THE Prime Minister Kyriakos Mitsotakis participated in the opening open debate of the 60th Munich Security Conference, entitled “Currency for Change: World Politics on a Budget”. German Finance Minister Christian Lindner, Argentine Foreign Minister Diana Mondino, Liquidity and Sustainability Facility President Vera Songwe and PIMCO Director and Vice President John Studzinski also participated in the discussion. The discussion was moderated by Zanny Minton Beddoes, its editor-in-chief “Economist”.

Here are the Prime Minister’s statements (unofficial translation from English):

“First of all, thank you, Zanny, for the good words about marriage equality legislation. I’m here with a few hours of sleep and I believe that it is a landmark decision for my country and I am very proud to have been able to bring it as the leader of a centre-right government.

Now, to answer your question, looking at many European countries and observing their fiscal situation over the last 30 years, I think a lot about the fact that Greece never really had a “peace dividend”in the sense that we were constantly faced with geopolitical threats in our neighborhood.

Even during the very difficult years, we have always spent more than 2% of GDP us for defense. So in our case, we didn’t really have to do much to increase our ability to finance our defense spending because we faced very particular geopolitical challenges, whereas other European countries, obviously after the fall of the Berlin Wall, maybe didn’t feel the need to spend so much on defense.

But on the subject of this discussion, “can you do foreign policy on a budget?“, the simple answer for me is “no”. And we should all be able to spend more on defense, but also to allocate defense funds more intelligently.

I was reading an article by her President of the European Commission and he was very clear about the need to mobilize more funds, both nationally and at European level, which will be a challenge at a time when our budgets are under pressure because we also need to finance the climate and technological transition. At the same time interest rates are at higher levels and we are coming out of the Covid period. We had to spend a lot more to recover from the pandemic.

Therefore, Greece has managed to achieve what you described as a situation where we can spend more on defensewhile reducing our debt-to-GDP ratio, simply because our economy is growing much faster than the eurozone average.

At the end of the day, if the economy isn’t growing, you won’t have the capital to finance either defense or climate transition. Therefore, the underlying growth and competitiveness of our economiesin my opinion, is crucial. It applies to Greece, I believe, it applies to Germany, it applies to all European countries. We consistently exceed our fiscal targets and this development has been able to enable us to do more, not only for defense but also for social policy.

Now, if we look at the European dimension, I think one of the challenges for the next European cycle is how to do more in the field of defence. Does this mean more fiscal powers at European level? Does this mean giving the European Investment Bank a mandate to finance more defence-related projects, which may be longer-term and higher-risk?

What it certainly means, and I speak from the point of view of a country procuring defense systems, is a clear rationalization of the European defense industry, which today is incredibly fragmented. For example, when we are looking to buy a new ship, a new frigate or a new corvette, we get five or six different offers from different European countries, for different European ships. This doesn’t make much sense.

We need to agree on which projects we need to pool resources into and in which we can be truly competitive, and in relation to USA. If you look at the airplanes, do we really have an airplane now that can compete with a fifth-generation fighter made in the US? The answer is: probably not. Therefore, at some point we also have to make some strategic decisions about where to direct our resources. And this will indeed enable us to buy European defense systems.

One last point, very important: on the new fiscal rules we agreed to deal with defense spending in a slightly different way. In other words, under certain conditions, defense spending will be excluded from the excessive deficit calculation. This is something we insisted on. And this also makes it clear that when we look at the totality of public expenditure, defence, because of its critical importance, is something different, it is something existential and so important that it must also be treated differently from an accounting point of view. So I think this is another important step in the right direction. Hopefully we won’t be able to use these exceptionsbut it is good to know that she the possibility really exists”.

“Look, what we achieved after covid were incredibly important. I remember my conversations with Angela Merkel at that time. She was very wary at first, but I think we managed to convince her and NextGenerationEU is, in my opinion, a European landmark project.

We use these funds to promote the green and digital transition, to make our economies more competitive. And of course I understand the skepticism of the so-called “frugal” countries, “how do you actually use the European funds?”.

But in the end, if we create a positive precedent with NextGenerationEU, I think we will have a convincing argument to be able to not necessarily create a new NextGenerationEU, but to look more convincingly at what it means to really create more own resources at the European level.”

“When we look at how the Departments of Defense make procurement decisions, we see that a change of course in the future is not counted at all. We are talking about long-term projects, large purchases of ships and aircraft.

But we need to make sure that the Departments of Defense and Treasury are already taking into account the changing nature of warfare and incorporating new technology which can be much cheaper, much more innovative, much easier to develop. And that requires a different mindset if we consider that these are traditional public services that have been trained to think only in a certain way.”

“I was thinking, as I listened to your comment, of our own case. We had our own geopolitical challenges, dealing with an aggressive neighbor to our east, and we always believed, and continue to believe, that we have to spend enough to have a credible deterrent.

However, of course we are trying to reach out to Turkey to normalize and improve our relations. And in the long term, because this is a long-term process, yes, this could at some point lead to a more permanent recession that would lead us to reconsider slightly, but I emphasize the word “slightly,” the way we allocate funds to defense us industry.

Of course, I believe so when you’re in a particularly complicated geopolitical position, the risk of being naive about your long-term planning can actually lead toin some years, in a very difficult position.

I believe we all seek peacebut there is also the well-known maxim that “if you want peace, prepare for war”.

I think the way of thinking right now in Europe is very much in that direction, because we cannot underestimate the trauma of a war in the heart of Europe, which was completely unthinkable three, four years ago, certainly for a generation that grew up after the fall of the Berlin Wall with the optimism that the dark continent had left behind its dark past. It’s kind of a shock and a jolt.”

“Greece does not belong to the G7 or G20 countriestherefore does not participate in these kinds of meetings where very important decisions are made.

But I want to go back to the comment you made earlier about fundamental trust and the ability to discern where we can work together and to whom we are natural strategic competitors.

What I do know is that when these issues are hyper-politicized and become part of internal political strife, the most rational decisions are usually not made. And that’s why it’s good to participate in these kinds of meetings because I think they put the issues in a clearer perspective.

And it is also a great opportunity to discuss with our Chinese counterparts to see how we can achieve this admittedly extremely complex balance.”