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Special Insert: Investments & Real Estate in Greece

When Diplomacy Serves the Economy and Investment

ATHENS – For about two and a half years now, the current Greek government – still near the beginning of its term – has officially incorporated economic diplomacy into its arsenal for the general economic development of the country, and this move seems to have already begun to bear fruit, even creating a great deal of hope for the future. Kostas Frangogiannis, Deputy Minister of Foreign Affairs in charge of Economic Diplomacy and Extroversion, spoke with The National Herald about how diplomacy marries with the economy.

The National Herald: Diplomacy is indeed a means of economic development. Are we in Greece late in realizing this?

Kostas Frangogiannis: The highlighting of the importance of the role of economic diplomacy in the overall effort of Greece to expand its horizons and promote a new model of development of the country was a vision of the government and of Prime Minister Kyriakos Mitsotakis from the first moment he was elected in July 2019. Today, two-and-a-half-years later, I dare say that it has become common sense that foreign policy today is not limited to national issues, but extends to many areas, to education, culture, tourism, gastronomy, and, of course, the economy.

The decision to include all the productive public actors involved in the extroversion of the economy in the official management body of the country’s international relations, in the Ministry of Foreign Affairs, was a catalytic reform, the tangible results of which are reflected in the increase of exports, the increase of foreign investment, but also in the spectacular improvement of the image of Greece as an investment destination.

It is the first time that we have, as a country, a comprehensive program for our international economic relations, the National Strategic Plan for Extroversion, which is prepared by the Ministry of Foreign Affairs’ General Secretariat for International Economic Relations, utilizing the network of the Bureau of Economic and Commercial Affairs Abroad. Under the National Strategic Plan for Extroversion, the actions of all productive ministries in terms of trade relations and investments are developed in a coordinated and targeted manner, by geographical area.

And to give you some figures for the course of exports and investments in the last two years, I point out that the total value of exports reached, in the period January-November 2021, 36.3 billion euros, showing an increase of 30.8%. In addition, in the first half of 2021 alone, net inflows of Foreign Direct Investment amounted to 2.31 billion euros, showing an increase of 34% compared to the corresponding period of 2020.

At this point, I would like also to point out the beneficial role of economic diplomacy in alleviating tensions between neighboring countries over issues of traditional diplomacy. The so-called positive agenda initiative with Turkey, which we have adopted at the Foreign Ministry, has exactly this goal. That is, the active promotion of bilateral economic relations that can only be mutually beneficial, without touching on sensitive issues in our relations. This is a low-diplomacy agreement between the two countries that, regardless of their geopolitical problems, must act for the good of their peoples without cutting the bridges of communication. This positive agenda is developed around sectors such as transportation, environment, tourism, small and medium-sized enterprises. We are developing a similar approach in our relations with the countries of the Western Balkans, where we are constantly seeking a dynamic return and presence both at the geopolitical level and at the commercial and business level. And we see that this policy works.

TNH: At what level are foreign direct investments with respect to GDP in Greece and what is your ambition for the foreseeable future at least?

KF: As I already mentioned, foreign direct investment showed an increase in 2021, compared to 2020, by 34%. In particular, regarding the strategic investments, the fast track investments that are implemented through Enterprise Greece, I mention, indicatively, that while from 2015 to 2019 the country had reached 1.6 billion euros in strategic investments, the corresponding amount for 2020 reached 2.8 billion and for 2021, 3 billion. In two and a half years of our government, we have exceeded 7 billion in strategic investments and from companies that are global giants, such as Microsoft, Pfizer, Amazon, Google, JP Morgan, and Cisco. Two points are of particular interest here, firstly that these investments were made despite the negative impact on the global economy caused by the COVID-19 pandemic, a fact that clearly proves that the global investment community now trusts Greece. And second, that there is a change in the quality composition of investments, with the participation of lower value-added activities – such as sales and marketing – reduced, but with investment in research and development centers and industry increasing. It is obvious that the profile of the country has now changed, Greece is seen as a modern, developed western power, in a geographical area central to global interests, as a bridge between three continents, Europe, Asia, and Africa.

Our goals and aspirations for the immediate future are the further increase of investments at very high rates for the next two years, so that with a horizon of a decade we can reach the doubling of investments in terms of GDP, from the current 11%, to 21% which is the average in the EU. The reforms that we continue to make in our legislative framework, in combination with the rich and targeted action plan provided in the National Strategic Extroversion Plan, will play a catalytic role in the implementation of this ambitious goal.

Our goals are obviously to increase exports of goods and services, which is expected to be large in 2022 and 2023, as the international environment will improve in the post-COVID era and international supply chains will be restored.

TNH: It is a given that the economic climate in Greece has changed recently, despite the pandemic and all the problems it has brought. Can we, however, say that Greece has become an investment destination or do we still have a way to go?

KF: I have already given you a picture of the spectacular change that has been recorded in the image of Greece as an investment destination. It is now a fact that a large part of ‘Repositioning Greece’ has been achieved and the hostile investment climate of previous years has been abandoned. Greece is treated everywhere as a safe investment destination and as a reliable partner. This has been reflected in recent surveys, such as the Ernst & Young survey, where Greece is ranked among the 10 most attractive European investment destinations, while 75% of companies estimate that Greece’s attractiveness will improve even more within the next three years. After all, the vote of confidence that the country has received internationally, is reflected in the significant investments of the world giants that I mentioned above.

Of course, we still have a way to go. And, of course, we continue the efforts at an intensive pace. To this end, we have launched travel/business missions to Libya and Saudi Arabia within the next quarter, and my visit to the Technology Mecca, San Francisco/Silicon Valley, is set for March 26, rescheduled from last December, due to health restrictions.

This is a trip that I am looking forward to, and I confess, with great expectations, as the main purpose of my visit is to meet people and contacts with large companies that are potentially interested in investing in our country.

TNH: Having seen investments from giants like Pfizer, JP Morgan, can we expect other similar investments?

KF: This is undoubtedly our goal. And I believe that we have laid strong foundations that make our country an attractive destination and a regional center for research and development in critical areas such as energy and technology, and, of course, in our traditional powerhouse industry, tourism. With new significant tax incentives for research and development expenditure, with new institutional frameworks for i.e. technologists and with the strong mobility of economic diplomats, both at the level of political leadership and at the level of service agents, I firmly believe that the conditions are now ripe in Greece for attracting and launching even more dynamic and innovative companies.

In the near future, and through the promotion of our energy cooperation with countries in the Middle East and North Africa, we expect investments in the fields of green energy and renewable energy sources, in order to facilitate the clean energy transition of our country.

In addition, we expect investments in mature projects in our country in the field of tourism but also in the field of digital interconnection with Southeast Asia and Europe, a project that will strengthen the position of Greece as a regional digital hub.

TNH: What would you say to the Greeks living abroad who want to invest in Greece?

KF: About a few weeks ago, I had the pleasure to participate in a hybrid event on the Greek Diaspora as a business network, an event organized by AHEPA and PADEE at the War Museum in Athens. It is indisputable that such a network has a huge value and importance, with our Greeks abroad looking for and highlighting issues that are mutually beneficial for both their country and Greece.

Until today, this network was activated more for the promotion of Greek issues and rights. However, the Greek diaspora can now play an equally mutually beneficial role in economic diplomacy.

There are countless Greeks who either run [companies] or are in high-ranking positions abroad. Many of these companies are already active in Greece and others are looking for attractive investment destinations.

At the Ministry of Foreign Affairs, we use this data in our planning and strategy, hoping that our Greek Diaspora has regained confidence in our country and will prefer it not only for their holidays, but also for their investments.

One initiative we are launching, about which I can tell you more after my trip to San Francisco, is the establishment of the Silicon Valley Greek Hub, following the model of similar initiatives in many European countries and beyond, to support Greeks and the Diaspora who develop innovation actions and are active in the field of start-ups. In addition, we are promoting legislation that supports and attracts ‘digital nomads’, we have created a favorable environment for taxation and investment incentives, while we hope that facilitating the vote for Greeks abroad is another step in developing a different relationship between the Greek state and the Diaspora that is mutually beneficial for us all.

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