Portugal wants long-term EU mechanism for security, energy investment By Reuters

© Reuters. FILE PHOTO: Portuguese Prime Minister Antonio Costa arrives at Downing Street ahead of his meeting with British Prime Minister Boris Johnson, in London, Britain, June 13, 2022. Aaron Chown / Pool via REUTERS / File Photo

LISBON (Reuters) – Portugal wants the European Union to create a mechanism similar to its pandemic recovery program to channel investment into defense, security, green energy and digital spheres, Prime Minister Antonio Costa said on Monday.

He told a conference in Lisbon this would be imply debt issuance by the European Commission, which would be paid for with transfers from member states, and also with new taxes on profits of multinational companies and on carbon emissions.

“The challenges of climate and digital transition, the strengthening of strategic autonomy of Europe and investment in security and defense require high coordinated investments at European level,” he said.

Costa said such investment projects should be for the long-term and not be “sacrificed in favor of short-term budget constraints”. He said they should also not be limited by the different financing capacities of individual member states to avoid the consolidation of “asymmetries between countries.”

He also saw no need for the EU to open a debate about changing quantitative limits of the EU Stability and Growth Pact that establish a 3% budget deficit threshold, saying the rules were flexible enough to adjust to adverse scenarios. This threshold is currently suspended due to the COVID-19 pandemic.

Costa said earlier Portugal would stick to its conservative fiscal strategy of cutting the deficit and debt given strong inflationary pressures and the European Central Bank’s new cycle of rate hikes.

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