Greece Finance Minister Kyriakos Pierrakakis Talks EU Seeking Trade Deal
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There's no business like small business. Hiscox Small Business Insurance. Bloomberg Audio Studios. Podcasts. Radio. News. It's a very filled docket here in Europe dealing with a number of different issues. And of course, I think front and center probably where you're going to get is this question of trade, though this is technically at the EU level sort of competence. This is the inevitable conversation really around the world. So we're very pleased to be now joined by the Greek Finance Minister Kyriakou Sapirakakis. Thank you so much for joining us today here in Brussels.

So listen, we just had the press conference from Geneva, from the Swiss. We have this sort of reprieve on the trade deal with the United States and China. Sitting here in Brussels, sitting in Athens, what does that tell you about what the United States is trying to achieve? And do you think that puts us closer towards some kind of resolution with the United States? First of all, it's great to be with you. I think that the news are positive. It's a positive development, the one that we are seeing. Obviously, we will have to study

the details of any agreement as we plan to do in the Eurogroup and the ECOFIN meetings with my colleagues at the EU Council. But overall our position as Greece, you know, we're a member state of the European Union that believes in free trade in a union that believes in free trade.

We hope to lower the temperature in the room and any such deal, any such development, it's already reflected in the markets, is quite positive. And in terms of kind of what, because we also heard from Scott Besson saying that the EU has fallen further back in the line in that press conference. He says that the UK jumped to the front, the Swiss are doing well. What is your sense of how close the Europeans are to actually reaching a deal with the United States? Their task is made more difficult, obviously, by the fact that there are 27 member states.

do you think that that puts us at a disadvantage as here in Europe in terms of negotiating an actual outcome? I had the chance to meet with Scott Besant in Washington in the context of the IMF Spring Meetings and my message to my American colleague was the fact that we hope to move quite fast, quite swiftly vis-a-vis achieving a very positive trade deal. The position of my Prime Minister, Kyriakos Mitsotakis, was

Ideally, we should have a zero-to-zero tariff relationship with the United States. As I said, we hope to lower the temperature in the room. I think it's feasible. We are a 27-member state union, as you suggested, but I think that we can move quite fast. And given what we saw from the UK, you still have those 10% tariff barriers there. Does that give you an idea of kind of what you can hope for from a deal with the United States? Because zero-to-zero seems fairly unlikely at this stage. Well, look, we're going to shoot for the best. We're hoping to achieve the best. Generally speaking, we should try to remove trade barriers.

But if you look at the EU budget, by the way, at the structure of the EU budget, I think around 13.7% of the EU budget already comes from tariffs as we speak. It's part of the overall EU trade architecture. But hopefully, ideologically, what we believe as Europeans should be to eliminate those trade barriers. Plus, we should be trying to remove the internal barriers that we already have within the European Union, the Draghi report, the letter report. And this is part of an overall discussion of an overall new architecture that we should...

aim to strive for. And one of the features of the trade war has also been extremely heightened market volatility that we've seen throughout the world. I remember a time that when you had that market volatility you had German and Greek yields moving in the opposite directions. They have been moving in lockstep. We've seen basically, you know, that story be a sort of haven assets within Europe. What do you think the opportunity is from the sort of

US policy in terms of attracting capital here into Europe, attracting talent. How does Europe capitalize on some of the uncertainty we've seen out of the United States? It's funny that you mention that volatility because in the past my country used to play a role in this discussion. We created that volatility and now we're a stability story 15 years later after a lost decade.

Plus, to add to your point, we discussed tariffs. Uncertainty is a much bigger problem. So the positive premium of those discussions, of those trade deals that we're seeing on the ground right now on behalf of the United States, with China, with the United Kingdom, with us as a next step, is to remove that uncertainty from the table in order to have a positive growth dividend in this debate. Is it an opportunity for Europe? Yes. We should always view crisis as opportunities. If you look at European history, by the way,

In every move of European integration, you had the crisis that catalyzed that integration, which we then metabolized as a positive institutional reform move. We should be able to do the same. The banking union, the savings and investment union, the capital markets union, all those things that we have been discussing, as you very well know, for quite some time, it's a topic, again, of discussion at the Eurogroup meetings, at the ECOFIN meetings.

it's an opportunity and we should grasp it. And when you think about that integration kind of concretely because again as you know we've been talking about the capital markets union for a decade at least and now we have some renewed urgency but I'd like to get a sort of an idea from you when do you think we can make meaningful progress on this and where do you sort of stand where do you think the sort of hurdles are?

The hurdles used to be that we had to negotiate a full spectrum of things, of details, of member states' sensitivities in all of those discussions. But again, a crisis can help as a catalyst vis-a-vis removing those sensitivities, vis-a-vis removing those hurdles. I think that there is a real opportunity on the table.

we plan to be very constructive with regards to achieving a very positive result. And I also want to get your take on some of the domestic issues going on within Greece. You are now rescheduling, you're paying ahead of schedule a lot of your first bailout debt. Is that something that we can expect more of? When do you think the first bailout can be completely behind you? Are we expecting that to come ahead of time? It should be completely behind us by 2031. This is 10 years ahead of schedule. As we have been

discussing both domestically and internationally for us, for my generation, for my government. Fiscal prudence is not a policy choice. Fiscal prudence is a regime. After having a very difficult decade, a lost decade, we lost 24 points of GDP. Right now we're growing ahead, much higher than the EU average, 2.3% growth. We had a headline surplus. Six countries in the EU had a headline surplus. We were one of the six.

and we plan to continue de-escalating our debt. We don't plan to pass the bill to the next generation as all the previous generations in Greece did. And in this context, we hope to create positive tailwinds even if we see negative headwinds in the international economy. And part of the contributor to that surplus that you had, that surprise surplus that you had last year, that was quite ahead of what anybody had anticipated, was a drive to basically deal with tax evasion, to collect taxes.

Again, is this something that we can expect more of going forward? And what is it going to mean budgetarily? Do you expect more surpluses in the future? And how big, do you have an idea of how big that shadow economy is and how much revenue could be there for you?

The first point would be that the expectation for the next primary budget surplus for next year, for this year, is 3.2%. So overall, we hope to achieve primary budget surpluses in all future scenarios. Second, if you look at studies that were conducted on behalf of the IMF in the previous years, the shadow economy was calculated to be in the ballpark figure of 30%. In the past, it was even 40%.

In the last IMF study that calculated the shadow economy in Greece, the number was 15%. And right now, it's even lower. We plan to lower it further using digital technologies to capture tax evasion. We managed to do that and achieve the budget surplus that you mentioned before.

We had a VAT gap, we have a value-added tax in Greece. Half of that VAT gap is already captured by our smartly shaped policies. We hope to do more. Overall, I would say digitization is a success story for Greece. If you look at our government platform, gov.gr, it has more than 2,000 services offered digitally.

And I've talked to a lot of finance ministers over the last couple of months and as you can imagine the focus has been on trade. I just want to return to that just for a moment. Do you have an idea, do you have your arms around how damaging this could be to the trade war is, to the Greek economy? Or is it still too early to say? Because every finance minister I spoke to the last few months

so that basically it's incalculable. Now do you have an idea of what the damage to the Greek economy could be? I adhere to the position that it is extremely difficult to calculate the effects. The primary level effects in Greece, if you look at them, they are limited. We have less than 5% of our exports, 4.8% of our exports go to the United States, it's less than 1% of our GDP. But it's a huge flow for trade. But it's a huge flow for... we're a maritime nation, it's a huge flow for trade. We're primarily worried about the second order effects. What would happen, for instance, if

the American economy moves into a recessionary or even to a stagflationary environment. What happens if you have a recession in certain European markets which directly interact with the Greek economy? All of those things worry us. This is why we believe that we should remove as much as we can the heat

from the room. And one of the topics that you'll be discussing today will be, no doubt, the defense plans within Europe in terms of dealing with, and Greece is one of the sort of highest spending nations in terms of GDP and the NATO commitment above 3%. You know, the Trump administration would like to see 5%. Do you think that we need to get to a world where we're closer to 5% rather than 2%? And is there an avenue to get there without European joint debt? And where do you sort of appraise the debate on the question of joint debt for defense in Europe?

I would say first of all that for us defense spending was not a policy choice per se. For us it was geographic destiny. It was one of the things that we had to focus on and invest on many generations before. And we're hoping to do it better in the future with more spillover effects in the economy. There were certain Bloomberg reports in the past which underlined that Greece was not

spending the defence amounts in the maximum spillover effects capability that it could. We hope to do more of this. For us that would be a growth dividend. But overall, the treatment of defence spending as it currently takes place in the context of the EU Council, I think is positive. We should have some exemptions vis-à-vis the new fiscal rules of the European Union and the current geopolitical environment mandates those exemptions. And we paid our fair share even before. More EU member states should be able to do that. Germany is now doing that.

I think that we should have those degrees of flexibility with regards to achieving this. And just a sort of final question on trade, because this is another question that I think is a very big one, a difficult one to answer. When we look at the trade barriers that were erected between China and the United States, the big concern is that all of that overcapacity flows to rich markets. There really is only one that rivals the United States, that is the European Union. How do you treat some of that oversupply coming from China, potentially coming into the European market? And what we're seeing from the United States rewriting this trade order, what have we learned?

about how trade deals should be structured and potentially differently in the future to protect, you know, sovereign industry? We don't yet know. There's lots of uncertainty. There's lots of uncertainty on the table right now in all of those discussions. We don't yet know if we're going to be in a zero, in a limited, or in a high tariff environment. You know, the world that we're going to be at in 90 days, 100 days from now will directly affect

That's the answer to your question. But what we do know is that tariffs are going to directly affect supply chains. If we look at what happened in the past, take the 1930s, the Smooth Holy Tariff Act of the United States.

This had a very adverse effect for the global economy. We should do our best with regards to trying to avoid that at all costs. And this is what we plan to do at the Guru Group and at the ECOFIN meetings. Well, Kyriakos Piedrakakis, I look forward to speaking to you in 90 days when we have certainty on the world that we're living in. Hiscox Small Business Insurance knows there is no business like your business. Across America, over 600,000 small businesses, from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance constantly.

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