Portugal anger over EU sanction threat

in News · 30-06-2016 12:25:00 · 7 Comments
Portugal anger over EU sanction threat

Despite growing anti-EU sentiment in the wake of the United Kingdom opting last Thursday to leave the Union, Portugal, for so long considered the “good student” when it came to implementing Brussels-imposed austerity, could now be on the receiving end of EU sanctions for narrowly missing its budget deficit targets.

By next Tuesday evening Portugal will know what, if any, punishment the European Commission has recommended Lisbon should face for once again failing to meet its budget deficit targets.


Portugal had been on course to be one of the better performers in the European Union in 2015, until the wheels came unstuck with cash injections into Portuguese banks.


From being underneath the EU’s budget deficit threshold of 3 percent, Portugal saw the shortfall balloon to 4.2 percent.
Nonetheless, and even coupled with extenuating factors such as a domestic banking crisis, Portugal still managed to substantially reduce its deficit last year from 7.2 percent in 2014.


While these figures are above the limit agreed to by Lisbon in terms of the EU Growth and Stability Pact, Portugal has managed to shrink this deficit in successive years after climbing to an all-time high of 11.2 percent in 2010, it seems that the European Commission and the Eurogroup are no longer willing to make concessions. At least not for Portugal.
France, whose deficit remains above four percent, has been given additional time by the EC to bring its economy in compliance with EU rules.
When questioned over reasons behind the additional leniency given to France, EC President Jean-Claude Juncker replied, “Because it’s France.”


But because it’s Portugal, the EC could decide on Tuesday to fine it with a figure equated to 0.2 percent of its GDP (just under €50 million) and/or freeze EU funding.


Under the current political climate, it would appear odd to most observers that the EC will risk straining relations with Portugal over its narrow failure and clear attempt at reducing its deficit.


The argument in Portugal is few, if any EU member states, have done as much as the country has in seeking to appease Brussels.
The accounts for 2015 are largely the responsibility of the previous government, which on a number of occasions was even praised by Brussels for going the extra mile in cutting spending.


While French newspaper Le Monde wrote this week that Portugal would be fined and face an EU funding freeze, other reports have stated that Portugal could face a symbolic fine of as little as one euro, but be forced to once again pledge allegiance to the Growth and Stability Pact.
Concerns in Portugal are that even this more favourable outcome would still be seen by markets as the country being on a downward economic spiral once more, and could it affect its ability to negotiate debt.


Portugal Prime Minister António Costa, who took charge with only a couple of weeks to pull a rabbit out the hat and reduce the deficit in the wake of yet another banking crisis at the end of the year, this week termed the threat of sanctions on Portugal as “ridiculous”.


“Faced with the dramatic situation of the UK’s departure, the refugee crisis, terrorism threat, it is ridiculous that we are discussing 0.2 percent of the previous government’s budgetary execution”, António Costa said at the European summit.


The Portuguese Prime Minister further ridiculed the threat by saying it would be even more serious in a year where even in the worst projections, Portugal will guarantee a budget deficit of below 3 percent.


António Costa added: “Unfortunately the European Commission has disappointed me on enough occasions for me to be sure they won’t disappoint me again.”


Opposition leader and former prime minister Pedro Passos Coelho joined in the criticism.


“I hope they [EC] are against sanctions because they have no reason to be imposed” he said, adding that “Portugal does not need to go around begging” to avoid fines and sanctions.


“If there is any decency, then you cannot sanction a country that has done the most to consolidate its structural budget and is, after Ireland, the country that most met targets which had been set out.”


The Left Bloc, who are key allies to the Socialist government, have gone one step further and called for an EU referendum should the European Commission recommend sanctions next week.


Catarina Martins, leader of the Eurosceptic party said her party would demand a vote to be held in Portugal should Brussels impose sanctions.


Martins, who was speaking after being re-elected party leader with 83 percent of the vote, said EU sanctions would translate into a declaration of war and so too would any calls for additional austerity.


But despite Portugal’s arguments and even counter-threats, Eurogroup chairman and Dutch Finance Minister Jeroen Dijsselbloem said this month that “sanctions are absolutely a possibility.


“They are in our rules and regulations, and when we view the current situation in Portugal and Spain there are serious reasons to consider their application, but we shall hear from the [European] Commission the reason for the decision.”


According to Dijsselbloem, Portugal’s Socialist government can avoid fines if it ensures “that the budget remains within the limits”, but said that he was speaking from experience when he said that this would be “a difficult job.”



Comments:

This is ridiculous. France go over the deficit agreed and nothing happens but when Portugal and Spain do it they receive sanctions. I am starting to think the UK are right and that leaving the EU was a good decision. The EU can never work as long as we have german and french fascists controlling it. The germans are still the expansionists they were and they haven´t changed since the World War II.

by Bob from Lisbon on 16-07-2016 02:29:00

As a passionate internationalist, I appreciate an interconnected Europe. However, the common currency is an economic wrecking ball wielded by the north against the south. Until this problem is sorted, there will continue to be stagnation across the zone and the risk of further disintegration of the noble experiment.

by David from Algarve on 07-07-2016 08:54:00

So its ok for France to run its deficit over 4 % because its France and Portugal is facing sanctions for doing the same ?
Time to say "Adios" to the EU.

by Tony B from USA on 05-07-2016 06:23:00

First of all... EU without UNITED KINGDOM???? no thanks.. I wont acept that.. If Uk isnt part of ue then there is no more european UNION... Its more like european ONION... Yes .. All it will be left are tears .. I wont be part of a ditactorship lead by nazis and their allready alzeimer neigbours !! Remenber when you all got erased from the maps of europe??? Remember why UE was created??? WHY be in ue without UK??? Explain to a portuguese why should we embrace UE???? France fails their deficit??? Uh cest la france ... Germanazis has excdents no one cares ... Both should have been sanctioned also... Fuck UE fuck central power... Why do i need no fucking borders if only others can enter and we cant get out because of your tactical enpovernment of my country??? Do this trash central ditators think we want to stay in europe without UK... Do you really think that when portugal leaves this shitless ONION spain will remain or will be left the same??? Do you know what galiza and pais basco and catalunha stands for??? Do you really want to be whitout portugal spain and uk .. Fuck ue... Keep your rotten sausages for yourself!

by Tiago from Porto on 05-07-2016 04:08:00

the european union parasites is like a dictatorship run by germany if they want to start threatening near by countries with sanctions they are in for civil war. in any case european union wont last long into the future maybe portugal is better off alone.

by rui martins from USA on 01-07-2016 11:09:00

do not buckle to these unelected beaurocrats,WE have just given them a bloody nose and they are screaming like little girls,stand firm Portugal they the [EUSSR] are in big big trouble and would not dare try anything with your country.

by bobbo from UK on 01-07-2016 09:36:00

Why can't Portugal just be its own country? Why does it need to be taxed by the EU? Look at whay they did to Greece.

by Alan Silva from USA on 01-07-2016 09:04:00
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