Welcome to the Official page of the Presidency of the Portuguese Republic

I thank you for the invitation, which I was honoured to receive, to address this Assembly. I have the greatest respect for the European Parliament and for its role at the heart of the European Union.

As I mentioned at this institution in September 2007, I am well aware of the action and contribution of the Parliament to the process of European integration. I have not forgotten the full and loyal support it gave me as Prime Minister during the months in which I led the first Portuguese Presidency of the Council in 1992.

I note with satisfaction the great evolution of the Parliament since the times of Maastricht. The Lisbon Treaty rightly consolidated its role as co-legislator, alongside the Council. This is a choice that favours the democratic legitimacy of the Union’s decisions and contributes to the strengthening of European civic culture.

There is thus no better place to share a few thoughts about the challenges that I consider most immediate and pressing for our States and citizens in this phase of our European project.

In the last few decades the European idea has been realized as an extraordinary political construct and an example for many. Frontiers have been eliminated; the free circulation of people, of knowledge and of culture has been established; the single market has been set up; the largest economic bloc in the world and the single currency have been created, and a community of belonging has been reinforced.

However, today we are unfortunately obliged to admit that the inspiration and the achievements we have attained since the founding fathers cannot be taken for granted.

Europe’s economic growth is weak and various countries find themselves in recession; and unemployment is a dramatic reality. These are the two greatest challenges that we currently face and for which we have still not found an effective solution. It is no surprise therefore that a growing disaffection between decision makers and citizens is added to these challanges.

Exactly 28 years ago, on the 12th of June 1985, in the cloisters of the Monastery of Jerónimos, Portugal signed its commitment to formally join the European Community. Joining the Community was the culmination of the consolidation of the Portuguese democratic process, and contributed decisively to the development of my country. Since then, Portugal has actively participated in the consolidation of the European project.

Portugal brought to Europe the legacy of its history, the imprint of its Atlantic dialogue, the universality of its language and culture. The special bonds of friendship with Africa and Latin America, the presence of a diaspora in all the corners of the earth, the growing international assertiveness of the Community of Portuguese Speaking Countries are factors that contribute to the global projection of the European Union, of our values, of our project.

Currently, as you know, the Portuguese are feeling the economic and financial crisis with particular intensity, with all the serious social consequences that arise from it. The last few years have been amongst the most difficult that we have experienced in our recent history. Since the middle of 2011, Portugal has made important efforts for economic and financial adjustment and structural reforms, within the guidelines of the programme agreed with international institutions. The process of budgetary consolidation has moved forward, despite an external economic context that is much less favourable than was initially foreseen by the Institutions involved, and the asymmetric shock to which we were subjected.

In my country, the harshness of the recession has been apparent in 10 consecutive quarters. The rate of unemployment has reached 17.7%, with youth unemployment at 42%. We have witnessed a worrying increase in the risk of poverty.

Heavy sacrifices are being demanded of the Portuguese, who have shown an admirable sense of responsibility, and have strengthened bonds of solidarity and mutual help that have alleviated some of the most dramatic situations.

Mr President of the European Parliament,
Members of the European Parliament,
This crisis has made evident the degree of interdependence between Member States of the European Union in general, and of the Euro Zone in particular. It is the logical result of the level of integration that we have attained. Today it is no longer possible to disassociate the situation of any one Member State from the general European context.

In essence, we are a Union and not a mere sum of States and markets. And this makes an enormous difference when it comes to understanding the current situation and formulating the most suitable responses.

In the last two years, we must recognize the efforts of the European Union with respect to the support for the financing needs of the Member States in greatest difficulty, to the strengthening of the rules of budgetary discipline and supervision, and to the deepening of the coordination of economic policies.

The European Central Bank, for its part, announced the possibility of unlimited intervention in the secondary market of sovereign debt. This was an important step to combat the speculative attacks that had been undermining the Euro Zone.

Despite these positive developments, we must admit that this crisis has exposed serious weaknesses in the Union. Apart from the slowness and timidity in responding to the Euro crisis, the greatest failure of the European Union was - and remains – in the area of promoting economic growth and creating employment.

In 2012 the Euro Zone registered a reduction in production of 0.6% and the forecasts indicate that the situation will continue to evolve negatively in this year of 2013. The rate of unemployment in the Union has risen consecutively in the last five years. 26 million people are unemployed, of which almost 5 million, seven hundred thousand are young people. The Euro Zone is in its 6th successive quarterly drop in production and 8th consecutive quarterly drop in investment. This is a clear divergence from the tendency observed in the United States and Japan.

For too long attention has been focused on austerity in order to correct imbalances in public finances, relegating economic growth to the background.

The delay in realizing structural reforms has put competitiveness at risk. In various Member States, businesses face extremely negative financial conditions. The loss of confidence has adversely affected investment, and continues to do so.

The contraction in internal demand in the Euro Zone, by exacerbating the impact of the measures that Portugal had to adopt to meet the targets for the budget deficit, contributed to worsening the recession and raising the level of unemployment to socially unacceptable levels.

When contraction policies in certain Member States are added to the countries that are carrying out programmes to consolidate public deficits, the consequence is a recession within the Union such as we are now seeing. The situation contrasts starkly with the option for more expansionist policies in other blocs of the world economy.

It is important, however, to recognize that it was not for lack of vision, or of various warnings by the European Commission and this Parliament, that the objective of economic growth and job creation was not given the same level of priority as that of correcting the budgetary imbalances sooner.

In December of 2011, the President of the Commission addressed this Parliament and affirmed, “we cannot construct our economic union just on discipline and sanctions, we also need a Europe of growth and jobs”. And there is no need to remind you of the innumerable occasions on which, since the beginning of this crisis, in this House, the voices of Members of Parliament, of the most diverse political families were heard, including your own, Mr. President Shultz, warning of the urgent need not to forget this priority.

The hesitations and political constraints of the Member States led us to take too long to recognize that the financial problems, discovered in certain countries, affect us all and that the crisis in the Euro Zone cannot be resolved just by imposing austerity measures on States with excessive deficits. In the case of countries subject to adjustment programmes, for example, we could have recognized sooner the advantage of allowing automatic stabilisers to function in full, that means not insisting on increasing efforts for budgetary consolidation just because economic recession reduces tax revenues.

The situation of great economic and financial interdependence, to which I referred earlier, requires of Member States a stronger coordination of their policies. Countries are no longer capable of resolving their problems in isolation. But, at the same time, at an European level, we are still not completely equipped to do so effectively. We find ourselves in a state of transition. The instruments of the past are insufficient for Europe to respond to the questions of the present, or to prepare for its future.

We need to move forward to a true Economic and Monetary Union in all its various aspects; banking, budgetary and economic. This must be an essential element of the European Union’s strategy.

There have been some immensely important contributions to the debate over the new phase of European integration, particularly the “Blueprint for a deep and genuine Economic and Monetary Union” presented by the Commission.

Here also the European Parliament is called on to play a central role. I am certain that it will know how to meet its responsibilities and the expectations of its citizens.

Mr President of the European Parliament,
Members of the European Parliament,
Just as the success of Europe is fundamental for Portugal, the success of Portugal is also fundamental for the success of Europe. Portugal counts on the support of the institutions and its partners.

First and foremost, in the promotion of economic growth and the creation of jobs. Several areas are decisive for this objective. On the one hand, it is fundamental to improve the conditions for financing the economy, especially for Small- and Medium-sized enterprises, for which both the European Investment Bank and the Structural Funds are particularly important. In parallel, it is fundamental that there is a response from the European Central Bank that re-establishes the normal functioning of the mechanisms of transmitting monetary policy throughout the entire Euro Zone.

The rapid implementation of Banking Union is itself also absolutely essential to counteract the fragmentation of credit markets and overcome the contagion of the risk of sovereign debt to the banking system, favouring the financing of economies in balanced and competitive conditions.

It is imperative to reduce the excessive cost of borrowing for businesses that burdens the economies of some States such as Portugal. The cost of borrowing borne by Portuguese businesses is far higher than that of their European counterparts, which undermines their competitiveness, affects investment decisions and engenders understandable feelings of unfairness.

On the other hand, it would be very relevant if countries subject to adjustment programmes could count on European incentives and support for the structural reforms that they need to undertake in order to improve their competitiveness in the global market and to guarantee the sustainability of public debt. For example, they could benefit temporarily from access to a special regime that would allow them access to fiscal incentives in the tradable goods sector.

A word regarding the Multiannual Financial Framework. I don’t just understand, I share the frustrations of many in this Parliament with the lack of ambition of the European Council. However, under the current circumstances I now appeal for an agreement to be rapidly reached in the negotiations with the Council.

Another requirement for Portugal’s success consists in the full return to external financing markets. This aspect would equally constitute a milestone in the strengthening of confidence and, consequently, in investment in my country. The first steps have been successfully taken with the issue of 5 and 10-year bonds already carried out this year. But the support of European institutions and of our partners continues to be necessary. The extension of the debt maturity of the Portuguese Republic is a positive contribution, as is the eligibility of my country for interventions by the European Central Bank in the secondary market for public debt.

I recall the commitment made by the Heads of State and Government of the Euro Zone in the Statement of July 2011, reiterated in the following October: "We are determined to continue to provide support to countries under programmes until they have regained market access, provided they successfully implement those programmes." The clarification of the way in which this commitment can be achieved will help pave the way back to the markets.

Mr President of the European Parliament,
Members of the European Parliament,
European cultural identity has been built over many centuries, through the sharing of ideals and common values, and through what distinguishes us as a civilization that champions freedom and democracy. Europe is a place that many seek, and not just for economic reasons. We are a place of human dignity, a destination of freedom and of justice.

However, only after a world war, which ravaged this Continent and cost millions of lives, did deeper union between its various States and peoples become possible. If this union did not exist, the risk of new conflicts and tragedies emerging would never be removed from our horizon. The European Union is a project of peace, as we were only recently reminded by the Nobel Committee.

From the founding countries’ dream of this project of peace, stability and prosperity, we have come a long way together, a journey of many decades: from a single European market we are progressing, now, towards a genuine economic and monetary union and have taken significant steps towards political union. Europe today is the collective destiny of our young people, who have always travelled in a territory without frontiers. That is the way new European generations were born and grew up and now do not accept living in any other way.

In the name of peace, we decided to join forces to build an open and free Europe, stronger because it is more cohesive and supportive. History has made us Europeans, but it was through free will that we built the Union to which we are proud to belong. Getting to where we are now has not been an easy road. It would be a serious setback for Europe if we abandoned the spirit of a union that is strong in its ideas and supportive in its foundations, and discarded, in this way, all that the Union has ensured us in relation to other economic and political areas in a globalized world.

In this context, solidarity constitutes a political and moral imperative of the various European States, but it is also, above all, an essential principle of the defence of the common interest. We are together; we are a Union, in times of plenty and in difficult times.

This European crisis has an economic and financial dimension but, at the same time, represents a crisis of democratic legitimacy. Increasingly the peoples of Europe are distanced from their leaders and there are worrying signs that the project of a Union no longer mobilizes the will nor excites the enthusiasm of former times. The crisis has caused the reappearance of national egos which we thought had been overcome, contrary to the spirit with which, along the decades, the Union and the dream of a place of liberty and justice unparalleled in the world has been crafted.

In the current situation, with 26 million unemployed, the European crisis demands a truly European solution. A European solution is not merely economic or financial. It requires, first and foremost, a social, cultural and political response that addresses the legitimate concerns of the people of Europe; the only way to overcome, with determination, the crisis of confidence and reinforce the democratic legitimacy of European decision makers.

In 2013 we mark the European Year of Citizens. In 2014 elections for the European Parliament will be held, which will certainly constitute a test of mobilizing its citizens.

To win back the confidence of the people of Europe it is not enough to make rhetorical statements or declarations of intent. For citizens to believe and trust in European institutions, it is urgent that courageous decisions are made which show the authenticity of this collective project, of its interests and its values; of the community method. We cannot waste any more time. It is now, in 2013, that we have to give reasons for hope to the almost 6 million young people who are unemployed. To celebrate the European Year of Citizens is to commit decisively to economic growth and to fight the bane of unemployment. Only in this way can we re-conquer civic confidence in the project for a united Europe.

Mr President of the European Parliament,
Members of the European Parliament,
As the Schuman Declaration affirms, “Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity“.

I would not be able to find, today, a better way of describing the nature of the challenges that we have ahead of us and the manner to meet them.

In the name of genuine solidarity, this is the moment to show tangible achievements to citizens in order that Europe might be the space of hope that we are all called on to build.

Thank you very much.