Prime Minister proposes the creation of a group of Atlantic countries in the European Union

Prime Minister António Costa claimed that the perspective of the EU enlargement to Eastern countries brings a political challenge to the countries "with an Atlantic tie", greater following Brexit.

"Each enlargement to the East means that Europe’s centre of attention is shifted to the centre of Europe. This isn’t necessarily a bad thing, yet it is indispensable for us to greatly boost the Atlantic alliance" he said during his speech at the Fórum  La Toja closing session in Lisbon.

António Costa claimed that "just as it was important to create the reunions and dynamics for Southern European countries, I believe that today it is important to set up a forum of the EU’s Atlantic countries as a way of being organised".

Reform to enlarge

In the enlargement perspective, the European Union requires deep institutional and budgetary reforms before Ukraine and the other Eastern European countries join. The Prime Minister stressed that the discussion on the criteria the European Union needs to meet to be able to take in new Member States is crucial.

Indicating the failed process of Turkey joining, he underlined that the European Union "must take very seriously the expectations it created regarding Ukraine and the Western Balkan states".

"Europe’s greatest tragedy in the future would be frustrating those expectations. It would be a huge betrayal of everything we tell the Ukrainians today. However, to take the expectations we created seriously, we need to be aware that we require a deep institutional and budgetary reform", he said.

If all the candidates join this is an institutional change from 27 to 36 Member States.

Budgetary reforms

Budgetary wise, if Ukraine joined the European Union now, for the Common Agricultural Policy alone, "this would imply almost doubling the necessary resources".

"Either the countries who are usually frugal stop being frugal, or the countries that are normally beneficiaries of the Common Agricultural Policy will stop benefitting so much because that allocation will be for one of the greatest agricultural producers. Ukraine is five times larger than Spain; it is bigger than France and Germany together in terms of territory", he added.

At the level of European funding, Ukraine joining, according to 2019 data, "would entail a radical change of the cohesion regions landscape.2 For instance, "the whole of Portugal, from a statistical perspective, would become rich without this meaning the rise of one cent in our Gross Domestic Product."

State aid

The Prime Minister also said that the new European State and corporate aid model must avoid fragmentation of the internal market and ensure greater balance, namely safeguarding the production capacity of small and medium-sized companies. 

"I understand that it is important for the competition on State aid rules to be liberalised because all States have granted them in their own way, but the problem is that the EU’s greatest asset is the internal market", he said.

However, "if the State aids are within each one’s possibilities, the risk of fragmenting the internal market is exponential", therefore it is essential to ensure that State aids for each country "do not have a disruptive effect on the internal market".

Accordingly, "we need to ensure that State aid ensures a minimum level of proportionality for all", he stressed.

Proposals

The European Commission presented two proposals for measures, which António Costa considered important.

First, there has to be a weighting of this State aid when they are granted by an alliance of States, namely if they are small or medium-sized, and not just a large State.

"This is important to help set up value chains that effectively integrate the different countries in Europe", for instance: "Portugal, Czech Republic, Hungary, Poland or Spain have the same car manufacturers in their countries and many of them, have their head office in Germany".

"What is the reason for not weighting a joint effort by all these countries, where there are also German manufacturers, so that together we can balance out what each one can do competing with Germany", he noted."

Second, each State aid justified so that the productive capacity in Europe is maintained "should maintain the productive capacity and not just in the country granting it, rather, likewise, retain the productive capacity where that group is implemented".

For example: "Let’s say that Germany grants the Volkswagen group State aid. To avoid a competition logic where each one offers more to retain the productive capacity, assistance offered by Germany to the Volkswagen should have as return maintaining the productive capacity of the group in the countries where it operates, whether Palmela, or anywhere else".

Common Fund

António Costa further claimed the need to have a European fund "that allows for joint common and shared effort and that is not fragmented according to each of the Member States’ individual capacities".

"We need to use that fund now starting from one that already exists, RePower, and the unused resources in the Recovery and Resilience Facility in its loan dimension that can and should be integrated in the RePower mechanism. It will be an additional funding instrument to ensure European companies’ competitiveness given the risk of relocation", he added.