Economic policy is the lever that brought Mr. Mitsotakis back.

The return carries many expectations.

Kyriakos Mitsotakis promised to rebuild Greece's credit rating, create jobs, raise wages, and boost state revenue during his swearing-in ceremony for a second term, following his New Democracy party's resounding victory in the country's parliamentary elections.

Greece has a new economic policy, which is based on Mitsotakis's future image 1 — Kyriakos Mitsotakis speaks to supporters after his victory. Photo: WSJ

Mitsotakis' center-right New Democracy party won 158 seats in the 300-seat parliament in Sunday's repeat election, far surpassing the 48 won by the left-wing Syriza party, which governed Greece from 2015-2019 at the height of a decade-long economic crisis.

"I have pledged that during this second term, we will realize the major changes that the country so desperately needs," the new Prime Minister Kyriakos Mitsotakis told Greek President Katerina Sakellaropoulou after officially taking on the task of forming a government.

Mr. Mitsotakis, a 55-year-old former banker from a powerful political family, served as Prime Minister of Greece from 2019 until he resigned to make way for an interim prime minister after a tie vote on May 21.

In this election, the New Democracy Party won by 20% – the largest margin in decades in Greek politics. But the center-right party still lacked the votes needed to secure an absolute majority in Parliament.

Therefore, Greece had to hold a second election, and the result was a resounding victory for the New Democracy Party, bringing Mitsotakis back to the prime minister's seat less than two months after his resignation.

Senior Vice President Steffen Dyck of credit rating agency Moody's said the New Democracy party's victory was a positive sign. Steffen Dyck believes that a second four-year term under Mitsotakis "will ensure continuity in Greece's economic and fiscal policies and, in particular, continue to focus on improving the business environment and the health of the banking sector."

Moody's vice president also predicted that Greece "will have one of the biggest debt reductions globally," with the government's overall debt burden falling below 150% of GDP by 2025, from 171.3% at the end of 2022.

Old team for a new goal.

Less than half a day after Mr. Mitsotakis took office, the Greek government spokesperson announced the new cabinet. Notably, Mr. Mitsotakis appointed Kostis Hatzidakis as his Finance Minister.

Hatzidakis, a 58-year-old reformer with the demeanor of an academic, is the vice-chairman of the New Democracy party. He previously served as Minister of Labor and Energy in the previous government, overseeing the restructuring of PPC – Greece's largest electricity company, which was struggling with overdue bills stemming from the legacy of the debt crisis.

Greece has a new economic policy, which is based on Mitsotakis's future image 2 — New Greek Prime Minister Kyriakos Mitsotakis at his swearing-in ceremony. Photo: Reuters

Nikos Dendias, the former Foreign Minister, has been appointed Defense Minister. The powerful Foreign Ministry seat in this government is held by George Gerapetritis. Born in 1967, Gerapetritis is a senior aide to Mitsotakis and previously served as Minister of State before taking over the Transport Ministry following a catastrophic train accident last February.

Greece's new cabinet will be sworn in today (June 27). According to political analysts, the main goals of Mitsotakis's administration will be to push through reforms to rebuild the country's credit rating after the debt crisis, increase revenue from the tourism sector, which is crucial to the country, and raise the basic wage of Greek workers to near the average level of the European Union (EU).

These are considered the most practical goals for Greece at this time. While the COVID-19 pandemic and the railway accident exposed shortcomings in the healthcare and public transport systems, soaring prices resulting from the Russia-Ukraine conflict and climate change have made the economy a top concern for voters.

Economics is the decisive factor.

The victory of Mitsotakis and the New Democracy Party shows that Greek voters, who have endured a decade-long financial crisis, are less concerned with political scandals or disasters such as the recent boat capsizing that left hundreds of migrants drowning off the Mediterranean coast.

For them, Mitsotakis's commitments to keeping the country on the path to economic and political stability are paramount. This means they support Kyriakos Mitsotakis's approach to the economy, including his rejection of the Brexit policy pursued by the opposition Syriza party.

Greece has a new economic policy, which is based on Mitsotakis's future image 3 — Kostis Hatzidakis, Vice President of the New Democracy party, has been appointed as Greece's Finance Minister - Photo: WSJ

Of course, Greece still has a long way to go to recover from the severe debt crisis and economic recession of the 2010s. Greece's GDP is still more than 20% lower than it was at the beginning of 2008, before the global financial crisis led to capital flight. But precisely because of this, the policies that Mitsotakis proposes will be more appealing to Greek voters.

The return of a center-right party to leadership in Greece is also a sign of how much Southern European countries are leaning to the right. A decade after the region's financial crisis spurred the rise of left-leaning parties, it is now time for the conservative right to return.

In Italy, Prime Minister Giorgia Meloni also gained power by leading a right-wing coalition last year. Spanish conservatives are voting ahead of incumbent center-left politicians as parliamentary elections approach at the end of July. This trend is now spreading to Greece, posing new challenges for European Union policymakers, given the conservative, nationalist, and generally unwelcoming nature of right-wing politicians.

With Greece, the new government led by Prime Minister Mitsotakis will soon show us the direction in which this Southern European country will transform through its upcoming policy decisions.

Mujtaba Rahman, Director of European Studies at the political analysis organization Eurasia, commented: “We are witnessing the most conservative parliament since democracy was restored in Greece in 1974. The significant support for far-right, nationalist views will allow Mitsotakis to quickly implement sweeping reforms in the public sector as well as the justice, health, and education sectors.”

Nguyen Khanh

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