JOURNALIST: A number of Cypriot companies are active and investing in Greece. What would you say to a Cypriot entrepreneur who is thinking about investing in Greece?
K. FRAGOGIANNIS: We have to look at the criteria a foreign entrepreneur considers when investing in another country. Most people believe low taxes are the key criterion. I’m not saying this isn’t important, but it doesn’t top the list. The main thing is for there to be a market for company’s products and services. The second is what our government has achieved: Political stability, economic growth and social cohesion. And no one wants to invest where they aren’t welcome. The society has to show that it welcomes foreign investment, that there is interest in the jobs this investment will create. It is obvious that today, seven months after the July elections, there is economic growth in our country. The borrowing rate on 12- and 10-month bonds has fallen steadily to historical lows, and it is negative for this quarter. The financial markets see what is coming and are acting accordingly. There is a positive climate, a tailwind. Greece is entering a new growth cycle – against international trends – under the best possible conditions: A liberal government with an absolute majority and four election-free years ahead is creating the stable conditions investors seek. The question for an investor now is: Why shouldn’t one invest in Greece, given these macroeconomic conditions?
JOURNALIST: In an environment of trade tensions and conflicts, how much more difficult is it to attract investments? Does the security factor play a role? What are investors looking for?
K. FRAGOGIANNIS: We all know that Southeast Europe and the wider eastern Mediterranean is a volatile region. In the 20th century, the region was the powder keg of wars, armed conflicts and geopolitical crises. In the face of these challenges, Greece has made a strategic choice to promote political stability and respect for international law. But what the government has achieved in its first months in office is to create the framework that puts our country back on the investment map, reversing the economic climate. But the country’s image is very important when we are attracting foreign investors. This image is usually associated with our country’s natural beauty, history and culture. But there is another image – that of unemployment, unreliability, the crisis. We want to change this. So, with our Prime Minister supporting this idea, we set up a working group called ‘Repositioning Greece’. The central idea is to create the image of a modern Greece that retains all the values of the past but is firmly grounded in the present. In other words, high tech, sciences, distinguished performance in the sciences and the academic community. We want to create the reality of the new Greece in the eyes of the international community. Not only for investors, but also for the customers of Greek enterprises that are looking to export their products.
JOURNALIST: The Balkans were a privileged space for Greece. The past decade has seen something of a retreat in this regard. Is the prospect of Bulgaria and Romania adopting the euro and joining the Schengen area an opportunity for renewed ties with the Balkan hinterland, or is it a threat? A threat in the sense that both countries have made great strides and offer tax advantages.
K. FRAGOGIANNIS: In the Balkans, Greece sees regional cooperation and the accession of individual countries to the EU as effective tools for the overall development of the region. Particularly in terms of the prospect of creating a single market with a single currency and rules on the movement of citizens of Balkan countries. We do not fear the deepening of the union, and as I said earlier, tax incentives are only one part of the feasibility studies for major investments. And we mustn’t overlook the fact that our country’s new government changed the tax law with the prospect of bringing taxes down for companies over the next three years. It is in the interest of Greece and its neighbours for there to be more Europe, and in this context, we do not fear the enlargement you’re talking about.
JOURNALIST: Turkey is a difficult country, but it has a large market, a population of 80 million. Is there room for the development of bilateral relations?
K. FRAGOGIANNIS: There is always room in diplomacy. Even in the most difficult times in our country’s relations with Turkey, diplomatic channels remain open. Greece isn't demanding anything, but neither is it giving anything away. It does not provoke, but it does talk. For us, the path of dialogue is open. But rather than going into the political aspect of our bilateral relations, I would like to focus on the two countries’ trade relations. Total Greek exports to Turkey in the first half of 2019 fell by 28% as compared to the same period in 2018. This was due mainly to a large fall (of 42.7%) in exports of fuel/petroleum products after the new refinery in the Smyrna area went into operation last autumn. If these products are taken out of the equation, exports fell only slightly, by 1.2%. Cotton exports from Greece to Turkey rose by 90.7%, and this did a great deal to offset the fall in exports of other products. Exported cotton is a raw material for the high-quality textiles Turkey produces. In the same period, Turkish exports to Greece increased by 3.2% and included vehicles, machinery and electrical equipment, steel products, plastics and clothing. The course of bilateral trade can, to a certain degree, be attributed to the fall in economic activity in Turkey during the first half of the year. So, the two countries’ trade relations make it clear that there is a lot of room for growth. An improvement in the political climate would benefit both countries.
JOURNALIST: In your planning, is Cyprus seen as competing with Greece? Can Cyprus and Greece work in tandem to attract investments?
K. FRAGOGIANNIS: At the Ministry of Foreign Affairs, we believe that it is of vital importance to create and promote a broader positive cooperation agenda, extending to multiple sectors, in the country’s international affairs, focusing on development of synergies and joint activities. Specifically, the trilateral cooperation between Greece, Cyprus and Israel has proven very useful, contributing significantly to the security and stability of the Middle East region. In this context, the three countries have signed an agreement on implementation of the EastMed pipeline, a project that is expected to impart further momentum to the economic cooperation of neighbouring countries, enhancing energy security. This pipeline is also aimed at developing interregional relations and networks in various sectors, including trade, tourism and environmental protection. The recent developments in Libya have rendered this cooperation even more critical.
February 16, 2020