Upon being appointed to your current post around 10 months ago, you stressed the importance of giving priority to the coordination and unification of digital and telecommunications policies, which according to you “will be the driver of new growth, which will make the country a leading player and more democratic.” Which are the government’s main strategies and projects to implement this vision?
Minister Nikos Pappas (NP): First of all, we want to increase connectivity by rolling out superfast broadband for all Greeks. For that to happen, by the end of the year we are going to start using the €500m in funds available from the European Union (EU) to get these kinds of networks up and running.
If you consider the DESI index (Digital Economy and Society Index), which shows the degree to which technology has penetrated all parts of economy and everyday life, you will find Greece at the bottom.
We see this as a golden opportunity, as it is a starting point that can bring us good growth. Indeed, if you look at this index and measure the rate of change, we are 5th in Europe, which means that there is an upward trend and that things are improving.
We are ready to utilise all the available funds from the EU, and to mobilise private sector funds from both local and international players. Local players have already declared intent to invest something in the region of €2.5bn in the fibre-optic network. This will have a real impact.
The telecommunications sector can be seen as the sector of all sectors, because it is the sector that can make all sectors of the economy more productive: from primary production (agriculture), to logistics, or to nanotechnology research.
This will enable us to go into the next generation of connectivity, and by the end of 2018 we will launch our 5G-rollout strategy, in line with EU targets. There are thousands of applications, such as smart cities technology, that will rely on 5G and fibre optics. Our second target is to make public administrative processes paperless in the next 18 months, which will save us roughly €400m annually. By the end of 2017 - and you may quote me on this - this ministry will be paperless. We are signing an accord with the contractor that will be rolling out the new system in the presence of the EU´s Digital Commissioner in the next week or so. We want to do this so that citizens can be serviced digitally, where possible. Our principle is as follows: the State has to remember each and every document it issues. We want to be in a position whereby the State no longer places the burden of record keeping on the citizen, but will have access to every document through a digital archive. This will save us a huge amount of time and money. The third initiative has to do with digital skills, and we are planning to invest a significant amount of funding in this area. We are coordinating these efforts with the Open University, and we want to create digital educators who can support individual citizens and businesses around the country. That sums up the three key areas of our digital policy.
Now, as I have already mentioned, this is the sector of all sectors. Through the implementation of our digital policy, we expect all sectors to become more productive and we expect to see a whole host of applications being developed and made available on top of the new digital infrastructure. Let us look at Israel, for example. They have high-speed connection and use open source data in various areas, such as their public transport sector. This enabled the development of a significant number of new applications that helped people and goods navigate from A to Z more efficiently than before. This digital strategy falls within the broader national strategy, which is to create a hub of steady growth. Due to our strategic location, we can become a hub for trade, logistics, telecommunications and so on.
For us to be that hub, we need to have credible, contemporary networks. Businesses need to know that when they come here, they can rely upon modern telecommunications and logistics networks, as well as a legal system that protects them fairly. If you look at the regional map, to the north of Greece lies the EU, a mature market that needs services like telecommunications and energy. Below us lies North Africa, a market of 400 million people that is looking to develop. Many of the constituent markets in this region are virgin markets, and we have every reason to work with our allies to stabilise and develop the North African market. Greece can be the gateway for the EU into the Middle East and North Africa, which combined accounts for almost one billion consumers. This is our core idea. That said, that idea by itself is not enough, and we have to make sure that the technologies we are developing are available for all.
We have a creed that drives us to bring this technology to all people. We want to make the technologies of tomorrow available to everyone today. We want to close the technology gap in places like our rural areas and remote islands. We have committed €125m already and look to double that in years to come to ensure that high speed connectivity is available to all. We are experiencing a digital revolution and we want to ensure that people can enjoy the fruits of that revolution. We want to start a new page in our growth story, a page that is all about sustainable growth, not non-sustainable borrowing. This means that we are building crucial, contemporary infrastructure to drive the economy forward.
You mentioned an example from Israel as something that could be applied in Greece, too. In general, how is Greece working with international counterparts to develop technologically?
NP: Greece is a member of the EU and we have utilised a lot of EU funds that have been made available. In the past, certain things were not done in the right fashion, chiefly due to the fragmentation of the previous digital agenda. I do not want to call it a policy, as it was very disjointed without any sort of coordination or street map. However, some good things did come out of the previous chaos. Take, for example, our e-prescription platform in the health service, which is probably the best system in Europe. All prescriptions now have to be registered through the platform, which saves a lot of money and helps to identify outliers due to individual and group practices. The data is publically available and allows people to work on key areas of concern. It helps reduce procurement costs and aids reaction to malpractice and beyond.
In terms of further developing technology-related industries, what are your priorities?
NP: I am going to focus on two sectors: space and nanotechnology.
We have a vibrant space industry in Greece with annual exports of more than €150m. However, this is another field that has struggled to really grow due to fragmentation. Everyone has been working on their own without a universal policy. For example, Greece produces micro-satellites, spearheaded by a couple of our universities working in isolation.
As a response, we have created a national plan that has brought the players together. We are funding it and we are aiming to have a fully functioning micro-satellite network up and running in the next 18 months.
Nanotechnology is the other sector. We have recently visited the University of Thessaloniki where they are focusing on photovoltaic research and creating photovoltaic systems for nanotechnology applications that can be applied in horticultural processes (mainly focused on greenhouse based horticulture). The idea here is to use it as an energy saving measure.
This brings me to another area in which advances are being made: the audio-visual industry, a field that the UK may also invest in. Greece is blessed with an exceptional scenery and we are dedicating €450m of investment to the sector over the next four years from the public investment programme. This money is designed to help establish Greece as a location for audio-visual productions. The programme includes tax credits and we are backing it up through the creation of a single point of entry, the National Institute for Audio-Visuals. Financially speaking, we are giving a 25% tax credit for any investment in audio-visual work that takes place in the country. The point is that, with this industry, we cannot actually measure the real impact it will have. Yes, you can measure the impact of direct spending, but how do you measure the impact of a major Hollywood film star shooting a film in any one particular place, such Meryl Streep in Mamma Mia!, for example? Of the 30 million tourists Greece receives every a year, how many went to the locations because of that film? At the time the film was shot, all the news were about a potential Grexit, default, crisis, you name it… Now we are looking at growth and recovery, and the time is now to capitalise on the good news by bringing together the diverse strands that are spurring growth under one ministry, one unified strategy. It is all about the network and content.
Talking about the aerospace industry, earlier this year the government announced the creation of a national aerospace agency to oversee development of the sector. What is the latest on that front?
NP: The agency is going to be created, and it is going to bring together our scientific community (research centres and universities) and funding to re-establish Greece as a player in the industry. We have all the constituent components. Just look at how many Greeks work for NASA and the European Space Agency – and yet there are no Greek flags to be seen, which is something that needs to change! We have the people, but until now, no one has pulled them together to work out what they can do for this country.
In terms of the broader economy and looking at Greece post-bailout, the Prime Minister, Alexis Tsipras, recently announced that Greece should become financially independent by 2018, without the need for further supervision from its creditors. In your opinion, what does Greece need to do to achieve that independence and stand on its own two feet?
NP: No country in the EU stands on its own feet, as everyone has debt and mutual responsibilities. If it was the case that every country in Europe should have to find its own way of dealing with the markets then we would not need the Union, and the Union is a fantastic thing. There are two key issues that have just been dealt with by the Union´s latest declaration. The first is the growth clause, which prioritises growth over debt servicing – because if you do not have growth, you cannot make the payments. This is a major change in mind-set from the former mentality of fiscal consolidation to pay the debt, as opposed to growth and employment. The second, and potentially more important point is the final paragraph of the declaration. This clause states that the ESM will pay a buffer to market access and risk. This means that unconditionally, regardless of the IMF and ECB´s moves, the ESM will have a buffer of €10-20bn to guarantee smooth and continued market access.
What are the key structural differences in Greece before the bailout began in 2010 and the current situation?
NP: Greece is a completely different country, having lost around 25% of its GBP. There has been a realisation within the population that economic policy needs to have some basis in social cohesion. That, added to sustainable growth, not only creates but also maintains political stability because both factors rely on each other. In order to have political stability, you have to create policies that convince people that the government is working in their favour.
One of the first things we did when we became government was to say that access to medication and hospital care was free for everyone, regardless of health insurance cover. Why? Well we had more than 2.5 million people (25% of the population) that were not covered by any form of insurance. That is a crucial element to our system. Secondly, we developed a system of minimum guaranteed income with 700,000 people entitled to it.
These are the best traditions of Western democracy in action; something I picked up from my years spent living in Scotland. It was there that I realised how important it is to have a mature, universal welfare state, something that did not exist in Greece due to its fragmented state. There were insurance schemes for different professional groups, such as lawyers, pharmacists, and whoever could exert political pressure. Now we opted for a universal solution, and it seems that it is working. We pursued a major pension system reform, and everyone said that the system was going to collapse, and that it would fail, and create huge deficits… Well, in the first 7 months of its existence, it is running at a €500 million surplus. Why? It is because we said that we were going to connect contributions to income. Before, there were five scales that you could select regardless of income. By connecting it directly, many people are paying less than before, but many more people joined the system as it finally made sense for them to declare their income and pay their share. I think that this is a very important part of the story, the ability to convince people that they could have faith in the economy – this is a critical part in the story of Greek democracy, getting our citizens to re-engage with our economy. People were not convinced and they almost lost faith in democracy.
After so many years of struggles, is there a generalized sense amongst the Greek population now that the worst is over?
NP: Yes. We are now seeing a constant stream of good news. This sector is going well, that sector has grown, industrial production has increased, and employment is up. The positives are piling up. The majority of our foreign partners are now realising this as well.
Foreign Direct Investment levels are increasing significantly, especially for 2016 and 2017. In terms of the sectors that offer the best opportunities for foreign investors, which ones can you highlight?
NP: Telecommunications. I think that telecommunications is going to be the biggest winner. We have completed a major motorway investment programme and the railway network is also currently being upgraded. Telecommunications is the next nexus for growth and development. If you have a good network in the country, you can be a credible hub. Our target is to connect with our neighbouring countries. We are focusing on a project to connect Israel, Cyprus, Crete and Attica, which is the EuroAsia Interconnector. This is a major step forward, which should lead to the ability to easily connect to the central European networks as well. This boosts mobility of goods and services and makes Greece more attractive as a destination for business.
You studied and lived in Scotland before returning to Greece. What did you appreciate the most about your time in the UK?
NP: In the UK, the thing I appreciated the most was the welfare state, a system that was built in a country recovering from the Great Depression and a World War. The people had suffered a lot and the government of the day knew they had to do something about it, not just look to individual concerns. When you talk about policies, you cannot just pursue your own interests, and that was the greatest lesson we learnt from the crisis here in Greece – you have to look to your neighbours. That was also the greatest lesson that I learnt from my time in the UK.