September 11, 2018
Ambassador Pyatt’s interview with Vassilis Kostoulas of “Naftemporiki” Newspaper
Ambassador Pyatt: Let me say at the beginning, since this is for your special edition, we’re very excited about Thessaloniki. We have made a huge political commitment to the Thessaloniki International Fair this year. A year ago when we talked with Prime Minister Tsipras about having the United States be the honored country, and then we had the Prime Minister’s trip to Washington and President Trump and Prime Minister Tsipras announced that we would do this, I don’t think we imagined that we would be as successful as we were. Not just in terms of the recruitment of American companies.
More than 50 top tier American companies and the American Pavilion, and the footprint that we’ll have there. But also the larger American brand in Greece, and especially Northern Greece. You will see we’ve got a very big cultural program that we will have around the TIF. I’m very excited about all the activities in the area, innovation and technology that we’re doing around TIF. We have a TEDEX thing that we’ll be doing. We have a Digital Influencers Hub which is bringing young people in the information technology news space from all over Europe.
We have a fantastically broad U.S. government presence. So of course we will have Secretary of Commerce Wilbur Ross as our head of delegation. We also have Michael Kratsios who is one of the senior Greek-Americans in the administration and comes from the White House Office of Science and Technology Policy. We have the Department of Energy, Under Secretary Menezes who has all of the international portfolio. We have Senator Ron Johnson who is a good friend and Chairman of the Senate’s Europe subcommittee, also a businessman himself, so he will understand what we’re trying to do at TIF. Matt Palmer, who is the new Deputy Assistant Secretary of State in charge of Southeastern Europe.
So this is a big American footprint. We’ll have one of our Navy ships in Thessaloniki. The USS Mt. Whitney will be there, as well.
When I first went to Thessaloniki two years ago, Governor Tzizikostas said to me, where are the Americans? You guys don’t seem to be around anymore. That’s not going to be a problem.
Mr. Kostoulas: Greece has completed the third adjustment program, but has not returned to the markets. What is the picture you are gaining about the Greek economy at this stage of developments?
Ambassador Pyatt: I think about this issue in the context of my two years in Greece, and when I was coming here in 2016 there were a lot of big structural questions that people still had. There were still concerns that Greece was going to fall out of the Eurozone. There were concerns about the stability of the financial system, and especially the systemic banks. There were real doubts about whether the government would comply with commitments it had made to the Troika.
Those uncertainties have all been resolved. And most importantly, with the end of the “Mnimonio” era, Greece is now in charge of its own economic future. I think that’s a very important development, something obviously good for Greece, good for the people of Greece. There’s a lot of hard work to do to overcome the loss of 25 percent of the Greek economy, continued very high levels of unemployment, but it’s very clear growth has returned, unemployment has declined, and most importantly from the American business standpoint, people are taking another look. That’s the reason we have such a large U.S. business delegation that has committed to TIF.
I’ve done a lot of spadework in New York and Chicago and Washington, D.C., recruiting American companies for this. The fact that we had the high-level political endorsement from President Trump at the White House helped enormously. But as you know, in the American system, just because the government says something doesn’t mean that companies are going to respond, and I think the fact that we have such a large commitment to TIF, from the very top tier of American business — Pfizer, Exxon-Mobil, Coca-Cola, Facebook, Microsoft, Google. This level of commitment reflects the confidence that the Greek economy is coming back, and there are opportunities here that are worth exploring. That’s not just in terms of this market of 11 million people, but also Greece’s role as a key hub for the wider Southeastern Europe, Balkan region.
Mr. Kostoulas: On the one hand, the 8-year Greek crisis. On the other hand, the increasing dynamic in the relations of the two countries. How are bilateral economic relations currently developing and what do figures show toward this direction?
Ambassador Pyatt: The good news is, our trade balance is balanced. The investment relationship is growing. Greece is one of the largest, fastest-growing sources of direct foreign investment in the United States today. We have the potential for some very large U.S. investments coming into Greece. There’s been some positive news this year in the tourism sector. Things like the revival of the Syros Shipyard that the Prime Minister marked last week with an American company. A very positive bit of news. But we can see some billion euro, billion dollar plus investments over the next year or two if the government sends the right signals.
So there’s clearly potential there.
Our trade and investment relationship is underway. It’s smaller than it should be, given both the overall size of the Greek economy and also the very strong people-to-people Diaspora, and it’s been underway, the relationship has been underway, because through all those years of crisis and uncertainty I talked about, American companies really weren’t interested in Greece. They looked elsewhere. Now they’re coming back. I think that’s the opportunity that TIF represents.
Mr. Kostoulas: So within this context, you mentioned some things. Which areas of economic activity is American interest and investment in Greece, mainly focusing, and what examples would you highlight?
Ambassador Pyatt: One big one, of course, is tourism. We have a new Hyatt here in Athens, a new Marriott, Wyndham is expanding their footprint, Avis USA significantly increased its investment here and its corporate commitment by repurchasing its local subsidiary. So tourism is one area.
Energy and everything around the energy sector is another. Exxon-Mobil will be the sponsor of our opening reception at the TIF. I think that is a reflection of their commitment to this marketplace. Their new relationship with Hellenic Petroleum and the exploration of off-shore opportunities around Crete. GE Wind has come back into the Greek market, so clearly interested in renewable space. So energy is another one. We can talk more about that a bit later.
Logistics, there’s the Syros Shipyard. We have interest from American groups in the Alexandroupoli Port privatization.
Then an area where I think there’s substantial possibility in the years ahead is the startup sector. The knowledge-driven entrepreneurial economies. We’ve got a lot of Greek-Americans who have gone to Silicon Valley, who have gone to Boston to the MIT Corridor, who are now looking at opportunities to come back. And one of the things that I’ve been impressed by as I’ve traveled around Greece, whether it’s in Patras or in Thessaloniki or in Athens, is how much is happening in that startup sector. And now with the EquiFund and the potential of very, very large sums of European capital being available for innovative startups, I think you’ll see more of that as well.
In your opinion, what is it that American investors give emphasis to before they get involved in a project in Greece?
Ambassador Pyatt: Predictability. The number one concern I hear from American investors is the role of the state. It’s why administrative reform, continued administrative reform is so important. It’s why the removal of bureaucratic bottlenecks are so important.
Mr. Kostoulas: And in terms of taxation also, would you say?
Ambassador Pyatt: It’s interesting. I’m not going to get into the Greek debate over tax policy. I think that’s something the Greek people, the Greek government has to decide. I think for foreign investors, at least for American investors, taxation is something you can budget against. What you can’t budget against is arbitrary shifts in policy where something is approved one day and not approved the next, or where there’s just an endless series of bureaucratic hurdles that are placed in the way.
This is why the Hellinikon Project, for instance, is so important. There’s been a lot in the press over the past couple of weeks about the prospect that that’s going to finally move ahead. I hope very much it does. We have some very big American companies that are interested in the integrated resort part of the Hellinikon project. Looking at investments in the 10 figures. But people have been talking about the project as long as I’ve been here. In fact the weekend that I arrived in Greece there was a front-page story in the Wall Street Journal about Hellinikon and I always remember the headline. It was the government at war with itself, and it talked about the tensions between TAIPED and the archeologists and the forestry service and of course we’re still talking about those same issues.
Mr. Kostoulas: It is widely believed that Greek-American relations are going through one of the best periods historically. To what do you attribute this development?
Ambassador Pyatt: I’ve been doing this for about three decades now. I guess the two things I’ve learned, one is, leadership matters. Personalities matter. And I think in both Greece and in the United States we’ve been fortunate to have political leaderships both with the Greek government but also with the U.S. administration, both Obama and Trump, strongly committed to our alliance with Greece.
But the other thing I’ve learned is that interests matter. Ultimately countries behave according to their national interests. And the fact is, there are converging interests between our two countries. In the United States we see Greece as a key pillar of stability, a key partner in a volatile region. A country that shares our values, that shares our interests in the strength of European institutions, in seeing that the countries that surround Greece, some of whom are not in such a happy situation, continue to move towards European values, Euro-Atlantic institutions. Strong convergence on military and security issues. Excellent relationship between our military leadership. Strong interest on issues like counterterrorism, dealing with instability in the Eastern Mediterranean region, the defeat of ISIS, the stabilization of Syria, of the countries of the Magreb.
I think the U.S.-Greek relationship has gone through ups and downs. As you say, we’re in a very positive moment right now. Thessaloniki Fair 2018 is meant to be a celebration of that positive relationship. But it’s not the end state. For us it is part of a continued process of engagement and support to Greece and Greece’s emergence from a period of economic difficulty.
Mr. Kostoulas: The USA is the main pole of attraction of young highly skilled people. How do they do it? And how would you say that Greece will be able to make use of these well-trained young people, who still leave the country at large today?
Ambassador Pyatt: I’m from California, so I’m very proud of what the California economy represents. We look at the fantastic dynamism, whether the entertainment industry in Hollywood, or technology in Silicon Valley. There’s no place else in the world that brings together what Silicon Valley has in terms of an attractive pull for human capital, for innovation, from people from all over the world. Look at the number of Silicon Valley startups that are founded by immigrants.
I had an interesting conversation a couple of months ago with a young Greek woman, an entrepreneur, graduate of Politechnica who now lives in San Francisco and has a medical technology startup which she founded with a couple of other friends, I think a Mexican and a Chilean or Argentinian. It was interesting talking to her. I said so tell me, how did this happen? She said I was able to do things in Silicon Valley that I couldn’t do anyplace else in the world. There’s no place else that I could find the combination of engineers, patent attorneys, marketing and design people, technology experts, coders, all in one place to bring them together. Then I asked her, I said so would you come back? She looked at me and said I would come back in a second. I love Greece. I love my family. I love my home. If I could find the right business environment, I would bring my company back.
What’s interesting to me is we’re starting to see more of that. A good example of course is the Tesla drive train facility here in Athens. Founded by or established by a group of Greek young people, graduates of the Politechnica, went to California, went to work for Elon Musk, developed their reputations inside Tesla, and then convinced Tesla management that they could keep doing their same job back here in Athens but they could also recruit local engineering talent as part of the research team, and do that work just as effectively sitting here in Athens as they could sitting in California. That’s the nature of the connected economy that we live in.
When I, as I said, the embassy has put a lot of energy into this entrepreneurship and startup sector, tried to be as supportive as we can with mentorship creating bridges and partnerships. That’s part of what we would do around the Thessaloniki Fair with some of our startup focused programming.
Whenever I meet with these folks I always ask, so what do you need from the Greek government? They always have the same answer. Just stay out of our way. Let us do our thing. And I think that idea, that represents a very different economic model for Greece. Where historically there’s been a very close relationship between politics and government and the business sector. But this new knowledge-based innovation economy is something that Greece hasn’t seen so much before but it’s starting to happen now. It’s much bigger than I think people appreciate.
I remember there was a Reuters story in the spring that talked about the number of registered startups in Greece, and I think it was, the number was several orders of magnitude, 20 registered startups in 2008, and many hundred now.
So clearly, something is happening there. I think the question is how does the government facilitate and encourage that?
One thing I’m impressed by, I remember for instance in Thessaloniki, when I met with Governor Tzizikostas and talked to him about the technology hut that they have there in Thessaloniki and how proud he is of the work that those companies are doing. Some are partnered with big Greek firms. ALUMIL, for instance, has a research partner that’s looking at innovative applications there. And of course ALUMIL has a large manufacturing facility also in the United States, firm connection to the U.S. There was a transportation laboratory in Thessaloniki that has a tie-up I think with Texas A&M.
There’s a lot of natural synergy with the United States, but when I talked to Governor Tzizikostas about all of this he recognized that for him, for the regional government of Macedonia, there was a huge benefit to having this there. But he also recognized that it’s the goose that lays the golden egg. You have to be careful not to strangle it. And the fact that this is happening not just in Thessaloniki, not just in Athens. In Patras. In Ioannina. All over Greece. Tells you how much potential there is if the government can get the right policies in place.
Mr. Kostoulas: The US thesis for Greece is in fact identifying with the core of the IMF agenda: bold debt relief and flexible fiscal policy. However, Greece’s main creditor is Germany, which is moving in the opposite direction. Within this complex environment, what was practically the degree of the well-meaning US intervention in the management of the Greek crisis?
Ambassador Pyatt: The United States was quite deeply involved, especially in 2015 at the peak of the crisis when the banking system froze up, when there were real concerns about Greece leaving the Eurozone. Secretary of Treasury Lew was deeply involved, both with Minister Schauble and also with Christine Lagarde at the IMF. And not just Secretary of Treasury, but the President, the Vice President. Because we believe that the Greece, a poorly managed answer to the Greek economic crisis had the potential to pull down the whole Eurozone which would impact American economic recovery.
Throughout that period the United States took a strong position in favor of Greek debt relief. President Trump reaffirmed that position publicly last October in the Rose Garden when he was with Prime Minister Tsipras. He made it clear that that remains the U.S. position.
Happily we’re not in the crisis moment that we were at in 2015. So the hands-on U.S. engagement is less than it was. And increasingly, I think for the U.S. government, what we can offer Greece is much more focused on how we incentivize and encourage growth of our trade and investment relationship, and that’s exactly the idea that lies behind TIF.
Mr. Kostoulas: The US encourages the EU’s energy diversification and within this context is setting some parameters, with the Russian factor in the background. What are the American priorities in relation to the European energy policy, and how do you assess the Greek perspective at this level?
Ambassador Pyatt: The United States has a strong position in favor of European energy security, including diversification of sources and origin of energy.
So one of the things that has changed significantly in the U.S.-Greece bilateral agenda just during my time here, has been the importance of energy security and our energy cooperation as part of our overall bilateral relationship. This is a very important part of the U.S.-Greece bilateral relationship today. It reflects Greece’s emergence as a major European energy hub. The most important piece of that development, of course, is the success of the TAP pipeline, and I’m not sure a lot of people in Athens appreciate either how large that project is, the value of it, the billions of euros of capital that represents, how big it is from an engineering standpoint, and how important it is for the overall European energy picture as the first new energy infrastructure built in Europe specifically to bring non-Russian gas to market. So TAP is a very big strategic development and it’s going to be finished by next year. And I’m not sure a lot of people understand that.
But TAP isn’t the only piece of the story. You have the growth in upstream operations here. Projects like the Exxon-Mobil collaboration with Total and Hellenic for Crete. You have the potential of Northeastern Greece to become a major energy hub with the completion of the Alexandroupoli FSRU, and the IGB Pipeline which both Prime Minister Tsipras and President Borisov have strongly committed to and it’s important that Bulgarian Energy Minister Petkova will be in Thessaloniki for the Energy Conference that we’re working on with AmCham around the TIF. And you’ve also got significant expansion of the Revithousa Terminal here in Athens. You have the emergence of the whole East Med energy equation with new resources off Israel, off Egypt, offshore exploration around Cyprus. And then against the background of all of that, the emergence of the United States as a major energy exporter. And the global implications of having U.S. energy and U.S. crude coming into global markets.
You asked about interests. This is an area where Greek and American interests converge 100 percent. Greece shares the American opposition to Nord Stream II which we believe will weaken European energy security. Greece shares our opposition to a second stream for the Turkish Stream Pipeline, a second pipeline for Turkish Stream for the same reasons.
So we’ve got a very high degree of convergence and that’s one reason why our Department of Energy is going to be so strongly represented at TIF. And it’s a reason why energy issues are a big part of the U.S. story at the Thessaloniki Fair.
Mr. Kostoulas: There is concern that the American government’s tariff policy on international trade is creating risks for the global economic system. How does Washington approach this debate?
Ambassador Pyatt: I’ll say a couple of things. Most importantly, as you saw in the recent meeting between President Juncker and President Trump, there’s a clear commitment between American and European authorities to working through our trade differences.
This is the largest trade investment relationship in the world. The TransAtlantic relationship. Our economies and our prosperity is deeply intertwined.
One example, I always love to point to, the largest automobile exporter from the United States now is BMW. And that tells you how this picture has changed.
President Trump has made clear that his major focus, his major concern, is in Asia, and the sense that the United States has allowed itself to be taken advantage of in some of these trade deals, and that we need to renegotiate on better terms which are fair for American workers, American exporters.
I think as a practical matter, as I see some of our European partners, they share some of the same concerns.
Obviously for Greece there’s a strong interest first of all in seeing these issues worked through in a way that doesn’t damage the Greek economic recovery which is in its early phases right now.
And as I said, I’m confident that U.S. and European authorities — Washington and Brussels, recognize the importance of our collaboration and the importance of keeping the focus on the real problem.
You raised Corinth, so I’ll just say very quickly I would put that in a different category. It’s important to understand what we’re talking about here. This is a preliminary determination as part of an independent, quasi-judicial process which is initiated by private American companies when they are concerned that they have been disadvantaged by damping.
So there’s a preliminary determination that has been reached. The next stage in the process will be for officials from the Department of Commerce to come out to Greece, to sit down with officials from the companies affected, in the Greek case, Corinth Pipe Works, to here/there data, to here/there, to look at their data, to hear their story, and to determine whether there is a basis for a different final judgment.
But the important thing is I’m very confident these issues will be worked through in a way that’s transparent, that’s not political, and which reflects the underlying commitment on both sides to seeing our relationship and our commercial and investment relationship continue to grow and move forward in a way that works to the advantage of both countries.
Mr. Kostoulas: Let me finish with the first issue, actually. The Greek economy has returned to a positive growth rate. Although, rather low, despite the preceding years of recession. Taxes have a significant impact on the Greek market and the share of investment is clearly below the Eurozone average. According to the picture you have formed, what is that keeps the Greek economy on a low flight mode?
Ambassador Pyatt: I think I would come back to my point about predictability and administrative reform. As I said, Greece has a fantastic opportunity now because you are captains of your own ship. Greece will define its own economic policies going forward. And I think one thing that markets, certainly American markets will be looking for are signals, first obviously the signal that the government intends not to squander the fiscal gains that have been made at great pains over these past years. The largest fiscal adjustment of any OECD economy, but also that there will be considered and continued progress on administrative reform, on streamlining, on removing impediments to investment. Streamlining the state.
I think that’s obviously a debate that the Greek people and Greek politicians will have to work through, but I’m impressed that everybody that I talk to, whatever their political party, whatever their ideological point of view, is, they all understand that the only way Greece gets to growth and overcomes some of the obstacles that your question pointed to, is by creating an environment that rewards innovation, that rewards investment, that helps to grow the economy and create an environment where business can grow.
Mr. Kostoulas: Thank you very much, Ambassador.
Ambassador Pyatt: Thank you. Great to talk to you.
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