Portugal may be forced to rethink some policy options on the fundamentals of the European project if the UK leaves the Eurozone.
That is the opinion of Portuguese political commentator, former MEP and lawyer António Vitorino at a debate Brexit/Bremain – the Impact on European Relationships organised by the British-Portuguese Chamber of Commerce and moderated by journalist Helena Garrido which took place on Tuesday. (7 June)
The consequences of a Brexit would be “serious for Portugal from a geo-political point of view because it falls within the European context as an Atlantic country of which the most important is the UK,” warned Vitorino who supported the UK’s remaining in the EU.
Economist João Ferreira do Amaral said that the UK’s eventual decision to leave the EU could spell the beginning of the end for the EU in its present form and could lead to Portugal joining Greece and Cyprus in leaving and redefine Spain, Italy and France’s future position within the Eurozone.
João Amaral, who has argued consistently for Portugal’s exit, said the increasing feeling was that the European Union was a space in “economic difficulty without coherence of action or purpose”.
Power tensions had got worse with Germany, a power that was weak in certain areas, and which was increasingly dominating a Europe that had weakened overall.
Public deficits were seriously high, there was a lack of solutions on immigration that was causing fear and anxiety.
“It is not in my opinion possible to find rationale in the EU or see how this rationale could be re-introduced.”
“Thirty years ago the debate would have been very different as the EU was very different and there was more unity and coherence.
“Today fear of economic catastrophe is part of the cement that keeps it together and it’s a poor cement. But I would argue there is already a pre-existing catastrophe and if I were English I would vote to leave; if I were Scottish or Portuguese I would vote for staying.”
António Vitorino pointed to the long list of exemptions awarded to the United Kingdom: not in Schengen; not signed up to the Charter of Fundamental Rights; relatively recently signed up to the European Social Charter.
The question of the UK’s importance to Europe was essentially political and geo-political. Its geopolitical contribution, its openness to the world, and that without the UK the EU would be relegated to a continental project and lose its ambition to look outwards to the rest of the world.
He pointed out that the UK was one of the three fundamental pillars of power with Germany and France and that losing the UK would be like “the Three Musketeers losing a member”.
“The UK has a fundamental moderating role regarding the relationship between France and Germany,” he said.
“A Europe without the UK would be more German than it is today and the imbalance between Germany and France would be heightened.”
Germany, because of its history, was a regional power. Only now was it starting to open its eyes to the rest of the world. France and the UK were permanent members of the United Nations Security Council; Germany was not.
The UK was also the champion of the Internal Market in Europe and which had been the fundamental cement of the EU for 20 years.
The idea of the Internal Market has been a project with roots in the 19th century.
The problem was that in the last 10 years the UK had stopped investing in the EU project as an Internal Market.
“It is both strange and astonishing that the UK never really recognised the enormous influence it has had on the European project. It has a lot more influence than it recognises.
For example, the rules of market competition had not been dictated by Berlin or Paris but by London.
Proof of its self-induced waning influence on Europe could be seen from the number of UK General Directors of the European Commission. Of the 33 only two were British compared to 17 a decade ago.
And the UK would not have an easy time negotiating trade deals with its former European partners if it left the Euro zone. It would not have unrestricted access to the Internal Market and risked losing its pre-eminence as the European centre of the banking and financial services sectors to Frankfurt and Paris.
João Ferreira do Amaral did not see a catastrophe unfolding from the UK’s decision to leave the Euro zone. The pound would fall but the economic consequences on Portugal would be small.
It was the geo-political consequences that would be bad for Portugal as a peripheral Atlantic country. But the economist believes that Portugal, like the UK, would be better off out of the Euro.
He has stated publicly his belief in a controlled exit, one that would be negotiated secretly behind the scenes and with a raft of measures and financial applications maintained in euros.
Amaral does not believe that the current path the EU has been following has a future since several countries including Greece, Cyprus, Portugal and even Italy and Spain are worse off in the Euro because the Euro reflects Germany’s strong economy and as members of the single currency they don’t have their own currency to devalue in order to make themselves more competitive.
“These countries will limp on for a while, but eventually some will have to go. The bases on which each country is in the EU will have to be reviewed regardless of the result of the UK referendum,” he said.
“I think Portugal will leave the Eurozone sooner or later as we don’t have conditions to stay and will naturally renew its ties and have a greater closeness to its fellow Atlantic country the UK.”
Vitorino does think that the EU has a future and says he is not opposed to the idea of a two-speeds solution.
For Amaral the question was not Greece, Cyprus and Portugal. The real issue was France, Italy and Spain.
Europe was in a period of redefinition with an inability to deal with the migrant refugee crisis, the crises of the peripheral countries and its political leaders needed to take a more serious reflection.
“A change there will be, but I don’t know if it will prove a change for the better or worse, but there is the risk of implosion,” he concluded.
What they asked:
António Comprido: "Europe seems to be in a position of definition and redefinition. Are the problems facing Europe - the migration, immigration and Brexit issues, crises of the peripheral countries - enough for our politcal leaders and people to engage in a more serious reflection on what needs to be done to change Europe and get Europe out of a cul-de-sac?
Joao Ferreira do Amaral: A change there will be but I don't know if it will be for the better of for the worse or even a rational one. There is a risk of implosion. The debate in Portugal on Europe has always been very weak. The tendancy was to transmit the line that was politcally correct. I blame the party politcal leaders who never wanted to address it as they should have. The way Greece was treated was a big shock for us. The Portuguese realised that membership of the EU was not the dream they had been sold."
Henrique José Saraiva Lima:
1) "What would be the internal consequences in the UK of a Brexit?
2) “We are seeing an EU of two-speeds. On one level with the Euro; on the other with the Schengen space. Will this be likely to continue?
António Vitorino: “The two speeds option – the idea that different countries could integrate at different levels and pace - could be a solution and I’m not afraid of it. The question of the ‘kids outside of the garden’ is not just Portugal and Greece;
On the question of the internal consequences for the UK of a Brexit - there is the question of Scotland and a countdown to Scotland leaving the UK. I think that whatever the result politics in the UK will go through great upheaval."
Jean Rozwadowski: “Portugal is a traditional ally of the UK. If the UK leaves will Portugal follow suit? Will there be contagion?
António Vitorino: “I don’t think so. The problem for Portugal would be political rather than economic. There are those who claim that Portugal would be the 4th country most effected in the EU from the fallout of a Brexit. As an Atlantic looking country, If the UK leaves we will feel even more peripheral in Europe. It would be a serious political backward step and it would force us to review some of our policy options regarding the fundamentals of the European project.”
Joao Ferreira do Amaral: Does the EU have a future? I don't think so. There are countries that are badly off in the Euro. It will limp on in its present form for some time, but eventually some will have to go. We have to review the basis on which each country is in the EU and I think Portugal will leave the Euro sooner or later."
Text & Photos
Chris Graeme & The Resident