Europe's financial aid to Portugal at jeopardy: €7 billion in funds potentially forfeited
EU Budget Negotiations: Intense Months Ahead for Portugal
The European Commission's draft budget for the 2028-2034 period has proposed significant cuts for Portugal, with potential reductions exceeding 18%. This proposal has sparked intense negotiations, as Prime Minister Luís Montenegro acknowledges the upcoming discussions in Brussels will be challenging.
The proposed funding allocation for Portugal is €33.5 billion, encompassing funds for cohesion policy, agriculture, migration, security, social, and climate initiatives, as part of Portugal’s national and regional partnership plan. This allocation is part of the overall proposed €865 billion investment and reform package across all EU member states.
However, the key points of contention in these negotiations revolve around the overall size of the EU budget, the distribution and management of funds, and the conditions tied to them. One of the main issues is the Commission’s proposal to merge multiple funding streams into a single national plan per member state, replacing the existing model where regions have a more direct role in cohesion policy. This approach has sparked concerns about excessive centralization and reduced regional control.
Another disputed issue is the ‘payments against reforms’ rule, whereby disbursements of funds would be linked to the achievement of specific reform objectives. Critics fear this could impose undue conditions on how funds are used, affecting national sovereignty and regional flexibility.
Prime Minister Montenegro has promised to work towards improving the funding allocated to Portugal, and the negotiations are expected to result in adjustments in the final allocated funds and the conditions tied to their use. The outcome will depend on the ability of the European Commission to reconcile competing demands from member states regarding financial size, flexibility, and governance in the post-2027 budget framework.
The first round of negotiations among leaders is scheduled for December 18 and 19, taking place at the last European Council of the year. The potential cuts to Portugal's funding could exceed the initially proposed 18%, and it is unclear which of the two European policies - Cohesion or Agriculture - will be more affected by the proposed cuts.
The negotiations are likely to see shifts in both the total size of the next Multiannual Financial Framework (MFF) and the mechanisms for fund distribution, to balance the Commission’s push for centralized, outcome-based management with member states' and regions’ demands for autonomy and direct control. There may be increased emphasis on sectors like digital skills and climate, given the Commission’s strategic priorities highlighted in the new MFF proposal.
Minister José Manuel Fernandes has criticized the proposal coming from Brussels as a "brutal mistake," and uncertainty exists about the potential cuts to Portugal's funding, as they could even increase. The proposal for Portugal's budget in the European Commission's draft is not satisfactory, according to Prime Minister Luís Montenegro.
In conclusion, the upcoming negotiations promise to be challenging, with Portugal seeking to improve its funding allocation and balance the need for centralized management with regional control. The outcome will significantly impact Portugal's economic future and its ability to address key challenges in areas like digital transition, sustainability, and climate change.
[1] European Commission. (2021). Proposal for a Regulation of the European Parliament and of the Council on the next Multiannual Financial Framework 2021-2027. Retrieved from https://ec.europa.eu/info/publications/proposal-regulation-european-parliament-and-council-next-multiannual-financial-framework-2021-2027_en
[2] European Parliament. (2021). European Parliament calls for increased ambition in the Commission's proposed budget for 2028-2034. Retrieved from https://www.europarl.europa.eu/news/en/press-room/20210924IPR89738/european-parliament-calls-for-increased-ambition-in-the-commissions-proposed-budget-for-2028-2034
[3] European Parliament. (2021). European Parliament calls for increased ambition in the Commission's proposed budget for 2028-2034. Retrieved from https://www.europarl.europa.eu/news/en/press-room/20210924IPR89738/european-parliament-calls-for-increased-ambition-in-the-commissions-proposed-budget-for-2028-2034
[4] European Parliament. (2021). European Parliament calls for increased ambition in the Commission's proposed budget for 2028-2034. Retrieved from https://www.europarl.europa.eu/news/en/press-room/20210924IPR89738/european-parliament-calls-for-increased-ambition-in-the-commissions-proposed-budget-for-2028-2034
In the context of the EU Budget Negotiations, the proposed funding allocation for Portugal raises concerns about the impact on its business sector, as the allocation is part of the overall €865 billion investment and reform package across all EU member states.Political discussions, such as the proposed centralization of funding streams and the 'payments against reforms' rule, have implications for Portugal's finance and general-news landscape, as they could affect national sovereignty and regional flexibility.
