Stournaras: Elevated Defense Spending Hinders Greece’s Path to Prosperity Like Ireland’s—Enhancing Greek-Turkish Relations is Essential

The “disproportionate burden of defense spending borne by the Greek taxpayer” which “relates to the protection of European borders and, above all, to Greek-Turkish relations” was referred to by Bank of Greece governor Giannis Stournaras, speaking at the launch of Takis Pappas’ book “Paradoxical Country: Why Greece lags behind Ireland and Portugal and what can we learn from them?”.

Why do we learn what we can learn from and what can we learn from this book and what can we learn from it?
Yannis Stournaras, after referring in detail to the positive outlook of the Greek economy, highlighted the economic challenges ahead and noted:

“Why does the Greek economy have a positive outlook?

“At this point, I would like to refer in more detail to the disproportionately large burden of defense expenditure borne by the Greek taxpayer compared to the taxpayers of all other euro area member states, which is related to the protection of European borders and, above all, to Greek-Turkish relations. The burden of this expenditure, which is mainly on imported equipment, is borne only by Greek taxpayers. What is currently lacking is a coherent and effective European security policy in the field of defense (something that is also highlighted in the Draghi Report) to maximize the benefits of investing in defense and minimize the disproportionate costs of defense equipment (through defense co-productions, etc.). At the same time, we must continue to seek convergence on Greek-Turkish relations, which have a significant impact on Greece’s economic and social performance, stability, and security.

It is a very important fact that the Greek-Turkish dialogue launched in 2023 has already yielded significant results in terms of violations in the Aegean Sea, curbing migratory flows and economic cooperation. Above all, it has created a framework of stability and security for citizens. It is no coincidence that while two years ago Greek-Turkish relations were, together with accuracy, the greatest concern of citizens, today, as the opinion polls show, citizens care without worrying. This has a very important reflexive benefit for the stability and prospects of the Greek economy. And, in my view, it would be a good thing to have an agreement on the settlement of our major dispute with Turkey, namely the delimitation of the maritime zones, which will undoubtedly create the conditions for long and sustainable peace, for prosperity in the region and especially in our country.”.

The “positive agenda” of Greece-Turkey

Yannis Stournaras also referred to the so-called “positive agenda” between Greece and Turkey, saying that “since the beginning of 2021, and in the context of the resumption of economic and trade cooperation between the two countries, after three years of tensions in bilateral relations, a new level of bilateral dialogue has been formed, spearheaded by a series of topics of mainly economic interest, under the name “Positive Agenda”.

These talks contribute to maximizing mutual economic benefits as well as to normalizing the climate of relations with Turkey, as they consist of jointly exploring ways to strengthen cooperation in productive and scientific sectors. Among the subjects on the positive agenda of the dialogue, which form a matrix of a joint action plan, are Trade and Investment, Infrastructure and Transport (air, road/rail/coastal), Telecommunications and Technology, Energy with emphasis on renewable energy networks, Tourism, Maritime Affairs, Education and Training, Social Security, Sport, Family and Youth, Environment and Connectivity”.

Similarities and differences between the Greek, Irish and Portuguese economies

Regarding the topic of Takis Pappas’ book, the similarities and differences between the Greek, Irish and Portuguese economies, Yannis Stournaras noted that “he identifies the relevant problem of Greece in the lack of basic consensus on major issues, in the populism, polarization, hostility and demagoguery that prevailed during long, and critical, periods of time. But it ends on an optimistic note about the political events of recent years. And that is what is important!”

“The book concludes that what differentiated Greece from the other two countries was the lack of a culture of political consensus and broad 3 support for the reforms deemed necessary to restore macroeconomic stability and fiscal sustainability. Although cooperative governments emerged in all three countries, in Greece, the absence of consensus, deep polarization, and the divisions that dominated the post-independence period prevented the strengthening of ‘ownership’ of reforms. The polarization that prevailed fostered a “negative partisanship”, undermining any possibility of cooperation or understanding on critical issues and fueled populism,” he said, among other things.

Here is the full speech of Yannis Stournaras

Διαβάστε ομιλία του Διοικητή Γιάννη Στουρνάρα στην παρουσίαση του βιβλίου του Τάκη Παππά με τίτλο «Παράδοξη Χώρα: Γιατί η Ελλάδα υστερεί σε σχέση με την Ιρλανδία και την Πορτογαλία και τι μπορούμε να μάθουμε από αυτές;» https://t.co/scVEhOpm5j pic.twitter.com/7neiu9Gdj1

— Τράπεζα της Ελλάδος (@BankofGreece) September 25, 2024

In addition to the governor of the Bank of Greece, former Deputy Prime Minister and Foreign Minister Evangelos Venizelos and ND MP Domna Michaelidou spoke at the book launch. The discussion in the “Yannis Marinos” hall at the Athens Concert Hall was moderated by the journalist Pavlos Tsimas.

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