Among European countries, Portugal is one of the least affected by the new coronavirus pandemic. Despite having more than a thousand deaths, the country managed to stabilize the infection and carry out a great control of damages, preventing the social collapse that was generated in other European states. This ability provided Lisbon with the possibility of advancing its economic recovery plans for the post-coronavirus world. However, the great challenge for a country that is little affected by the virus will be precisely the ability to deal with the countries most affected. In the specific case of Portugal, specialists are betting on the country’s ability to establish a common point of interest for American and European investments, being a privileged “bridge” between both continents.
This project is supported and publicized by the Social Democratic Party (PSD), which forms the largest opposition party to the government of Prime Minister António Costa, a socialist, in Parliament. This Wednesday (June 3), the PSD presented a set of suggestions for the resumption of the national economy, which has among its bets the attraction of new foreign investments for the country.
In this sense, in an interview, the Party’s spokesman, Joaquim Sarmento, announced: “If a process that COVID-19 may have started is confirmed, with closer proximity to the production lines, Europe and the United States have opportunity to reindustrialize and, with that, Portugal has a privileged position from the point of view of the connection Europe and the United States (…) “We have to act on policies on the supply side, whether from a fiscal point of view, simplifying, making it less complex and, obviously, acting at the level of tax incentives, and then on the non-fiscal side, reducing costs, lengthy licensing and authorization processes “.
The coronavirus is not, however, the only reason behind the optimism of the Portuguese social democrats in attracting investments. The country has a recent history of relative gains in attracting foreign investment. Last year, according to official data from the Portuguese government, contracts amounted to more than € 1 billion, 9% growth compared to 2018. However, the PSD spokesman mentioned the fact that “in recent years the Foreign investment was mainly focused on tourism and real estate, not on industry”, and the objective now is “to bring in major industrial projects”. The most referenced example during the presentation of the proposals was that of Autoeuropa, a German Volkswagen factory that was implanted on Portuguese soil in the early 90’s. Today, the company represents 1.6% of the country’s Gross Domestic Product (GDP) and accounts for 75% of all national automobile production.
The success of Autoeuropa’s work in Portugal led the president of PSD, Rui Rio, to say the following words: “If we manage to capture one, two, three major investments like Autoeuropa, we have completely changed the profile of the Portuguese economy and particularly in our balance of payments”, said PSD president, deputy Rui Rio, at the press conference. (…) If these investments manage to go to more abandoned places, namely in the interior of the country, even better, it would be vital for the future from the country”.
In any case, the number of politicians who intend to rely on foreign investments in the industrial sector to recover the Portuguese economy seems to be growing in the Portuguese Parliament. In fact, despite any strategic value in attracting such investments, the project presented as a solution to the country’s economic problems only tends to unstable Portugal’s political and geopolitical situation. This small country in Europe is proposing to play a role of “bridge” between two distant and opposite universes.
In order to make a decision as important as the one that plans a large part of the Portuguese Parliament, the first step to be taken is a primary political decision, the choice of a step to be taken in disputes in context. US and European Union are two different worlds in constant division. If Portugal undertakes from now on projects of interest to both sides, it is very likely that Lisbon will end up involved in future tensions between the blocks. It is up to the Portuguese government to decide whether such a step is really compensated by the crossfire of the trade wars of the future.
There is yet another point, the interest of which is almost strictly strategic: Portugal seems to have definitely given up on starting heavy national industrialization projects. The country wants to become a colony of foreign investments and, as a consequence, will have to deal with a strong economic backwardness and the possibility of serious difficulties in case of hypothetical future scenarios – such as, for example, a fragmentation of the EU.
In short, it seems that the project most applauded in the Portuguese Parliament is a project to subject Portugal economically to foreign interests. Trying to create economic “bridges” between foreign powers is literally to get caught in the crossfire and submit to both sides. A perfect formula for failure.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of The Duran.