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The economic and financial crisis

The effects of the international financial crisis on the Portuguese economy, particularly with respect to unemployment and the risk of poverty and social exclusion were the height of my concerns in my third year in office as President of the Republic, the period to which the speeches transcribed in this book refer.

Within the framework of my competences and respecting the actions of those who have the responsibility for governance, determining and carrying out public policies, I tried to contribute towards minimizing the economic and social costs of the crisis in order that the Country treads a path which permits overcoming the challenges that it is facing.

The consequent slowing down of the Portuguese economy did not excessively surprise me.

Firstly, because it became very clear, during the second half of 2007, that a marked worsening of the international financial system was taking place which, in spite of its localized origin, would have inevitable consequences on the global economy.

The summer of 2007 witnessed the news of the enormous losses in the large international banks with head offices in developed countries, resulting, above all, from errors in the assessment of the risk of financial applications respecting, in particular, to North American market products related to housing mortgages (known as sub prime).

The loss of confidence of investors which followed led to a sharp fall in the liquidity of the financial markets and of the interbank monetary markets, to a strong turbulence in the stock markets, to the worsening of the crisis in the housing market and, consequently, to the reduction of credit and to the deterioration of the conditions of financing the economies.

From here to the emergency intervention of the monetary authorities and governments in banking institutions with grievous liquidity and solvency problems, and to the bankruptcy of others, was a relatively short step.

The intervention of the Bank of England in Northern Rock occurred in September 2007, and the bankruptcy of Lehman Brothers, in September 2008, was the cause of the global collapse of confidence in the banking sector.

Since very early on it was obvious to me that a crisis of such a size in the international financial system would evidently have very negative consequences on production levels, employment and family living conditions.

The knowledge of the vital functions of the financial system in a market economy would be sufficient reason: easing payments and mediating the use of savings, capturing these from the savers in the form of deposits or other credit tools, and channelling these to investors under the guise of loans. It is for this reason that a grievous disturbance in the financial system hinders, or even prevents, the growth of the economy.

The second reason why I was not excessively surprised by the effects of the international financial crisis on Portugal was that it arrived when the Portuguese economy was still showing serious structural weaknesses, well known at any rate, by all the economists mindful of the realities of the Country.

Should any doubts subsist, it would suffice to read the first paragraphs of the Preliminary Conclusions of the Mission of the International Monetary Fund, dated 14 July 2008 (available in [www.bportugal.pt] ): «The deterioration of the world economic situation is prejudicing Portugal’s recovery, but the fundamental issues which condition the Portuguese economy are internal: wide deficits in the current account and budgetary balance; the high level of debts of families, companies and the public sector; and a significant hiatus in competitiveness. Portugal has been living above its means for many years, obtaining finance from the rest of the world through the banking system, increasing its external debt. However, although its participation in the Economic and Monetary Union alters the nature of the external restriction, it does not remove it: the accumulation of a net external liability cannot continue forever. »

My endeavours to help the Country and the Portuguese to face the obstacles have taken diverse forms.

It is my belief that it is important to speak the truth to the Portuguese, in order to induce behaviours which allow softening the effects of the crisis and preparing a more prosperous and fairer collective future. Only by knowing the true economic situation of the Country and by having the correct information available can people take the correct and considered decisions, which will protect their future and that of their children. As I stated in the ceremonies commemorating the 98th Anniversary of the Proclamation of the Republic, «truth generates confidence, illusion is a source of disbelief».

At the same time, I have tried to inspire the Portuguese with courage and the will to overcome difficulties, appealing to work, to the sense of responsibility, to entrepreneurship, to creativity, to joining of efforts.

To youth, I have addressed words of encouragement to acquire the skills and qualifications demanded by the times we live in and appealed that, in the face of difficulties in gaining first employment, not to allow themselves to be defeated by despair and to believe in their capabilities.

I have called the attention of entrepreneurs for the need to avail themselves of the opportunities which always exist in times of crisis, not to postpone investment projects which are clearly profitable, especially in the export sectors, and that they invest on quality, on innovation, on technological development and qualification of human resources, in order to better face the competition in the global economy. It is in the production of goods and services that compete with foreign production that the competitive capability of the Country is played out and, consequently, the containment of foreign debt.

With foreign responsible politicians and economic agents I have tried to demonstrate the Country’s potential and to contribute to the improvement of its external image.

To those Portuguese who are experiencing particularly difficult situations, I have expressed my solidarity, eliciting, at the same time, particular attention from the public authorities to the regions of the Country which are more afflicted with the crisis, and proposing that a reserve be constituted to face possible situations of social emergency.

I have voiced my support for the social solidarity organizations and institutions who work incessantly to answer the increase in demand from persons in poverty situations and the requests for aid to requite basic needs.

In the situation which the Country is going through, the President of the Republic cannot limit himself to making a diagnosis of the situation, although it must be minded that it is not in his power to govern or legislate. In this sense, I have endeavoured to show the path that Portugal must follow to overcome the near stagnation in which it has lived and again approach, sustainedly, the level of the average development of our European partners. I have emphasized, on multiple occasions, the strategic priorities of national policy which, in my opinion, will enable us to build a more promising future.

As President of the Republic of all Portuguese, I believe it is my duty to equally defend the interests of the younger generations, of those who have not yet reached voting age. The decisions which are taken at the present time cannot ignore their effects on the future. We do not have the right to bequest to our children – and to our children’s children – a liability which they will find difficult to sustain, condemning them to a lower level of living than that which our parents bequeathed us.

It is important that the public authorities are aware of the situation in which the Country should be when the international financial crisis is overcome, in order that the possibilities of future development are not thwarted. If, as compared with the competing countries, the competitive capacity of Portuguese companies has not improved and the export sector is weaker, everything will become even more difficult.

On the other hand, I have reinforced my appeal so that politicians, whilst respecting differences and ideological debate, leave out sterile quarrels and divisions and try to cooperate and join forces so that the Country overcomes the underlying difficulties and better perspectives may be envisaged for the Portuguese.

When all efforts should be focused on the recovery of the economic lag, on the fight against unemployment and on the risk of poverty and social exclusion and on the reduction of income disparities, it is totally incomprehensible that the political agenda is diverted to themes which cause fractures in Portuguese society and waver their attention from the resolution of national issues.

The President of the Republic and the Autonomous Regions

Portugal is a unitary State, which «respects in its organization and functioning the insular autonomic regime», in the terms of article no. 6 of the Constitution.

This constitutional solution, with which I have often stated my appreciation, is, without any doubt that which better corresponds to the nature of the Portuguese State, to the layout of our territory and to the legitimate rights and interests of the insular peoples. After thirty years, the autonomous regime has asserted itself as one of the more fruitful achievements of our democracy, and has decisively contributed to the economic and social progress of the Azores and Madeira.

The competences which our fundamental law attributes to the President of the Republic in what pertains to the Autonomous Regions correspond to setting the date of the elections of the members of the local Parliaments, to forwarding messages to such Parliamentary Assemblies and, also to decide upon their dissolution which, in the terms of the Constitution, can only take place after hearing the Council of State and the political parties represented in the local Parliaments.

The competences of the President of the Republic also include, after hearing the Government, the appointment and dismissal of the Representatives of the Republic in the Autonomous Regions, whose duties are to represent the Republic in each of the insular regions, and it is not fortuitous that the Constitution grants them the power to sign and enact the regional legislation and the regional regulatory decrees. With respect to these acts the competences of the Representative of the Republic include their signature, their forwarding for preventive checking by the Constitutional Court and the exercise of the political veto.

The Constitution equally determines that the sovereign bodies cooperate with the regional governmental bodies, specifically in those fields which are naturally included in the Government’s sphere of competence, as responsible for the conduction of the Country’s general policies. This duty of reciprocal cooperation, in constitutional terms, is particularly related to the economic and social development of the Autonomous Regions and targets specifically the correction of the inequalities resulting from insularity. The Fundamental Law consequently imposes that, amongst the sovereign bodies and the local governmental bodies there should exist, more than just institutional relationships, but a relation of cooperation targeting a specific objective: the economic and social development of the Azores and Madeira.

In this context, it is the duty of the President of the Republic to exercise his influence so that a climate of cooperation is established between the executive branches of the Governments of the Republic and of the Regions.

Throughout my term of office, I have endeavoured that a loyal and constructive dialogue and a favourable environment for a healthy institutional relationship should exist between the bodies of the Republic and those of the Autonomous Regions, and that the specificities of the Regions be duly taken into account. I have visited both the Azores and Madeira where I had the opportunity to contact the local peoples and, on several occasions, tried to bring about an improvement in the dialogue between the central and the regional authorities. The latter’s political and administrative autonomy must be respected, such as these must know how to respect the fundamental principle of the unity of the State.

I believe, on the other hand, that the duty of exemption and impartiality in the treatment of the different party political forces, which I assume nationally, is also extensible to the parties represented in the Azores and Madeira Parliaments. As such, the President of the Republic must abstain from nourishing differences of opinion or commenting on statements of politicians made within the scope of democratic party politics.

I am also of the opinion that the President of the Republic, inasmuch as he must not interfere in the organization and internal operation of other sovereign bodies, cannot interfere in the organization and internal operation of the regional bodies. It is his duty, within his sphere of influence, to contribute in allaying excessive brittleness or to overcome anomalous situations and in principle should do so discretely and initially through the Representatives of the Republic, whose duty is to follow up the political situation in each of the Regions, keeping the President of the Republic duly advised.

2008 was a year in which the future of the Autonomous Regions was deeply affected, as well as the layout of the Portuguese State as a partially regionalized unitary State. I naturally refer to the approval of the Political Administrative Charter of the Azores Autonomous Region. I am certain that, in the procedure which led to the approval of this act, what was at issue reached such lengths that, very probably, only the future will allow viewing it in all its implications. It is thus my belief that the Portuguese should have a wider understanding of such implications.

It was in this context that I decided, on 31 July, to issue a communiqué to the Country regarding the revision of the Political Administrative Charter of the Azores. Ever since the beginning, I had a very clear notion of what was at issue. It was not a question of a greater or lesser appreciation of the autonomy of the insular regions. And it also was not a question which was directly related to the holder of the office of President of the Republic. What was at issue, as I stated to the Portuguese, was the principle of confidence and of political and institutional loyalty that must rule the relations between sovereign bodies. This is an issue which is totally distinct from the appreciation of the constitutionality of statutory rules.

I refer, very decidedly, to the rule that obliges the President of the Republic, in order to dissolve the Azores Parliament, to hear a number of bodies far greater than those which he is required to hear when deciding to dissolve the Nation’s Parliament, a solution which I consider absurd. Independently from knowing if that solution, apart from being absurd, is also unconstitutional, there is a prior component which, in my understanding, is not politically admissible: a sovereign body cannot, through the means of an ordinary law, limit or condition the exercise of the authority of another sovereign body, nor must it, in any way, interpret the Constitution with reference to the exercise of the authority of another sovereign body.

This is, as I have already stated, a question of confidence and of institutional loyalty, without which the normal operation of the basic rules of the democratic game is compromised and perverted. It is an essential principle, valid whether it refers to the competences of the President or whether to those of any other sovereign body, without prejudice to the constitutional particulars of each of them.

I repeat that in the case under appreciation the defence of the authority of the President of the Republic was not at issue, especially since the rule under discussion, relative to the dissolution of the Regional Parliament is only very remotely applicable. In thirty years of regional autonomy, never was the Azores Parliament dissolved and there are no reasons to suppose that such would occur in the near future.

Prior to its being configured as a juridical-constitutional issue, this is a question of respect for the fundamental values of the Republic, which are valid for all and any State bodies. Should Parliament, for instance, decide to limit or condition the way the Government carries out its constitutional duties, such a principle would equally be placed at issue. And, even if such a legislative solution would not necessarily be unconstitutional, it would always offend that, which in my belief, is one of the basic principles of our democracy: institutional loyalty in the context of the balance between the sovereign powers of the State.

One other rule of the Azores Charter merited my opposition. This refers to the self limitation of powers that the current Members of Parliament introduced in this legislation. Members of Parliament decided, even after the President of the Republic politically vetoed the legislation that revised the Charter, that, from now on, in future alterations of the Charter, they will only be able to alter those precepts that the Regional Parliament decides require alteration. In a procedure of revision of the charter, the introduction of which is the duty of the Regional Parliament, the constitutional authority of Members of the National Parliament to approve the laws of the Republic will thus be clearly limited. I find it very difficult to understand that Members of Parliament decided to mortgage so drastically the freedom of action of their successors.

The issue, once again, is essentially a question of principle. In this case, what I believe is inadmissible, such as I understand the structure of the Portuguese State and the operation of its sovereign bodies is the possibility that, by ordinary legislation, members of a Parliament can limit the authority of future Members. In truth, since the initiative of statutory revision is the duty of the Regional Parliaments, and since Members of the National Parliament can only intervene in the matters that those Parliaments decide require revision, the Political and Administrative Charter of the Azores Autonomous Region has now become excessively rigid, perhaps even more so than that of the Constitution of the Republic, a situation which I must term as manifestly absurd. In future, the margin of action of Members of Parliament in subsequent legislatures will be compromised – definitively compromised, perhaps – due to a cyclical option of the Members of the current legislature, an option which, moreover, is solely owed to party political reasons.

Contrary to what people were led to believe, my opinion is what was at issue was much more important than a question of relationship between the Members of the National Parliament and the President of the Republic. Office holders are ephemeral and transitional. The same cannot be said of the basic values which founded our democracy and sustain its operation. These, I have no doubts, were clearly placed in question, independently from any judgement that may be made as to the constitutionality or unconstitutionality of the rules of the Political Administrative Charter of the Azores Autonomous Region.

In all this process, my conduct was based on two rules: placing the higher national interest above everything else and speaking the truth to the Portuguese, making them understand the reach and the relevance of this political and institutional issue.

Listening to youth

The problems of youth have deserved constant regard during my mandate. I have endeavoured to listen to their voice and have directly addressed the new generations several times, asking them not to become resigned in the face of difficulties.

The quality of education, the fight against lack of success and schools abandonment, violence in schools, the access of youths to the labour market and the lack of stability in employment, the access to housing, and the economic, social, cultural and environmental entrepreneurship of youth are issues to which I have dedicated my full attention.

The signs of estrangement of youth in relation to politics – gathered, right at the beginning, in contacts made during my university days – have been for a long time one of my main concerns.

The interest of youths in civic and political participation is an issue of the greatest relevance for the future of the Country, because they will become members of the government, members of parliament, local authorities, and the party leaders who will have to ensure the continuity and quality of our democracy. From them will depend the vitality of our political system and the civic conscience of Portuguese society. This is why it is so important to understand why politics are not motivating youth.

For this reason I requested the Catholic University to carry out a survey on the attitudes and behaviour of youth, with the objective to place this theme in public discussion and invite politicians to give it their close consideration.

The survey, carried out in accordance with the most reliable methods of gathering information, confirmed the extremely low interest of youth in politics. I made it available to the parliamentary groups and decided to make it the central theme of the speech I delivered in Parliament during the celebrations of the 34th Anniversary of the 25th of April.

I later promoted a meeting with leaders of youth organizations, with the objective of finding out their opinion on the estrangement of youth in relation to politics and what measures could be taken to contribute towards minimizing or even reversing this situation. Youths with experience in the leadership of diverse associations – party-political, academic, trade union, entrepreneurial, cultural and volunteering – were thus able to provide useful contributions to help the understanding of this phenomenon.

The Meeting, which in its first part, had the presence of four specialists in the area of political science, revealed itself as very stimulating, not just during the debate held, but also due to the Conclusions reached by the three working groups, made up exclusively of youths and respectively dedicated to Local Politics, National Politics and European and International Participation. The working groups were stimulated by young «activators» who demonstrated, in practice, the effectiveness of the non formal method of education followed by the youth associations. Due to the relevance of the majority of the recommendations, I decided to send the Conclusions to the remaining sovereign bodies, as well as to the National Association of Municipalities and to the National Parish Association.

One of the recommendations addressed to the President of the Republic was to carry out a “Route to Youth”, a challenge I immediately accepted.

The first campaign of this Route, subject to the theme «Youth Autonomy and Associability”, included visits to young farmers’ business enterprises, initiatives of young entrepreneurs, to a cultural organization led by youths and to the Porto Academic Federation. Finalizing this campaign, I had the opportunity to attend a fashion display featuring young national designers.

The targeted objectives were the provision of value to youth associability within the entrepreneurial field as a means to promote autonomy and to provide skills and capabilities, the disclosure of good examples of innovation capacity and initiative of young entrepreneurs, and the recognition of civic and social actions of the youth associations and of volunteering initiatives through student organizations.

In the speech which I then addressed in the National Association of Young Entrepreneurs, I underlined the relevance, for companies and for the national economy, of entrepreneurial autonomy with respect to political power and called on youth to assume it without fear and to give the example.

The trend noticed in some enterprises to search for protection or the blessing of the State to carry out their business is harmful for the Country’s progress and, in the medium term, for the entrepreneurs themselves. It distorts competition, favours the production of goods which cannot be transacted internationally – emphasizing the external imbalance – and does not stimulate innovation, technological modernization or the readiness to face competition in the global market. Political power must, therefore, act in order to contradict that trend and favour the autonomy of Portuguese entrepreneurs.

The second Campaign of the Route to Youth was dedicated to cultural and artistic youth associations as tools for the economic and social emancipation of the young.

I tried to bring out good examples of youth associations which work on and use art as a means of community integration and social inclusion, through stimulating life in the local communities and providing youth with opportunities which otherwise would not become available. Good examples also, of juvenile associations that promote citizenship and volunteering as tools for social integration and individual achievement, and which stimulate artistic creativity, international mobility and interchange between young artists of different countries.

Outstanding in this second campaign of the Route to Youth were projects and initiatives which are instances of sharing and inter generational learning, as meritorious areas of creative freedom and civic responsibility.

When launching the Route To Youth I also wanted to provide the opportunity for young people to voice their opinions, to emphasize their individual potential and that of their organizations and, especially, to provide worth and recognize the value of their intervention and their entrepreneurial capability for the progress of the Country.

The Supreme Commander of the Armed Forces

In the terms of the Constitution, the President of the Republic is the guarantor of national independence and of the unity of the State and, inherently, the Supreme Commander of the Armed Forces.

The constitutional charter of the President of the Republic, as Supreme Commander of the Armed Forces, has its own specificity, unparalleled in any other areas of his political activity, whilst presupposing the exercise of explicit and implicit competences, with a significant operational margin within ordinary laws, such as is the case with the Law of National Defence and Armed Forces.

The constitutional association of the President of the Republic with the Armed Forces underlines and emphasizes its essential national and politically independent characteristics, thus contributing to the strengthening of its political exemption and to guarantee the continuity of State policies within the scope of the military institutions and, on a wider context, in the sector of national defence.

The relevance which I attribute to my duties as Supreme Commander of the Armed Forces derives not only from constitutional and legal responsibilities which are specifically granted to me, but also from my careful interpretation of the contents that, in the exercise of such duties, may be identified.

As an area of vital importance for the Nation with permanent and transversal characteristics, I have endeavoured that national defence continues to deserve wide consensus from politicians and sovereign bodies.

This culture of State has been the determining reference of my actions on behalf of the convergence of efforts, of the institutions and of the Portuguese, around the objectives of national defence. Thus the reason why I have been trying to emphasize, with public opinion, the relevance of the role of the Armed Forces in the safeguard of national defence and of the well being of the Portuguese, and their growing relevance as a tool of the State’s foreign policy.

We have allowed ourselves for some time to be deluded with the hope that we would be entering a new order, without any reasons for conflict, and in which development and human rights would be the bases of a new paradigm of international relations. Today we can establish that the need and the relevance of the Armed Forces are not any less than in the past.

In the performance of my duties as Supreme Commander of the Armed Forces, I have endeavoured to give particular emphasis to following up the issues of national defence and of the development, in Portuguese society, of a culture of security and defence. I have equally tried to contribute towards the reinforcement of the cohesion and the prestige of the Armed Forces and to cause the Portuguese to perceive their specificities and their role as an institutional State structure, as well as to encourage the process of restructuring and development of the toil and of the combined and joint capabilities of the Armed Forces.

As Supreme Commander I have exercised my duties to advise the Government as to the conduct of the policy of national defence, particularly with respect to the Armed Forces, and have kept a close relationship with their commands, in order to obtain up to date information as to the existing conditions for the accomplishment of their missions.

Since I took office I have carried out and taken part in more than twenty visits or activities of the Armed Forces, and have given priority to the direct contact with our military personnel, especially with those who are in missions overseas. I consider as especially relevant the visits I made to Kosovo, Bosnia-Herzegovina and the Lebanon, as well as the preparations for the aerial policing in the Baltic countries, in which Portugal took part as a member of NATO.

I thus tried to make the Portuguese aware of the relevant role that the Armed Forces have assumed in the defence of the interests of Portugal and the image of prestige, sense of duty and competence shown by our military personnel with our allies and with the peoples of the countries where they are deployed.

The recognition of the sacrifices borne by these military personnel and their families led me to invite, during the 2008 Christmas holiday, the families of the members of the armed and security forces deployed in foreign parts during the previous year, and to share, with me and my wife, the opening of the festive season in the Palace of Belém.

Since the beginning of my mandate, I have wanted to associate the Armed Forces to the celebration of the National Day of Portugal, Camões and the Portuguese Communities, deservedly highlighting them as a fundamental State institution, and as a structure of our identity and an integral part of the history of Portugal as a free and sovereign Nation. It is on that occasion that I directly address the Armed Forces and endeavour to provide specific visibility and public testimony of their capabilities and of the excellence of their performance in accomplishing missions on behalf of Portugal and the Portuguese.

In short, I have endeavoured to tread the path which I proposed in my address when taking office, in which I assumed the commitment to strengthen the cohesion and the prestige of the Military Institution and to closely accompany, linked with the remaining sovereign bodies, the restructuring and modernization process of the Armed Forces, and to stimulate the joint efforts of their branches, in order to reinforce the operational status of the forces and to promote an adequate rationalization of their means.

Aníbal Cavaco Silva
March 2009