized the state. This has led to significantly higher growth rates than the eurozone average, while at the same time, we can run primary surpluses and reduce our debt,” he said.

At the same time, he said that the next steps will be related to the microeconomy. “The next ‘Greek story’ is more about the microeconomy than the macroeconomy. It is about attracting investment, strengthening our competitiveness, boosting our exports, and focusing on the areas where Greece can become a champion in Europe,” he said, among other things.

In detail the interview of Kyriakos Mitsotakis:

Michael Bröcker: Thank you very much for being on the show, Prime Minister. Welcome to Germany.
Kyriakos Mitsotakis: Thank you. It’s a pleasure to see you again.

Michael Bröcker: How was your day in Germany? You met with the leaders of the EPP trying to sort of reconstruct Europe, right?

How did you spend time with the German Bundestag?
Kyriakos Mitsotakis: We had the opportunity to come to Berlin as leaders of the European People’s Party and to support Friedrich Merz’s candidacy to become the next Chancellor of Germany. I think it is important for us to add another member of our political family to the group of leaders in the European Council, where we already have a majority.

But of course, Germany, as the largest economy in Europe, is also particularly important for our overall European agenda. We have set very clear priorities for the next five years with the President of the European Commission Ursula von der Leyen. And, of course, the full alignment between Germany and the priorities we have set as the EPP is also very important. So that is why we are here.

Michael Bröcker: We need to strengthen European competitiveness. That is obvious. What are the two, or three main reforms that the European Commission, and the European heads of state have to implement?
Michael McBeal.

Kyriakos Mitsotakis: I think it is very clear that we are burdened by excessive regulation in Europe, which puts obstacles to the competitiveness of all businesses, large businesses, but especially small and medium businesses. We look forward to the European Commission President’s proposal for a multi-faceted piece of legislation that will simplify regulations in all areas.

We need to do something about energy. Energy prices in Europe are much higher than in the United States. But also within Europe, we see big discrepancies in energy prices.

If we want to make the green transition a reality, we need to invest in our networks. Electricity networks should be treated as projects of common European interest. European funding could be required. But we must not only bring down electricity prices in Europe in general but also make the European electricity market work in a way that avoids large divergences in electricity prices within the EU.

Michael Bröcker: You also promised to reduce bureaucratic obligations by 35%. Is this realistic?

You also promised to reduce your budget by 35% and you also promised to cut back on the number of staff.

Kyriakos Mitsotakis: This is a target set by the European Commission, I think it is 25%, not 35% if I am not mistaken. But we are adding regulations without really thinking about their consequences on the cost structure of our businesses. We cannot implement the green transition at the expense of our competitiveness. I believe that this is now very clear.

Michael Bröcker: So the Green New Deal needs a parallel industrial deal.

Kyriakos Mitsotakis: Exactly, a “Clean Industrial Agreement”, and that is exactly what the European Commission will propose. Of course, we are also looking at the reforms that Germany will, in good faith, implement. I am very happy to see that the programme proposed by the CDU/CSU coalition has a lot in common with what we have implemented in Greece since we took over the government.

We have reduced taxes without compromising our fiscal position. We have simplified the regulatory framework, and we have digitised the state. This has led to significantly higher growth rates than the eurozone average, while at the same time, we have been able to run primary surpluses and reduce our debt.

So it is indeed possible to reduce taxes and create fiscal space through growth. This is exactly what Friedrich Merz is proposing. And I can tell you that in the case of Greece, this has yielded results.

Michael Bröcker: Yes, we have to talk about the Greek economy, which I think is growing at a higher rate than the eurozone from 2021. Public debt has come down – it sounds like a miracle. Are you proposing a new kind of economic policy or is it just supply-side economics?

Kyriakos Mitsotakis: No, it’s not just economics on the supply side. We have to explain this, because of course we have achieved a measured reduction in taxes, but we have also moved against tax evasion. We have been relentless in the fight against tax evasion, using digital tools. This gives us the additional fiscal space to invest and support the welfare state.

So in our case, this policy has been successful, because we need to run primary surpluses to reduce our debt, but we can do this while maintaining growth rates significantly higher than the eurozone average, reducing unemployment, and increasing wages. Because, at the end of the day, macroeconomic figures must have a spill-over effect on the real economy. This is starting to happen as we speak.

But, of course, we also need structural reforms: labour market reforms, skill development reforms, justice reforms, digitalisation, where there has been a tremendous success in Greece since we took over the government, reducing the bureaucracy related to the interaction between citizens and businesses on the one hand and the state on the other.

All of this, combined, has created an environment that encourages and attracts investment. If you add to this the Recovery and Resilience Fund, which has been a great success in Greece, I think it allow us to bridge the investment gap that has always separated Greece from the eurozone average.

The next “Greek story” is more about microeconomics than macroeconomics. It is about attracting investment, boosting our competitiveness, strengthening our exports, and focusing on the areas where Greece can truly become a champion in Europe.

Michael Bröcker: The Draghi report is a sharp warning for the European Union, in fact for its lack of momentum. Yet the US and China are financing their industry with billions of dollars. Don’t we need more money for European companies? Where will it come from?

Kyriakos Mitsotakis:Absolutely. That will be the next debate we will have, at the level of the Multiannual Financial Framework (MFF). We cannot hope to achieve all the goals we have set without the funding means to do so. Some of the money will come from private capital, and that is why we need the Capital Markets Union ‘yesterday’, because our capital markets are simply not competitive compared to those in the United States. But some of it will also come from public funds.

The Recovery and Resilience Fund has been a great success. We need to look at what we have done and think about the next day. Defense, is a big priority for all of us. There is no way we can finance our increased defense spending only from national budgets. We may need a small – compared to the Recovery Fund – European Defence-focused fund, financed by common European borrowing.

Michael Bröcker: With new, “fresh” money from member states?
Kyriakos Mitsotakis: With “fresh” money borrowed at the European level. A kind of Recovery Fund…

Michael Bröcker: Like the one we had in Germany, at the European level…

Kyriakos Mitsotakis: Yes, what we did with the Recovery Fund, on a smaller scale, of course, but exclusively for defense and for projects…

Michael Bröcker: How big should that be?

Kyriakos Mitsotakis: I don’t know. I mean, even if it was, say, 100 billion – the Recovery Fund is 750 billion – it would send a clear message that we mean what we say. If this fund is focused on…

Michael Bröcker: Would this be a proposal for Donald Trump to say, okay, we’re willing and able to spend more?

Kyriakos Mitsotakis: I have submitted this proposal together with Donald Tusk, and the letter was sent to all my colleagues. We have to do two things: we have to spend more at the national level, which is inevitable. Greece already spends more than 3% of its GDP on defense. We need to spend more at both national and European levels because, at the end of the day, it is our security that is threatened.

Asked if he agreed with an earlier statement by Polish Foreign Minister Radosław Sikorski that he feared Germany’s weakness more than its strength, the Prime Minister replied:

Kyriakos Mitsotakis: We cannot envision significant progress in the European Union and the strengthening of the European economy without a competitive Germany. Therefore, Germany must regroup. There are structural issues regarding the German economy, which have been sufficiently discussed in the public debate in Germany. I believe that this is the time for bold action and more radical reforms. I am convinced, from the discussions I have had, that Friedrich Merz has this agenda and knows exactly what the German economy needs.

Asked about his impression of his contacts with Friedrich Merz, Kyriakos Mitsotakis said:

Kyriakos Mitsotakis: I have known him for years, I did not know him when he was out of politics. I will say it again, it is not my job – I want to be very clear – to tell the German people who they should vote for. But it is my job as the leader of the EPP to support the EPP candidate for the Chancellorship of Germany and to share with your audience, in the best possible way, my experience and why what I believe he wants to do in Germany is, in a sense, in my belief, the right policies for Germany. However, again, it is not my intention to interfere in the German elections. After all, I do not have such a role to play for the Germans to hear what I have to propose. But, to the extent that you ask me, I will give you an answer.

Michael Bröcker: Greece was the “problem child” in Europe 15 years ago. Now it’s like a “come-back” story, and everyone is looking at your country. How does it make you feel and how do you see the reactions of other leaders in Europe when they talk to you?

Kyriakos Mitsotakis: First of all, it makes me feel good on behalf of the Greek people.

Michael Bröcker: Are they more resilient than others? Are they better at something? What is it?
More than others?

Kyriakos Mitsotakis: I think the Greek people have proven to be incredibly resilient.

Michael Bröcker: Obviously.

Kyriakos Mitsotakis: However, I think they have also proven that when they have to make a choice, at election time, they will ignore the promises of populists and reward a competent government. They did so in 2019, after the experience with SYRIZA, which, by the way – let us remind your audience – was then allied with the far right. It was Syriza and the hard right that ruled Greece during the very difficult period 2015 to 2019. They elected us in 2019 to propose a different way forward and they re-elected us, giving us a stronger mandate, in 2023.

There is still much to be done. The work is not complete. There are still issues, important issues in Greece. We still have to close the gap that separates us from the rest of Europe, especially in terms of our GDP per capita. But I believe that we are moving in the right direction.

Michael Bröcker: Despite this, at least four or five countries in Europe are ruled by right-wing populists. What is your prescription against these people, against this movement?

Kyriakos Mitsotakis: In my mind, this is very clear. If people vote for populist parties, they are expressing a legitimate dissatisfaction. It could be economic discontent, inflation…

Michael Bröcker: Something tautological…

Kyriakos Mitsotakis: …identity issues. And these issues must be respected. We have to listen to these people. We should not ignore their concerns, because their concerns usually have a basis. The answer is no, that is, voting for a populist party has not solved the problems that people have, and this has been proven worldwide.

In Greece this has happened, certainly. People were angry with the parties in power in 2015. They gave the mandate to SYRIZA, with a hard right. What was the result? A third memorandum. More suffering, more misery. The only way to convince people is to propose an alternative that focuses on results that at the end of the day will make their lives better, but also takes into account their legitimate concerns.

Immigration is a real issue for citizens that needs to be addressed. We have managed to tackle immigration in Greece. That is why immigration is not in the top five issues that citizens tell us they are concerned about. A careful balance is needed.

In Greece we have been very responsible, we have followed what I call “responsible patriotism” when it comes to foreign policy and immigration issues, strengthening our defense. We have been socially progressive when we thought it was necessary and we have been economically liberal. The third was probably the most important, because that’s what creates growth, that’s what reduces unemployment and that’s what ultimately raises wages. In our case, that triangulation has paid off.

Michael Bröcker: Thank you very much for your thoughts in this interview. Thank you, Prime Minister.

Kyriakos Mitsotakis:Thank you.