Greek Premier Backs Joint Debt for EU Defense Spending

Greek prime minister Kyriakos Mitsotakis said that his EU colleagues are warming up to the idea of issuing joint debt to sure up defense spending in light of Russian aggression and pressure from the Untied States on defense contributions in Ukraine. The prime minster also discussed his country's budget and cross-border banking.

Greek Prime Minister Kyriakos Mitsotakis said there is movement among European Union member states to issue joint debt to support a boost in defense spending in the bloc.

“There’s much more momentum among my colleagues,” Mitsotakis said in an interview with Bloomberg Editor-in-Chief John Micklethwait Friday. “Some of the countries that were against the idea of further borrowing have changed their minds.”

Common borrowing by the EU’s 27 members remains a controversial topic, with nations including Germany broadly opposed. Since Russia invaded Ukraine in 2022 and President Donald Trump stepped back from the historical American security role on the continent, European countries have been looking to dramatically increase their defense outlays.

The EU issued collective debt for the first time to help the continent recover from the Covid-19 pandemic, and launching a similar program for defense could unleash the bloc’s huge spending power and help drive down costs.

Greek Prime Minister Kyriakos Mitsotakis said he’s in favor of cross-border bank consolidation in Europe and welcomes the investment by Italy’s UniCredit SpA in Alpha Bank SA.

“If we really mean what we say about creating scale in banking union we should be open to these types of transactions,” Mitsotakis said in an interview with Bloomberg News Editor-in-Chief John Micklethwait Friday. “In principle we’re in favor of these transactions and I’m happy that UniCredit has decided to look at one of our banks and take a significant stake.”

He didn’t say whether he would back a full takeover of Alpha Bank, after UniCredit recently raised its holding to around 26%, worth about €2.1 billion as of Friday.

Greece has been leading a broader move by European governments to return bailed-out lenders to private ownership, and unlike some countries has welcomed foreign investors taking large stakes. Bank of Greece Governor Yannis Stournaras told Bloomberg earlier this month that he was in favor of more cross-border transactions and hoped such deals would prevail elsewhere too.

“We’re taking a very pro-European view, which helps to implement banking union and capital markets union,” Stournaras said. “We’re in favor of cross-border transactions and I hope that this will prevail elsewhere.”

The Greek financial industry has been recovering from the country’s debt crisis over a decade ago that claimed around a quarter of its output. The Mediterranean country has regained investment grade ratings, allowing similar developments to take place at the country’s lenders. In little over a year, Greece exited from three big lenders and largely divested from a fourth.

By contrast, the German and Italian governments have been opposed to UniCredit’s pursuit of Commerzbank AG and Banco BPM SpA, respectively, with UniCredit since dropping the Banco BPM bid. Some Italian officials in private are also skeptical of the proposed asset management tie-up between the country’s largest insurer, Assicurazioni Generali SpA, and France’s BPCE SA, people familiar with the matter have said.

Banks in Greece have also started making acquisitions abroad, most notably in Cyprus. This year Eurobank SA fully acquired Cyprus’ Hellenic Bank, while Alpha Bank is in the process of taking over Astrobank, another Cyprus-based lender.

As Greece continues its recovery, Mitsotakis’s government has focused on attracting foreign investment and repeatedly stressed the country’s improved fiscal position.

“We have been producing significant primary surpluses and I think it’s quite possible that we will have a real surplus again this year. This is a foundation of our economic policy,” Mitsotakis said.

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