Release from the PCP Press Office

European Commission proposals do not respond to the country's needs

The proposals presented by the European Commission, concerning the Multiannual Financial Framework (MFF) 2021-2027 and the so-called "recovery fund", will still be subject to debate and approval by the European Council and the European Parliament.

Without prejudice to a more in-depth analysis of the announced proposals, including important aspects not yet presented in a systematic way - such as the various conditionalities imposed for the use of financial resources and their breakdown by country, as well as the national contributions planned for the future MFF. - the PCP considers it important to underline the following at this point:

In addition to the creation, on a temporary and limited basis, of the so-called "recovery fund", it should be stressed that the revised MFF proposal of the European Union (EU) for the period 2021-2027, with a total value of 1,100 billion euros (at 2018 prices) is lower than the proposal presented by the European Commission in 2018, which proposed around 1,134 billion euros (at 2018 prices), thus representing a 3% cut;

It is worth remembering that, according to the proposal for MFF 2021-2027 previously presented by the European Commission, Portugal would suffer a significant cut in the amounts to be received under the Cohesion Policy and the Common Agricultural Policy. It would be unacceptable for Portugal to continue to suffer losses in the amounts to be received under these MFF lines - which will be references in the future;

As for the "recovery fund" proposal, it must be stressed that it has a different nature from the EU budget. It is an instrument to be constituted from the issuance of debt, by the European Commission, with the financial markets. The repayment of this debt and related interest is expected to take place through the EU budget, over an extended period, from 2028 to 2058;

The "fund" will have 500 billion to be allocated to States in the form of grants, and 250 billion in the form of loans, for a total of 750 billion euros. This is a much lower amount than was considered necessary by several countries and institutions from the EU itself - such as the European Parliament - and which will be spread over a period of up to four years (2021-2024). According to information made public, Portugal could apply for around 15.5 billion euros in the form of a grant and around 9 billion in the form of a loan;

Although it is necessary to determine the evolution of the balance of transfers to Portugal via MFF 2021-2027, in the next seven years, bearing in mind that a significant increase in the national contribution to this budgetary framework is expected, it is important to stress as of now that, if confirmed, the 15.5 billion euros in grants to be transferred under the new "fund" are far from responding to the needs of the country. By way of illustration, this amount corresponds to much less than the financial resources - about 30 billion euros - which in the last three years left the country to offshore/tax havens, avoiding due tax collection;

It is important to underline that the fact that the payment of this "fund" and the interest associated with it will be borne in the future by the EU budgets - either through national contributions or through the creation of "European taxes" whose revenue will revert to the EU budget, thus being diverted from national budgets, to the detriment of each State's means of investment in its development strategy and its sovereignty over fiscal policy -, means that part of the use of financial means of the "fund" corresponds an advance receipt on account of future payments to which States would be entitled through the EU budget;

A matter of the utmost importance is the conditionalities imposed on the use of funds in the scope of the EU, either under the MFF 2021-2027 or under the new "fund". It would be unacceptable that the use of these financial means be tied to macroeconomic and political constraints, namely the implementation of the neoliberal policies and "reforms" advocated by the EU. The use of these financial means must be determined by the necessary response to the problems that the workers, the people and the country face, contributing to ensure the sovereign development of Portugal, and not be defined according to the EU's priorities, according to the interests of the main powers and large economic and financial groups.

Answers and solutions that the country needs

The proposals presented by the European Commission do not provide the necessary response to the problems of the workers, the people and the country that are at the source, the increase of exploitation, social inequalities and asymmetries of development between countries.

While not failing to adopt, at the national level, all the measures that are required, regardless of the EU, or despite it, to respond to the funding needs of the social and economic responses required by the current situation, the Portuguese government must resolutely intervene at the European Union level in order to counter the continuation of policies that are at the root of the problems that Portugal faces.

Regardless of the insufficient and temporary nature of the funds that Portugal may have access to or apply for within the EU framework, it is essential to ensure that these are made available in the form of grants (non-refundable funds) and that they are placed at the service to valorise work and workers, defend and promote national production and the productive sectors, recover the basic and strategic sectors of the economy for the public sector, guarantee public administration and services to serve the people and the country, for the sovereign development of Portugal.

In view of these objectives, the PCP has been defending important proposals, namely in the European Parliament, which correspond to the interests of the workers, the people and the country and which remain entirely pertinent and topical, among which:

- A significant strengthening of the Multiannual Financial Framework 2021-2017, fully ensuring the redistributive function of the EU budget and the objective of effective economic and social cohesion, supporting the productive sectors, employment with rights, public services;

- A budget that must be built, fundamentally, through national contributions, according to the principle that the countries with the highest income and that have benefited most from the integration process should contribute proportionally more;

- The flexibility of the EU budget, giving Member States freedom to reallocate sums between funds, items and priorities, according to their economic and social needs; and the raising of maximum EU co-financing rates to 100%, in advance and not for reimbursement of expenses;

- The cancellation of the fraction of public debt issued by the States during the entire period of overcoming the consequences of the epidemic, which is in the possession of the ECB and included in the respective balance sheet, thus ensuring the formal maintenance of pre-epidemic debt levels;

- A derogation of Article 123 of the Functioning Treaty of the EU, opening up the possibility of direct funding from the European Central Bank (ECB) to Member States, namely through the direct purchase of national government bonds, avoiding the current intermediation of financial markets, speculative attacks against sovereign debt and financial capital gains at the expense of reducing the revenues that States could earn from direct sale of debt securities to the ECB;

- The renegotiation of public debts, in terms of interest and amounts, allowing the redirection of debt resources to the urgent and necessary economic and social responses in the Member States;

- The repeal of all the mechanisms that constrain and condition the leeway of the Member States in promoting public investment, in financing public services and their social functions, in boosting economic activity, such as the Stability Pact, the legislation of the Economic Governance, the European Semester or the Budgetary Treaty;

- The rejection of the creation of "European taxes", which represent the subversion of the sovereignty of States over their fiscal policy and the diversion of funds essential to a country's economic and social development;

- The adoption of measures to curb financial speculation and the predatory action of financial capital, namely through the control, which proves to be adequate, of the movement of capital;

- The creation of a programme in terms of the EU that frames a negotiated exit from the single currency of the countries that decide to do so, recovering monetary sovereignty, regaining the capacity of the respective National Central Bank to issue currency, functioning as a lender of last resort, capable of financing the State and provide leeway in the face of blackmail from the financial markets.

This set of proposals, among others presented, represents an effective response to the serious current situation, which takes into account the needs of workers, micro, small and medium-sized entrepreneurs and the country, especially in terms of social protection for those most affected and disadvantaged, the defence of employment with rights and of public services, support for the productive sectors and the relaunch of economic activity.

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