Greeks are tired of the kind of anti-austerity strikes and demonstrations that once paralyzed their biggest cities during the financial crisis. A few of those protests broke into open warfare between rock-throwing hotheads and police dressed like gladiators.
In one of the riots, as the tear-gas canisters and stun grenades filled Syntagma Square and the streets around it in central Athens, dozens of buildings went up in flames. Greece was dying, it seemed, but would not go gently into the night. It would go out with a bang, propelled out of the euro and reduced to a pauper state on the fringes of the European Union.
Today, nine years after the first of three Greek sovereign bailouts, Greece is still in the euro zone, and Athens feels abnormally normal. The mass protests of 2019 happened in France, Hong Kong, Chile, Lebanon, Spain, Malta and elsewhere – not Greece.
The new Prime Minister, Kyriakos Mitsotakis, couldn’t be happier. He is gambling that his proposed economic overhaul will meet with little resistance, even if it costs jobs, and he may be right. There are occasional protests in Athens, but they are tiny, and support for their causes has dwindled.
“Let me give you an example,” Mr. Mitsotakis said in a recent interview in his vast office in the neoclassical Maximos Mansion. “Two days ago, there was a surprise strike in the Athens metro. It took only 20 people to shut down the Metro for four hours. Why? Because we took them from their desk jobs and told them they needed to issue tickets. People were furious at the strikers. There is a clear recalibration in terms of how much Greeks are willing to deal with industrial action and accept violence.”
Mr. Mitsotakis, 51, is the leader of the centre-right New Democracy party, which won a landslide victory in the July election, pushing Alexis Tsipras’s radical-left Syriza party into opposition.
His vision for Greece is nothing short of revolutionary. He wants to create a competitive economy that is a magnet for foreign investment and not entirely dependent on sun-and-sea mass tourism for survival.
The strategy calls for across-the-board tax cuts, a fairer insolvency law, streamlining and “digitizing” the bloated civil service, developing green technologies, accelerated privatizations and ridding the banks of great chunks of non-performing loans so they can lend again. “We fully recognize that growth has to come from the private sector,” he said.
He admits he is more socially “liberal” than his own party, meaning he wants an overhaul that doesn’t create more losers than winners. “The growth has to have two main characteristics,” he said. “It has to be inclusive and sustainable. It has to be growth that does not exacerbate income inequality in the way we have seen in many Western liberal democracies."
That’s a formidable challenge: Greece is fundamentally uncompetitive and seems allergic to structural reforms. That latest survey from Switzerland’s IMD World Competitiveness Center placed Greece 58th among 63 developed economies – below Peru, South Africa and Jordan. Yes, Greece is growing again after a grinding recession that shrank the economy by 25 per cent, but the expansion is coming despite a lack of reforms, not because of them.
Then there’s Turkey, the big geo-economic risk. Mr. Mitsotakis admits he has a big problem with Greece’s eastern neighbour, which could reopen the migrant floodgates or threaten Greece’s sovereignty by drilling for hydrocarbons in the area that Greece considers its exclusive economic zone: the Aegean Sea. Either scenario could trigger a crisis that would stall Greece’s recovery. “We will not permit any Turkish activities that would infringe upon Greece’s sovereign rights," he said, referring to Ankara’s new maritime borders deal with the Government of National Accord in Libya, which would essentially divide much of the energy-rich eastern Mediterranean between them. “We are ready to talk with all our neighbours, including of course Turkey. And if no agreement can be reached, we are even open to international jurisdiction. But the red lines cannot be crossed by anyone."
Mr. Mitsotakis is a political outsider-insider. He is a member of a prominent political family, but was a relatively late arrival to the messy Greek political scene. His late father, Konstantinos Mitsotakis, was prime minister from 1990 to 1993. His sister, Dora Bakoyannis, was mayor of Athens and Greece’s minister of foreign affairs in the first decade of this century. Their family has known misfortune. Mr. Mitsotakis’s brother-in-law, Pavlos Bakoyannis, was the liberal politician assassinated in 1989 by the domestic terrorist group 17 November.
Mr. Mitsotakis was born in Athens in 1968, but his family fled to Turkey, then France, after his father was arrested by the military junta that seized control of the country in 1967. They returned in 1974 when civilian rule was restored. Mr. Mitsotakis is well educated and speaks English, French and German. He has an undergraduate degree and an MBA from Harvard, plus an international master’s degree from Stanford.
His political career was not inevitable. He had careers at Chase Manhattan Bank, McKinsey & Co., Alpha Bank and National Bank of Greece, where he ran its private equity and venture capital businesses, until 2003, when his political DNA surfaced. In 2004 he was elected to the Greek parliament, where he earned a reputation as a centrist liberal in the conservative New Democracy party.
From 2013 to 2015, he was minister of administrative reform and e-commerce, a job that made him an enemy of the bloated and unproductive civil service, where he met with only partial success. The true number of civil servants is still unknown, but is estimated to be about 600,000, down from a peak of about 750,000 but still absurdly high for a country with a population of only 10.7 million. The reduction was largely achieved through attrition, not firings.
In 2015, New Democracy was ousted, leaving it to Syriza and its madcap finance minister, Yanis Varoufakis, to try to end the austerity recipe whose main ingredient was brutal budget cuts. Mr. Mitsotakis was the long-shot winner of New Democracy’s leadership contest a year later. During the 2019 election, he positioned himself as the candidate of change, campaigning, in his words, as “an ardent defender of a small and efficient state, education reform, the fight against red tape and monopolistic practices that impede development.”
He also took a tough line against refugees and migrants, arguing that the EU’s refusal to share the burden had left tiny Greece overwhelmed by arrivals from Turkey.
The tactics worked. Voters turned against the Janus-faced Syriza, which had promised to end the harsh austerity measures demanded by international lenders only to embrace them in exchange for a third bailout. Golden Dawn, the neo-Nazi party that had used a feral anti-migrant platform to storm its way into parliament, found itself eradicated, partly because Mr. Mitsotakis’s reasoned demands for a European solution to the migrant crisis seemed more humane.
Mr. Mitsotakis is fairly tall and slim – he loves to play basketball. He has a formidable work schedule. A colleague of his said the Prime Minister works almost 18-hour days and takes one day off, or less, every two weeks.
He had removed his suit jacket and leaned back on his office chair during the interview. He wore a black Apple watch and a bracelet made from remnants of the weaving process of fashion brand Zeus + Dione, which is co-owned by his wife, Mareva Grabowski-Mitsotakis.
Mr. Mitsotakis’s vow to fix the Greek economy and renew the country’s stature within the EU has won him friends among global leaders, including Donald Trump, who is hosting him in Washington next week, and Justin Trudeau, whom he met on the sidelines of the NATO summit in London in early December. By all accounts, the two sons of prime ministers formed an instant strong connection. Mr. Mitsotakis said Mr. Trudeau invited him to make an official visit to Canada, which he expects to do by 2021.
Mr. Mitsotakis is the beneficiary of good timing. The Greek economy has been expanding since 2017. GDP growth was 1.9 per cent in 2018, but was forecast by the European Commission to dip slightly to 1.8 per cent in 2019 before recovering somewhat this year. Youth unemployment is almost half its crisis peak – though still atrocious at just less than 30 per cent. Greek bond yields have plummeted as the risks of default and Greece’s exit from the euro zone have all but vanished.
That’s the good news. The bad is that the recovery is much slower than crisis lenders had predicted a few years ago. Foreign direct investment, while improving, is still weak. Young, smart Greeks continue to flee in droves. The new Greek diaspora is likely to continue until the economy becomes competitive. That could take years – or not happen at all.
Mr. Mitsotakis’s fledgling government has passed 32 pieces of legislation in less than five months, including a law that will allow the diaspora to vote and a budget that will reduce the marginal corporate tax rate to 24 per cent from 28 per cent and cut dividend tax in half, to 5 per cent.
His plan centres on reviving the entrepreneurial class, which was all but eradicated during the crisis, and luring big-spending foreign investors. Greece’s low savings rate means attracting foreign capital is essential. China – which owns the Port of Piraeus, one of Europe’s biggest cargo and passenger ports – the United States and Canada are at the top of his wish list. The Americans and the EU are not happy that China has dominated foreign investment flows in Greece in recent years, but the effectively bankrupt country was in no position to be choosy. “I’ve told my American and my European friends that China came at a time when Greece was considered uninvestable,” he said.
Canada is already one of the biggest foreign investors. Prem Watsa’s Fairfax Financial of Toronto is a significant shareholder in Greek lender Eurobank and the home improvement chain Praktiker Hellas – both bets on the German recovery. Eldorado Gold of Vancouver owns Greece’s biggest gold operations, although the mining adventure has seen as many retreats as advances.
On Dec. 20, Mr. Mitsotakis met with Eldorado chief executive George Burns to persuade him to keep the gold company’s investment plans intact. The day before, Mr. Mitsotakis said: “Since last summer we have issued a number of licences that were inexcusably stalled by the previous government. We are now renegotiating the contract that will provide the terms for the remaining investments to keep the number of jobs intact, minimize the environmental impact and provide social responsibility commitments to the local community. I am confident we will reach an agreement very soon."
In an e-mail, Mr. Burns mentioned another possible sticking point: “Of importance is putting in place relevant investor protection mechanisms, which have been provided to other foreign investors in Greece." He also said the company’s proposed “dry-stack” mine waste technology would cut the project’s environmental footprint by 40 per cent.
Mr. Mitsotakis is clearly ambitious and impatient. He knows his parliamentary majority and the protest fatigue among Greeks will allow him to shake up the system faster than previous governments have done. But some of his reforms, such as shrinking the civil service, may be met with fierce resistance. No Greek government since the 2008 crisis has been able to implement the reforms it had promised.
Is this time different? “I was elected on a platform of change – and change is coming,” he said.
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