Portugal is trying to move on from years of severe austerity to become a destination for investment and innovation. In fact Lisbon fought hard to host the The Web Summit, one of Europe’s major new technology events.
But how will the election of Donald Trump to the White House impact this country and a fragile Europe? To discuss this, I am with Portuguese Prime Minister Antonio Costa for this edition of The Global Conversation.
Biography: António Costa
- Costa became Prime Minister in November 2015
- Costa leads an anti-austerity socialist minority government
- He governs with the support of a political alliance including two hard left wing parties
- Costa was mayor of Lisbon from 2007-2015
Isabelle Kumar: “Let’s begin with the US elections and the arrival of Donald Trump in the White House: was that the result you were looking for?”
Antonio Costa: “The choice of the President of the United States is up to the US voters. Obviously a lot of people, including me, were surprised. Let’s hope the United States will honour its commitments under the transatlantic alliance with Europe and its responsibilities within the framework of the United Nations.
‘But I believe the key message we have to try and understand is how was this result possible? That is the big question. It’s a question about Brexit according to several polls in different European countries. “
Isabelle Kumar: “How was it possible?”
Antonio Costa: “I think that frankly there has been a disconnect between the dominant political framework and ordinary people who feel afraid. We have to catch up and get closer to the real political issues affecting citizens. Obviously globalisation is irreversible and it’s something the entire world economy benefits from, as well as the development of several countries. It’s also seen as a threat to many people. We should have reassured them, but we did not.”
Isabelle Kumar: “You say that globalisation is a reality – but Donald Trump challenged it during his campaign, advocating a protectionist, isolationist stance. How would this impact Europe?”
Antonio Costa: “We have also had protectionist reactions in Europe. When we see countries in the Schengen Zone closing their borders to keep out refugees, when we see the United Kingdom leaving the European Union, when we see Trump’s victory, we realise how strong reactions against globalisation can be.”
Isabelle Kumar: “Is this bad news for Europe?”
Antonio Costa: “No, this is bad news for the world, and also for Europe. What we must understand is that globalisation needs to be regulated. And that is one of the great failures of the European Union.”
Isabelle Kumar: “We will come back to taking about the European Union – but still with Donald Trump – what do you think of his policies so far?”
Antonio Costa: “Well, his policies are not my policies, not only on economic issues but also in respect of values. But among democratic countries, we have to respect everybody’s choice. And so we have to respect the choice that Americans have made for their president.”
Isabelle Kumar: “We will return to the US elections throughout our conversation, but we are in Lisbon, at the Web Summit.”
Antonio Costa: “Fortunately!”
Isabelle Kumar: “So let’s talk about it! This summit comes at a difficult time with the Portuguese economy. Some can see a new economic strengthening – but the economy has been struggling. Why was it so important to you to hold the Web Summit here in Lisbon?”
Antonio Costa: “We are at a turning point. We completed the adjustment program with the Troika. This year we will achieve a deficit of below three percent for the first time. So we will leave the excessive deficit procedure. The economic recovery must be supported with innovation.
‘Start ups represent the path we took to mobilise this generation of Portuguese, the most qualified generation yet, which during the years of the crises was hit by emigration.”
Isabelle Kumar: “Did they leave the country?”
Antonio Costa: “We have to bring back these people – and more importantly we need to keep the people who are here studying in universities and polytechnics and take advantage of the skills their generation has to offer.”
Isabelle Kumar: “Was austerity necessary – was it the right policy for that time?”
Antonio Costa: “I think the austerity was a mistake, we have moved on. We have turned the page and we are looking towards the future.”
Isabelle Kumar: “You say that you have moved on – but given the global uncertainty, some are talking about the possibility of a second bailout.”
Antonio Costa: “No. But there is no reason for that. First of all, we will have the best deficit in 42 years – one of the best in the European Union.”
Isabelle Kumar: “But a weak growth”
Antonio Costa: “Yes that’s true, but weak in a European context where all growth is weak. We have reduced unemployment it has been reduced by 2 points this year. Our exports increased by 6 percent – and our exports to the European Union rose by 7.6 percent.”
Isabelle Kumar:“Will you be ready to step down if you do not find that growth?”
Antonio Costa: “This is not a question to pose at this time. We have a stable parliamentary majority, a very good relationship with the President of the Republic, a very good relationship with the social partners.
‘All economic indicators tell us that confidence levels have been increasing throughout this year. The wages of civil servants, which were cut by 30 percent over five years, were reinstated. We have reduced taxes on wages – both private and public.”
Isabelle Kumar: “But not everyone agrees with what you do.”
Antonio Costa: “But that’s normal, isn’t it?”
Isabelle Kumar: “Within Europe – I’m thinking of Wolfgang Schauble the German finance minister. The president of your party called him a “fire starter” because he apparently wanted to set your country ablaze.”
Antonio Costa: “Although it is true, unfortunately Minister Schauble, has a hostile attitude to our government based on ignorance of the reality of the Portuguese economy. I often say that I am very interested in the Germans, especially the Germans who are interested in Portugal, the Germans who know Portugal well, have confidence in Portugal and invest in it. The most productive Volkswagen factory in Europe is located in Portugal.
“Volkswagen has decided to launch a new model next year that will be produced in its factory in Portugal. Bosch have opened two new industrial plants in Portugal. Continental will open a new factory this year.”
Isabelle Kumar: “What about Schauble then?”
Antonio Costa: “He does not know the Portuguese reality at all, but fortunately the German entrepreneurs do. They are committed to Portugal and are boosting their investments in Portugal.”
Isabelle Kumar: “I would like to return to the trans-Atlantic comparisons. Donald Trump, during his campaign, repeatedly claimed his victory would be a kind of Brexit. Many analysts say it was victory for populism, but was it a victory for populism in Europe too?”
Antonio Costa: “Xenophobic populism touches many parts of Europe – with the exception of perhaps Spain and Portugal. This is normal. Portugal is not a closed country in the middle of Europe, it is on the Atlantic, open to the world.”
Isabelle Kumar: “What will be the impact on populism in Europe – will this reinforce this movement?”
Antonio Costa: “I always hope that every unfortunate decision, such as Brexit, or Trump’s victory, will serve as a vaccine to prevent fresh mistakes and new triumphs of populism in Europe’s upcoming elections. Fortunately we remain immune, we remain open to the world and decisive about our future. It is part of our history but also of our future.”
Isabelle Kumar: “But your party still has an alliance with the eurosceptic parties, a trend that is gaining ground in Europe – aiming at the disintegration of the European Union. Is there a risk of disintegration?”
Antonio Costa “For Portugal, one thing has to be understood: the alliance that underlies our government respects different positions. The socialist party, which I lead, is a defender of European integration. The agreement we have with the other left-wing parties does not address European issues – so the government programme remains pro-European and a defender of European integration
Isabelle Kumar “Will you be ready to hold a referendum – if the people were to ask for a referendum on continued membership of the European Union.”
Antonio Costa: “We’ve been a member for 30 years. We are not going to hold a referendum now. This is not an issue in Portugal.”
Isabelle Kumar: “To clarify, you will not have a referendum?”
Antonio Costa: “In Portugal there is broad consensus: even after four years of Troika, people remain pro-European. There are problems within the European Union that clearly need to be addressed: economic and monetary union need to be completed to stabilise the whole of Europe.”
Isabelle Kumar “But the populist movement will do everything to prevent this.”
Antonio Costa: “We must fight them.”
Isabelle Kumar: “Then how? We see very strong personalities leading these populist movements – we’ve mentioned Donald Trump in the United States, in Europe Nigel Farage was one of those who helped UK voters reject remaining in the European Union.”
Antonio Costa “Yes and then he quit and left Great Britain with a big problem and then he went away. It’s irresponsible.”
Isabelle Kumar: “However, they claim to be responsible for the European Union.”
Antonio Costa: “Populism is more or less a synonym of irresponsibility. It is easy to make speeches, it is easy to mobilise people to make decisions. But after it is more difficult to govern, after these decisions. What is happening in Britain is incredible, all the great defenders of Brexit, except Boris Johnson, are gone.
‘Those who are left do not know what to do. It is incredible that after a decision to leave the European Union that every day the United Kingdom takes more time thinking about what it needs to do to start the negotiations.”
Isabelle Kumar: “When talking about these populist personalities, could this be the problem, a lack of leadership in Europe?”
Antonio Costa: “I do not know if it lacks leadership but it certainly lacks results. People want to be reassured, participate in a global economy but there are policies that can help job creation.
‘There needs to be more training so that people can take part in the labour market and don’t have to remain outside the labour market. The answer: growth, employment, and security. Three fundamental areas in which citizens are expecting a positive response.”
Isabelle Kumar: “So Germany, often considered the leader of the European Union, is not always the example to follow.”
Antonio Costa: “I think it’s a paradox, because it’s the only one who can be the leader, but unfortunately it does not want to be the leader, because the leader must have the ability to bring people together: the poor, the rich, the small, the big, the countries of the east, the countries of the west, the countries of the south.
‘And Germany does not know how to do it. Germany has never been a unifier and has never learned how to be one. It is very difficult for Germany to have this leadership position and unfortunately there are no other countries that have succeeded in exercising this function of Germany.
‘That is why I have great hope for Jean-Claude Juncker and his Commission, because in the absence of a leader of member states, there is an opportunity for the Commission to return to the central position it had in the days of Jacques Delors, of having the true leadership of the European Commission.”
Isabelle Kumar: “Let’s go back to the Web Summit. There’s a session here called Virtual Reality Insanity. Do you think we’re going to jump into the unknown? Will future generations have to pay the price?”
Antonio Costa: “All generations face something unknown: their future. Technological innovation is incredibly demanding, compared to anything we’ve had in the past. Automation, robotics and digitalisation. Throughout history, all gains in productivity, all technological advances, have created more jobs than have been lost. We have to re-invent the way we work, to make use of our time and productivity in different ways.”
Isabelle Kumar: “To finish on a lighter note … as we are at the cutting edge of new technology, do you have a favourite new technology or is there anything you’d like?”
Antonio Costa: “I believe a lot in new technologies in the field of mobility. The major challenges facing humanity over the coming decades are climate change and especially finding a sustainable forms of mobility. And developing environmentally-friendly mobility. New technologies offer huge opportunities.”
Isabelle Kumar: “And in your daily life?”
Antonio Costa: “In my daily life – I work with programmes on my laptop. It’s always an adventure. On my smartphone there are always new apps, for banking, for buying books, to help find a restaurant, to improve how we are informed. It’s a fantastic world!”