Kathimerini Interview with Vassilis Nedos
June 7, 2020
Kathimerini: Thanks for hosting us here. It’s very beautiful.
Ambassador Pyatt: It’s a good way to celebrate the return to something more like normalcy.
Kathimerini: I agree with you. Let’s start by going exactly to the post-COVID era. We have been navigating through uncharted waters and I wanted to ask if you think that the post-epidemic situation in terms of the U.S.-Greek relationship is reshaping the environment and if you think that the post-COVID situation is also creating another environment for global relations as well, and how the U.S. and Greece can work together in that new era.
Ambassador Pyatt: A really good question. Let me start at the very high level, at the strategic level, and then come down to the Greece issues that you talked about.
I think it’s really too early to tell how this crisis, certainly the most severe global crisis of our lifetimes, is going to affect international politics. There are some trends that it clearly has accelerated. The clash between China and the West has become sharper as a consequence of how the PRC handled this pandemic and the changes that that is forcing in terms of global supply chains, in terms of how we think about the rivalry with China, but also the pressure that China puts on some of its interlocutors.
There are other things that won’t change. I disagree with those who suggest that this crisis is going to undo globalization. Our system is too connected to disconnect it. In fact, in many ways the crisis and the pandemic are a reminder of how we need strong international cooperation and strong international institutions to manage this era of increased global connectiveness. The reason we are in the mess we are in today is because a disease that should have been contained in Wuhan or Hubei Province was allowed by the authorities in Beijing to spread globally. Why did you have flights locked down inside China while aircraft were still traveling to Europe and to the United States carrying the disease with them?
We’re going to have to work together to manage this pandemic, to deploy whatever vaccine is eventually discovered, but also to make sure that this never happens again because of the huge human and financial costs.
So I think your strategic level question, the answer is it’s just too early to know how this is going to affect, but it will certainly affect things. I think I’ve mentioned to you before the analysis of Henry Kissinger, which I subscribe to in terms of the major areas where this will change the international system, but also how it will reinforce the importance of the United States continuing to invest in the system of international institutions and alliances that has been the bedrock of peace and stability in the 70 years since the end of the 2nd World War.
The U.S.-Greece part of this, I think it’s clear where we are. First of all, we’re enormously fortunate that we had the Prime Minister in Washington, DC in January before this mess began – that we had a visit which delivered such a clear message in terms of the two governments’ priorities on the U.S.-Greece relationship and helped to sharpen up our agenda on the work that we need to do going forward, including engagement on technology, advancing the strategic dialogue, reinvesting in the 3+1 and Eastern Mediterranean security, building up our defense and security relationship. So we locked this all in. We put a few more points on the scoreboard in terms of our bilateral ties in a way that was very usefully removed from American domestic politics. It was very powerful to have the Prime Minister engaging with both Nancy Pelosi and President Trump and Secretary Pompeo and Vice President Pence the way he did. It sent a clear message in terms of bipartisan support for Greece as we came into an election year, which is going to be a very difficult election in the United States.
So we have strong momentum. The health emergency made us focus for a couple of months on that aspect of it, and I’m very proud of the cooperation we had with the Ministry of Health, the Ministry of Digital Policy, the Ministry of Citizens Protection, as we worked to coordinate our approaches, to make sure that Greece had a clear picture of what was happening in America and the U.S. government had a clear picture of what was happening in Greece.
Now that Greece has begun the process of reopening we have shifted our priority back to a focus on the economy — how we help Greece to ensure that you have a V-shaped recovery, that you get back to positive growth as quickly as possible. And I think that effort will be helped by a couple of factors: one is the reputational gains that Greece has enjoyed because of its very good management of the pandemic, the way in which Greece exceeded expectations and out-performed many of its European neighbors in terms of managing the disease. But second, and this is the part of the story that hasn’t gotten so much attention, is the really tremendous progress that the government, that the Prime Minister and Minister Pierrakakis and Minister Georgiadis and others were able to make in the digital transformation of Greece — an area where Greece was near the bottom of the European Union when this government took charge, and where Minister Pierrakakis has been able to build on the starting initiatives that Minister Pappas put in place to really lift up and to leap over Greece’s ranking in terms of digital governance. And I’m very proud of the fact that American companies, American technology have been such an important part of this.
So there’s going to be a lot of work to do but we, the United States, are going to remain strongly focused on how we continue to work across all of the pillars of the strategic dialogue but with a particular focus over the next few months on supporting Greece’s economic recovery, building our trade and investment relationship, leveraging tools like the Development Finance Corporation which we can talk about later, and identifying the sectors where we see Greece poised for a rapid, positive growth story.
Kathimerini: That was going to be my next question, you actually kind of answered it so I’m going to be more specific.
There was U.S. interest for some strategic infrastructure like Alexandroupolis, Elefsina. You mentioned the technology sector which is very important. And there is some concern in Greece because of the crisis, maybe U.S. momentum on these investments has a little bit, priorities have shifted a little bit. So one thing is that. The second one you already mentioned, DFC. I would like to ask more specifically if there are money that can be levered through the DFC. And on a more strategic standpoint if you think this is also a way of countering Chinese soft power influence in the region.
Ambassador Pyatt: Three separate questions there. I will try to remember them and answer them backwards.
The Development Finance Corporation was created by the U.S. Congress in order to give the U.S. government a tool to push back against our great power rivals and in particular to create an alternative to the checkbook diplomacy that China and other rivals have been engaged with through mechanisms like the Belt and Road. It was very clearly understood in Washington that we needed to put an alternative on the table.
When DFC was established, its original focus was in particular developing countries where China, in particular, has done a lot of presenting what looked like attractive loan packages for things like railways or steel mills or power plants.
Starting when I was actually back in Washington in November for the Kathimerini Conference, I had an opportunity to meet with Adam Boehler who is the CEO of the Development Finance Corporation and his team. And we talked a lot about the particular challenge that we face here in Greece as a country which is a member of the Euro Zone, which is a member of the EU, a developed economy but which China itself has identified as the dragon’s head of the Belt and Road Initiative in Europe. And I underlined to him my view that we need tools like DFC here.
I was very pleased working with some of my colleagues and interlocutors in the U.S. Congress that we were able to achieve support in December for an amendment to U.S. law which specifically authorized the Development Finance Corporation to take a financial position in Greece and in developed countries like Greece where there are strategically important projects particularly linked to the energy sector which has been such an important part of the U.S.-Greece cooperative agenda recently.
So DFC is open for business in Greece. We talked about this when the Prime Minister was in Washington in January. Since then, there’s been a really effective dialogue with Minister Georgiadis who’s been leading this effort. DFC has sent delegations from Washington. We had a video call just a few days ago between Washington and Minister Georgiadis and Frank Fannon from our Energy Bureau to talk about the particular projects in Greece that are at the top of the DFC agenda.
One that they have expressed interest in is the Elefsina Shipyards. That’s right now with the Ministry of Development in terms of managing the financial and debt aspects of that project. But we look at Elefsina Shipyards as a model similar to the example in Syros where an American company, Onex, successfully worked with two Greek governments, with the Tsipras government and with the Mitsotakis government, to bring that shipyard back to life in a way that has been a great success for Syros. I know the workers in the shipyard are very proud of the fact that they’ve been able to apply their skills again, and it would not have happened without Onex and U.S. capital coming in.
Elefsina is similar but bigger, and the DFC has formally expressed its interest in that project. That was exactly the focus of the video that we recently had with Minister Georgiadis, so we hope that that will move ahead in the weeks to come.
The DFC has also prioritized the whole complex of projects around Alexandroupoli. The port privatization, the FSRU, the Kavala underground storage, the privatization of the Egnatia — all of these are part of this logistics and transportation hub around Alexandroupoli which has also been identified by DFC as a priority. A DFC delegation traveled up to Alexandroupoli. That one is more complicated because it’s in an earlier stage of privatization. It was welcome news that TAIPED announced that the Alexandroupoli privatization will move ahead with the Port of Kavala and that this will be one of the agencies’ priorities as it implements. So DFC is going to be very important to all of that.
The second question, you need to remind me.
Kathimerini: It was about whether the investment interest of the U.S. was going to wane.
Ambassador Pyatt: You’ve got demonstrated interest from American companies in both of those projects. Globally, investment will slow down because of the shock of the economic slowdown globally as a result of the pandemic. But the thing to remember is that this has been a symmetrical slowdown. It’s something we’ve never really seen before. Even during the Asian financial crisis, 1998, I remember people looked to the United States, they looked to the developing countries of Africa and Latin America to keep global demand going. This is different. It’s a symmetrical crisis that has affected the whole world at one moment.
The money has to go somewhere, and I think Greece is in a good position because of those reputational gains that I mentioned, to convince capital markets that as the global economy begins to spin back up again this is a place to capture gains, but the capital has to go somewhere. And certainly as far as the DFC is concerned Greece is one of their top priorities in Europe. And Adam and the team there have made that very clear. We’ve got an excellent relationship with Minister Georgiadis and the government on this and it’s helped by the fact that the Development Finance Corporation, because they have this congressional mandate to demonstrate that we can challenge some of our great power rivals, they have an incentive to identify bankable, shovel-ready projects of the sort that Greece presents today.
Kathimerini: So projects that can proceed with funding.
Ambassador Pyatt: Proceed with both guarantees, loan guarantees, but they can also make capital investments. They also — DFC has a clear mandate to work in the Western Balkans as well. This is why Alexandroupoli is so relevant because projects there connect to things like the proposed gas interconnector with North Macedonia, the prospect of gasification of Serbia. I was very glad to see just yesterday that there were communications between Vučić and Borisov where the Serbian government again emphasized its interest in identifying options to bring non-Russian LNG, non-Russian gas, and the IGB, the IGB pipeline is the way you do that. So this Eastern Macedonia and Thrace energy and logistics hub is very significant and it brings together a lot of shared equities between Greece and the United States.
Kathimerini: My next question is about the Elefsina strategic project that you mentioned, and it also brings to my mind the possibility, the prospect of cooperating in various defense projects. Of course our parliament already voted for the Romeo helicopters and the F-16s and all that but I wanted to know if there is prospect or perspective for closer cooperation, I don’t know, maybe through the FMF program or something similar.
Ambassador Pyatt: We’re going to continue to work on all of these lines of effort. We’ve already got great co-production technology transfer cooperation, especially at Hellenic Aerospace which is so important to Lockheed Martin’s global supply chain and global production. The C-130, the middle section of every C-130 in the world is produced in Hellenic Aerospace. The air intake for every F-16 is produced at Hellenic Aerospace. And now we’re working with the government, with Minister Panagiotopoulos and also with the Finance Minister, and the last time I saw Minister Staikouras we talked about this, to build up the capacity at HAI both so that it can implement the Viper F-16 upgrade program, the Papa-3 upgrade program, but also to look at how HAI plays an even bigger role over the long term as part of a global partnership with Lockheed Martin.
I would love to see us accomplish the same thing at Elefsina. I know at Syros, Onex is already building up its capacity to fulfill U.S. Navy and other NATO-related contracts at the Syros Shipyard. It would be a huge step forward if we were able to identify an option for Greece’s next generation of frigates to co-produce those at Elefsina. This is one of the things that American companies do very well. The government has a ways to go before it decides what its next generation frigate is going to be. I know that the American companies that are interested in this have an explicit plan for how they would be able to work with Greek industry and the Greek maritime industry to add value here in Greece.
But the first thing that we’ve got to do is bring Elefsina back to life. I remember three years ago walking around the Syros Shipyard when it looked like something out of Road Warrior. Nobody was working. Everything was rusty. Rusted chains swinging in the wind. Literally, it looked like Road Warrior. When I went back with Minister Georgiadis and all the Greek ship owners in December for the inauguration of the shipyard, it was a real miracle. It was a rebirth. I’m confident the same thing can be accomplished in Elefsina because right now what you have there is nothing. You have an asset which is dead. You have workers who are not being compensated. And you have potential that’s not being fulfilled.
Kathimerini: My next question would be about Turkey. You saw what happened the last few days. There is a request for seismic research from the Turkish Petroleum Company in an area that Greece regards as being part of its continental shelf. And I wanted to ask how does the United States look to that situation evolving down there.
Ambassador Pyatt: You and I have been talking about this a long time and I’ve spoken frequently in December, in January, in terms of our views on this MOU between Turkey and Libya. Our views on the rights of islands in terms of their maritime rights and the EEZ being exactly the same as continental territory. So there’s nothing new that I can add there. But what I think is really important is the very clear message that you heard yesterday from Assistant Secretary Fannon as he was speaking on the panel with the 3+1 Energy Ministers. That was a really important event yesterday with AmCham and the Atlantic Council, both because it demonstrated how we are continuing to invest in this 3+1 framework and the really important leadership that Minister Hatzidakis has provided in helping to bring together Minister Steinitz from Israel, the Cypriot Minister and Assistant Secretary Fannon. In fact later this afternoon I’m going to go see the Israeli Ambassador and one of the things we’ll be talking about is how we continue to follow up on that.
But it was also really important as an opportunity to have the most senior Washington official who deals with these issues at the technical level, Assistant Secretary Fannon, deliver a completely unambiguous message about how this MOU takes no rights away from Greece and the American interpretation of both the international legal aspects but also the diplomatic aspects of it.
Kathimerini: What are the guarantees that the United States can provide that this will not go worse than it already has? I know this is not an easy question, but this is always something that is of great concern in Greece.
Ambassador Pyatt: I think the way I would answer that is two-fold. First of all, I thought Minister Hatzidakis spoke very well on this issue yesterday, and he’s not a diplomat but he has internalized the first principle of diplomacy, which is it takes two to tango. And he was very clear both in terms of Greece’s desire to have a normal relationship with Turkey including on energy issues, the open architecture that Greek foresees for regional energy cooperation, as long as Turkey is prepared to engage on the basis of recognizing international law. So I think he was very clear on that. All the United States can do is to support the efforts that Prime Minister Mitsotakis and his government have made to manage tensions and to identify areas of cooperation.
I can’t make any promises about what the future will bring. But what I can assure you is that U.S. policy is going to remain clear in exactly the way you heard it enunciated yesterday by Assistant Secretary Fannon.
Kathimerini: Two regional things. One, how do you see the 3+1 proceeding? If there can be, the American phrase that I like, more beef to the bone in that respect. And the second one is about the Libyan conflict and how do you see things, how does Washington see things evolving there?
Ambassador Pyatt: I will do that, but I want to do 360 degrees, because we need to do Eastern Med, we need to do Libya, but we should also do Western Balkans because you’ve got important elections coming up in North Macedonia. I will go around the globe.
Let’s start on the 3+1. Yesterday, as I said, was an important signal of Washington’s continued investment in this relationship, the 3+1 relationship. It’s one that comes from the top, from Secretary of State Pompeo. Energy is clearly the bright object. It’s the area where we first had a ministerial level engagement and it’s the area where we’ve moved most rapidly in terms of our joint cooperation. But we’ve also had cooperation in other areas. We had a counterterrorism 3+1 in Cyprus last year. We also had a business and women’s empowerment 3+1 hosted by Manisha Singh, our Assistant Secretary back in Washington last year. I’m very focused on how we continue to elaborate this broader agenda and it’s exactly as you say, to put more beef on the bone.
I think the good news is, this has now become self-sustaining. It’s hard-wired into American diplomacy. It’s written into law through the East Med act, and I mentioned yesterday our gratitude to Senator Menendez and Senator Rubio for pushing that forward, which created a congressional legal obligation on the executive branch to sustain that. So this is now, this is hard-wired into American foreign policy.
In terms of other areas of cooperation, one that I see as a natural is technology, especially because Israel has positive examples, because Greece has made so much progress, because American companies lead the world in this area.
Another I would describe as strategic stability, and not strategic stability in the Cold War sense but how we think about this Eastern Mediterranean region. I’m always reminded any time I talk to Admiral Foggo or Admiral Franchetti in Naples, they talk about how when they were young naval officers in the Eastern Mediterranean we basically treated it like a NATO lake, and now all of a sudden you have a Russian naval base in Tartous, you have Russian submarines operating all over the Eastern Mediterranean, coming out of occupied Crimea, moving through the Black Sea and down through the Aegean and into the Eastern Mediterranean. You have an uncertain situation in Libya which we’ll come to in a minute. So I think how we think about this strategic landscape in the Eastern Mediterranean is something that we want to continue to build on. The operational manifestation of that for me is the Iniochos exercise where Greece led the way and you had American fighters and Israeli jets and the small Cyprus Air Force contingent all working together. We want to continue to work in that domain as well.
So I’m very optimistic about 3+1. We lost some momentum because of the political transition or the political uncertainty in Israel. And as I said, now that there’s a government, I was really glad to hear Minister Steinitz yesterday talk so clearly about the 3+1, about his engagement with Secretary Pompeo in Jerusalem two weeks ago. And as I said, I’m seeing the Israeli Ambassador today to continue this work.
Libya is a big mess. The basic problem in Libya is external actors including Turkey, Russia and UAE who continue to pour gasoline on the flames by sending in weapons and fighters. We have made very clear that this is a conflict that needs to be solved through diplomacy, through a return to the negotiating table.
You also had a fairly unusual development last week as AFRICOM declassified a significant volume of intelligence information about the advanced fighters and Russian Air Force pilots that the Russian government through its Wagner mercenaries has been sending into Libya. This includes a massive escalation in terms of the level of military capabilities, both MiG fighters but also supersonic bombers. This will not help the situation and it has the risk of a further escalation of a proxy war on Greece’s borders. There’s a reason that it’s called the Libyan Sea when you get to the south coast of Crete where I’ve been, so I know that. So that’s Libya.
Then just quickly on the Balkans, I would just emphasize, I think one of the things we’ve been very pleased to see is the way in which the Foreign Ministry and the related technical ministries were able to build on the Thessaloniki Summit that took place back in February in order to deepen this vision of Greece as a major partner with all of your neighbors in the Western Balkans. It was very useful, I think, that you had these communications established. And I’ve talked to Minister Kikilias, and I’ve talked to Ambassador Kate Byrns in Skopje, and I’ve heard about the communications going on between the two Health Ministries to manage the disease, but also to ensure that logistic chains are kept open, that trucks and goods are able to move back and forth, that temporary workers from Albania are able to come into Greece.
This all fits with a vision that we started working on in 2018 at the Thessaloniki Fair and the meetings that we did there with Matt Palmer and the rest of our team that’s been focused on how we help catalyze those relationships between Greece and its neighbors in the Western Balkans. I think there’s going to be an important challenge in the weeks ahead as North Macedonia heads into elections and we’re going to have to wait to see what the voters there decide but I think both of us, Greece and the United States, are keenly interested in seeing that whatever government is elected in North Macedonia, it continues the course of reforms towards European standards and becomes the successful NATO member that we want to see.
It was a huge breakthrough last week when you had a B-1 bomber mission working with Greek F-16s flying over North Macedonia. For me that said a lot about both the dramatic progress in Greece’s relationship with its northern neighbor, but also the way in which our two Air Forces are working together and the way in which the Pentagon and European Command and NATO looks at Greece as a major factor of stability in the wider region.
Kathimerini: This comes to my last question, the U.S. has to face some challenges of another kind: the election year; of course it’s COVID that is still causing a lot of human casualties every day; and at the same time the social tensions of the last weeks after the incident with George Floyd. It is a concern in Greece and I would daresay to the rest of the world if the internal challenges that the U.S. is facing lead to a more introvert foreign policy. That’s the question.
Ambassador Pyatt: Let me start by sharing what I said to my Embassy team when we got to the office on Monday morning. I reminded everybody, the Rodney King riots in Los Angeles happened during my first Foreign Service assignment overseas about 30 years ago. All of us, I think, have been dismayed and appalled at the images that we’ve seen from the United States over the past few days. But it’s also clear that our democratic institutions are working. You see the messages that are coming from our mayors, from our local leaders. American society will pull together. We will get through this. And in exactly the way that my adopted hometown of Los Angeles got through the Rodney King riots and moved on, we’re going to get through this difficulty. You can be very confident in that.
But we’re also a very big government. We have global responsibilities. We have a global footprint. That’s not going to change. As I said at the start of this conversation, in many ways I think the lesson of the pandemic is that our engagement and our international partnerships are in many ways more important than they’ve ever been before.
We’re going to have a debate in terms of how we get the balance right in dealing with the challenge that China presents. China’s not going to go away. The U.S.-China trade relationship is going to remain very large. But still the largest trade and investment relationship in the world is the one across the Atlantic Ocean between Europe and North America. That’s going to continue and we’re going to have to work through those issues. And now we’re going to have to work together to overcome the huge disruption that’s come from the pandemic and the economic and unemployment costs that that has imposed on all of our countries.
Kathimerini: Thank you very much for this.
Ambassador Pyatt: It’s great to see you. As I said, it’s nice to do this in real life again and in this wonderful setting.
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