14 Mar “Greece is a beacon of stability in the region, politically, economically and diplomatically.”
Interview with Konstantinos Karamanlis, Minister of Infrastructure and Transport, Greece
BF: Let’s start with the recent visit of Prime Minister Kyriakos Mitsotakis to the US, where he confidently stated that Greece is ready to punch above its weight. Looking back at your government’s first seven months, what have been the key indicators that corroborate that Greece’s economy rightly deserves the boost in confidence it has witnessed during this period, in your opinion?
MINISTER: Greece, today, looks very different than seven months ago. If you walk down the streets here in Athens, you will notice the change. The sentiment has changed. The psychology of Greek people and of investors has changed. We see that everywhere. We see that the major economic indicators look much better than they did seven months ago. Business confidence is up. Interest rates in our 10-year bond, which is our benchmark, are at historic lows. Basically, in seven months we have slowly achieved leaving the crisis behind us. For us, 2020 is extremely important because we have to take advantage of this very good sentiment that exists within the investment community, both foreign and domestic. We have to move forward in implementing all the big ideas we have about leaving the worst economic depression we have faced since 1929. I think that the Prime Minister said something that resonates: the fact that Greece is a beacon of stability in the region, politically, economically and diplomatically.
BF: You mentioned Greece as a beacon of stability in a complicated, to some extent, region. Speaking of Greece’s strategic geographic position, it is a key entry point for serving the Balkans, Central and Eastern Europe. What is your vision for further developing the strategic corridors between Greece’s ports, linking them to the railroad network and building a logistics centre along these corridors?
MINISTER: That is an interesting question, because that is one of the main goals of our government. We have proposed a very concrete plan about advancing infrastructure projects when it comes to ports, logistics centres and an electrified rail. It is no secret that Greece has been left behind when it comes to the operation of a modern rail system. Our port in Piraeus serves as a hub for products from South-Eastern Asia and is mainly a transhipment port. We have to take advantage of other ports as well, in Thessaloniki, Kavala and Alexandroupoli, for example. We need to connect these ports, so that the port of Thessaloniki becomes a gateway port for all products from the Balkan region. We need to basically connect the ports of Thessaloniki, Kavala and Alexandroupoli, then connect the port of Alexandroupoli with the Black Sea region. This would provide an alternative route to the one we have now through the Straits. This is a very ambitious plan. We are looking very closely and working very closely with the European institutions to take advantage of tools such as the Connecting Europe Facility, which is basically a way of guaranteeing finance for projects like that, and to also take advantage of other finance tools such as the European Investment Bank (EIB). We have already concluded a number of agreements with the EIB when it comes to, for instance, anti-pollution infrastructure projects and road safety projects. Recently, we actually signed an agreement for a huge infrastructure project for the development of a new airport in Crete with the help of the EIB. This government is open to private investment participation in big infrastructure projects in the transport industry. We want to bring private investors closer to this process – and we want to use all necessary tools such as public-private partnerships (PPPs) in order to promote all necessary infrastructure projects. They are so important because they create a huge driveway to ignite the Greek economy.
BF: What are some of the upcoming projects in the pipeline that will offer lucrative PPPs?
MINISTER: First of all, we have a number of projects in the pipeline. We have the privatisation of Athens International Airport, which I think is going to be a great success.. We believe that this is going to give a concrete signal to international investors in the market that we are open to do business. The second very important project is the concession of Egnatia highway, which is a major highway that basically connects the western part of Greece to the Greek-Turkish border. This highway is around 1,000km. We are moving very quickly with the Hellenic Republic Asset Development Fund, TAIPED, which is responsible for those privatisations.
We are also looking to conclude the Patra-Pyrgos highway, which is another highway that was left out of the concession of Olympia Odos. We have concluded a negotiation with the concession there in order to bring this small project within the Olympia Odos concession. We are looking to promote a very important project in Crete as well, which is the North Crete highway. This is something that the Prime Minister himself has placed as a top priority. Because you asked about PPPs, other projects have to do with finding out-of-the-box ideas to do something with our remaining 23 airports. This is also one of the projects that is under the general framework and supervision of my ministry. As I mentioned before, we are also looking at using PPP projects for advancing railways and ports – seeing how we can attract private investment and how we can bring them closer to infrastructure projects.
BF: You mentioned the issue of pollution. During this year’s Davos in January, the climate crisis filled the top five places on the risks report for the first time . In what ways are you integrating sustainable practices to the policies developed at the Ministry of Infrastructure and Transport?
MINISTER: First of all, I think we are one of the greenest governments in the EU right now because we have placed our priorities on policies and infrastructure projects that have to do with climate change. As you know, the EU has a very ambitious plan to move to zero carbon-dioxide emissions by 2050. As we mentioned before, part of that is to use alternative means of transport, so advancing the train is a huge boost to having an alternative means of transportation. That goes for the underground projects such as the metro line 4 in Athens. The tender has been concluded; I think we will have a contract signed in 2020.
Also, we are working very closely with the EIB in promoting infrastructure such as anti-flooding projects. We have signed around €800m, a combination of both state funds and loans with EIB. I think EIB participation is around €450m to €500m. Those are very important projects in terms of facing climate change consequences. We are also moving very quickly, again with the support of the EIB, to renew our bus fleet. We have one of the oldest, and not at all environmentally friendly, bus fleets. In Athens and Greece, the average age of buses is around 15-17 years. We are close to doing a tender in the next three to four months, so that we will have at least 1,000 buses in use in the next two years. EIB has been very supportive. It has moved its target to increase its budget to environmentally friendly investments by 50%. In the ministry, we are working with them very closely in order to promote and develop projects like the ones I’ve mentioned that are projects we need and have a positive environmental impact.
BF: Speaking of the UK, because the report will be published with the Guardian, Greece and the UK have expressed a commitment to strengthen their bilateral ties in the post-Brexit era. Tourism is also a strategic sector, with the UK being the number one market for Greece. What is your vision for building infrastructure that caters to touristic needs?
MINISTER: You are absolutely right that tourism is a major economic indicator. I think it consists of around 20-25% of our gross domestic product. We have to work around promoting infrastructure projects to promote tourism. We do not want to promote seasonal tourism. If you look at Athens, it has become a destination city over the past two years. This changed because there were specific projects that helped boost the profile of Athens – I think the Acropolis Museum was one of them. Basically, we have to find smart ways to promote the industry of tourism and infrastructure projects that can help in that way.
Our goal of advancing ports will also be for private use – for yachts and sailing boats. For instance, right now, we are already in the process of privatising one of the biggest ports in Athens, which is the Alimos Port. Projects like that will boost Greece’s presence in the industry of tourism. Not only do we want to increase the number of tourists that come to this country, but we also want to make them stay longer and we want to advance the process of improving the quality of tourism we get. We are working very closely with the Ministry of Tourism to implement specific policies that will lead towards that end. We hope that British citizens will continue to choose Greece as one of their top destinations.
BF: I have also met with the Ministry of Tourism and we spoke at length regarding the initiatives and plans to extend seasonality.
MINISTER: This is a general discussion, where the political and business elites will have to sit down with all the people and institutions involved in this process to determine the model that Greece has to follow for the next 10-15 years. What are our comparative advantages? Tourism is obviously one of them. Logistics, to my understanding, can be another, with projects creating and making Greece a hub of infrastructure for the region – ports, rail, industrial hubs and industrial centres. The Hellinikon is the biggest redevelopment and real estate project in Europe right now. I think all those projects that we have discussed will move towards making Greece a very different place and an economy that is more export-oriented than it was in the past.
BF: I had a meeting earlier with Enterprise Greece. We spoke about some sectors that people would not necessarily associate with the country – business process outsourcing, for instance. International companies are now setting up their bases in Greece because the new government has made it easier to set up a business. It is more streamlined but there is also the necessary human capital.
MINISTER: Greece can play a very important role when it comes to tourism, culture and being the industrial hub of South-Eastern Europe. We can become a base for startups and new technology companies. The government is very keen on attracting and facilitating those projects. Our biggest obstacle is overcoming the huge bureaucratic processes that exist in Greece’s public sector. But I think that we are moving quite successfully in trying to convince investors that things are going to change very quickly.
BF: With regards to the investment programme that you have in the pipeline, which is worth €12bn and has the potential to create over 43,000 jobs, how does your plan aim to tackle the 0.7% systemic gap in infrastructure that accumulated during the crisis over the past decade and how do you plan to bring Greece up to EU efficiency standards?
MINISTER: First of all, as I said before, infrastructure can be a huge driveway for the Greek economy, but we need to attract private investors. We can do that by simplifying all of the processes. This is something that we have already done in specific amendments that are now the law of the land. Over the next three months, we are going to propose new legislative initiatives so that we can simplify the bureaucratic process when it comes to big infrastructure projects. One idea that we have for specific projects is called ‘Unsolicited Proposals’. It is basically an idea that invites private companies and enterprises to come up with an idea for a major project, then we open up the tendering process – we basically decrease the length of time of the tendering process. This is an example that could work for small airports or industrial hubs. It could work for the old airport in Heraklion, Crete, which is a small project. We are working very closely with other ministries in order to find ways to make life easier for investors.
BF: The process of digitalising and being able to get licenses and permits online is certainly a breakthrough. I would like to invite you to make some concluding remarks and share a powerful and insightful message about Greece and its potential with the readers of the Guardian.
MINISTER: Basically, this is a new government that came to power seven months ago. In seven months, it has already facilitated new investments and changed the economic climate that existed a few months ago. As I mentioned before, the sentiment is very good, but 2020 is a year of delivery – we have to deliver on all the big plans and promises that we have made. For me, it is crucial that the Athens International Airport bid goes well. This is the first crash test for the Greek economy. In this project, 30% will become privatised. The second very important project that we have for the next year is to find some mobility when it comes to the Hellinikon project. Those two projects are going to change the idea of how investors view Greece. I am very hopeful that this will happen and both cases will be successful. This will signal to both domestic and foreign investors that the crisis is over and Greece is back on the right track.