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

The return brings with it many expectations.

Kyriakos Mitsotakis promised to rebuild Greece's credit rating, create more jobs, raise wages and boost state revenue as he was sworn in for a second term after his New Democracy party won a landslide 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

Mr Mitsotakis's centre-right New Democracy party won 158 seats in the 300-seat parliament in Sunday's rerun election, well ahead of 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 in this second term we will realize the major changes that the country so desperately needs,” new Prime Minister Kyriakos Mitsotakis told Greek President Katerina Sakellaropoulou after taking on the formal task of forming a government.

Mr. Mitsotakis, a 55-year-old former banker and descendant of a powerful political family, served as Greece's prime minister from 2019 until resigning to make way for an interim prime minister after an inconclusive vote on May 21.

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

As a result, Greece had to hold a second election, which resulted in a clear victory for the New Democracy Party, bringing Mr. Mitsotakis back to the prime minister's chair less than 2 months after his resignation.

Moody's senior vice president Steffen Dyck said the New Democracy party's victory was a positive vote of confidence. Mr. Steffen Dyck believes that a second four-year term under Mr. Mitsotakis "will ensure continuity in Greece's economic and fiscal policies and, in particular, a continued focus on improving the business environment and the health of the banking sector."

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

Old crew for new goals

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

Hatzidakis, a 58-year-old reformer with the air of an academic, is vice president of the New Democracy party. He served as minister of labor and energy in the previous government, overseeing the restructuring of PPC, Greece’s largest electricity company, which is struggling with overdue bills 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 inauguration ceremony. Photo: Reuters

Nikos Dendias, Foreign Minister in the previous administration, was appointed Defense Minister. The powerful Foreign Ministry seat in this government belongs to George Gerapetritis. Born in 1967, Mr. Gerapetritis is a senior aide to Mr. Mitsotakis and has served as State Minister and took over the Ministry of Transport after a tragic train accident last February.

Greece's new cabinet will be sworn in on June 27. Political analysts say the main goals of the Mitsotakis administration will be to push through reforms to rebuild its credit rating after the debt crisis, boost revenue from the country's crucial tourism industry and raise the minimum wage for Greek workers to near the European Union (EU) average.

These are considered the most practical goals for Greece at the moment. While the COVID-19 pandemic and the train accident have exposed shortcomings in the healthcare and public transport systems, soaring prices due to the Russia-Ukraine conflict and climate change have made the economy the top concern of voters.

Economics is the deciding factor

The victory of Mr. Mitsotakis and his New Democracy party shows that Greek voters, who have endured a decade-long financial crisis, are less concerned about political scandals or disasters like the recent boat capsize that drowned hundreds of migrants in the Mediterranean.

For them, Mr Mitsotakis’s commitment to keeping the country on a path of economic and political stability is paramount. And that means they support Kyriakos Mitsotakis’s approach to the economy, including turning away from the Grexit movement pursued by the opposition Syriza party.

Greece has a new economic policy, which is based on Mitsotakis's future image 3 — Mr. Kostis Hatzidakis, Vice President of the New Democracy Party, was appointed as Greek 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 gross domestic product is still more than 20% lower than it was in early 2008, before the global financial crisis led to capital flight from the country. But that makes Mr. Mitsotakis’s policies more attractive to Greek voters.

The return of a center-right party to power in Greece is also a sign of how far southern Europe is drifting to the right. A decade after the region’s financial crisis fueled the rise of left-leaning parties, the conservative right is back.

In Italy, Prime Minister Giorgia Meloni also won power at the head of a right-wing coalition last year. Spanish conservatives are voting ahead of center-left incumbents in parliamentary elections due at the end of July. That wave has now reached Greece, and it is posing new challenges for European Union policymakers, as right-wing politicians tend to be conservative, nationalist and anti-immigration.

As for Greece, the new government led by Prime Minister Mitsotakis will soon show us how this Southern European country will change with the policies it will soon issue.

“We are witnessing the most conservative parliament since democracy was restored in Greece in 1974,” said Mujtaba Rahman, European head of higher education at political analysis group Eurasia. “The significant support for the far-right, nationalist views will help Mr. Mitsotakis quickly carry out sweeping reforms to the public sector as well as the judiciary, health and education sectors.”

Nguyen Khanh

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