← Brussels Playbook Podcast
Brussels Playbook Podcast
Omnibusted: The EU’s competitiveness conundrum
00:41:11
European leaders have spent the week talking about how to make the EU more competitive — first with industry heavyweights in Antwerp, then behind closed doors at a leaders’ retreat in Belgium.
Loading summary
Transcript66 lines
- [00:01]
A
Europe's leaders have been on the move this week from boardrooms in the port city of Antwerp to a castle in eastern Belgium ringed by a moat. First they sat down with industry chiefs laying out a bleak picture. Plant closures, high energy prices, collapsing investment and Europe losing ground to China and the U.S. a day later, many of those same leaders gathered at Aldenbeson Castle for a little getaway hosted by Antonio Costa to talk about how to restore Europe's competitive edge and fix its sluggish economy. But haven't we heard all that before? Competitiveness has been the buzzword for years. The so called Antwerp Declaration, a plea for support and regulatory relief from some of Europe's most powerful business lobbies, had its third anniversary gathering in the Belgian port city. And EU leaders from the German chancellor to the commission president made enthusiastic appearances. And yet the divisions on actually doing anything remain. France is pushing for joint borrowing and by European Germany is wary of new debt, Nordic countries skeptical of protectionism. And then there's another split. The commission insisting it has put the tools on the table or while the member states refuse to pick them up. So is Europe finally ready to act or just rehearsing the same arguments in a different setting? Can the EU boost growth without sacrificing its green ambitions and throwing out the basics of good governance? Are the solutions on the table even going to fix the real problems? I'm Sarah Wheaton, host of EU Confidential. Later in the episode, we'll touch on the latest political developments in Portugal and how they reflect on Brussels. But first, I'm joined by my colleagues to break down what this latest competitiveness push really tells us about Europe's direction. With me in the studio are Marion Gros, sustainability reporter Carlo Martu Seli, who covers trade. And fresh back from that industry summit in Antwerp, Zia Weissa, our senior climate reporter. All right, we have a full house in the studio today. Let's start out with a little tour de table. Competitiveness has been this buzzword that we've been hearing for over a year now. Are we at a turning point or is this just another Brussels cycle of diagnosis and delay? Carlo, you're closest to me. Start with you.
- [02:36]
B
So I'm going to be a bit of a pessimist here and say that I don't think much is going to come from this, mainly because the problem has been diagnosed over and over again and pretty much everyone knows what the options are. So I don't see how getting people around a table once again to talk the issue out is going to Change something.
- [03:01]
A
Zia, your. Your kind of top.
- [03:03]
C
Take what Carla said about like, they've basically run the diagnosis a million times, but from a client climate policy perspective, I don't know. Why do you think the solution is to dismantle that? Because that wasn't really in the diagnosis set or set of solutions. And I think what we saw, at least this week, was that the bashing of climate policy really went up a notch. But, yeah, if that really helps with competitiveness, that. Yeah, let's see.
- [03:30]
D
Marianne, it definitely feels like we're sort of stuck in this cycle of diagnosis and delay. The messaging, I feel, has changed quite a bit. And at least on the environmental topics, it's clear as day that, that you will no longer suggest any kind of policy or change or strategy that doesn't fit with what it defines as competitiveness. I do feel like they have perhaps put all of their eggs in this one simplification basket and are hoping to see a lot from these omnibuses. But omnibuses are policy proposals. They take time. And so there must be quite a lot of frustration around the lack of progress on that.
- [04:07]
A
We're going to unpick all of that more. Zia, you were just in Antwerp on Wednesday, and this has kind of been what's become the annual festival of deregulation. So what did it feel like in the room? Who was there and who did most of the talking?
- [04:22]
C
So, to be completely frank with you, this is not a very transparent or open event. So the press was actually not even allowed into the same building as all of these people. We sort of shunted into a hotel across the street, given some the occasional live stream of a speech there. So I can't actually tell you what the mood in that room was like because we weren't allowed in. That said, I mean, this has been sort of the highest profile of these events, which is now, it's the third time this is happening because Macron and Mertz showed up, as well as the Austrian, Belgian and Dutch leaders on von der Leyen and a few commissioners. In terms of who did most of the talking, I mean, a huge influence at this event and I think in this debate generally is the European Union's chemicals industry, because they actually set up this event and run it. And so a lot of their arguments and demands are very much at the forefront.
- [05:14]
A
And yeah, as you mentioned, you know, Suffolk, the chemicals lobby has really been the driving force here, and they argue that their sector is facing extinction. They say that since 2023, more than 20 major chemical sites have shut down across Europe. And this has cost 30,000 jobs. Another 200,000 jobs could disappear in five years. That's pretty intimidating. And you know, we've been saying that this Antwerp declaration gets more influential every year with more and more power players signing on. But like the results have not been very impressive. A report prepared by Deloitte on behalf of the Antwerp declaration crowd looked at a series of measures like energy costs, digital connectivity and, yes, simplification. And they said that on 84% of the factors important for competitiveness, the EU was showing stagnation or decline. So, Zia, I take the point that you couldn't really hear that much of the discussion yesterday, but, you know, what was the mood and the message from industry?
- [06:14]
C
I mean, it's pretty much what you said. It was sort of a message that if we don't act now, like we'll face extinction. Now we need action. Which is why the sort of demands are very, very similar every year. You know, bring down energy costs, make sure we have fair playing field when it comes to exports, make sure there's more demand for our products on the internal market. But what isn't really addressed at the summit. Or maybe sort of like there's some wishful thinking that maybe with enough measures we can turn back the clock somehow because there's just some changes like the rise in energy prices to the fact that we just don't have access to cheap Russian gas anymore and probably never will, and that China has just become this export powerhouse and that's for very export dependent industries is a huge problem. I mean, these things are not things that the European Union can undo. So I think, yeah, I mean, it's. Sometimes the conversation doesn't quite align with the new reality.
- [07:11]
A
And Ursula von der Leyen did actually try to make the point that she has been taking some action.
- [07:16]
C
Totally. Yeah. Von der lyen's point on Wednesday at this event was that we, the Commission, are taking action, but member states are not doing enough. So she kind of threw the ball into their court by saying, look, there's too many differences in regulation that are making it difficult to operate across our internal market. They're not approving the proposals that we make fast enough. So there was a lot of that.
- [07:41]
A
Well, yeah, and I mean, politically we've seen both the Commission and national leaders argue that they are friends of industry. But about what Brussels has been actually doing in the past, these meetings in Antwerp have really paved the way for all this deregulation that we've been seeing. But Marianne, very briefly, do they turn out to be what people have expected them to be. Is this simplification actually in service of boosting competitiveness?
- [08:06]
D
Yeah, I guess it depends which people you are talking about. I think civil society organizations and NGOs have warned that the simplification agenda would be about deregulation, and that's very much what is happening. The Commission, however, is doing what it said it would do. Von der Leyen made a promise to reduce administrative burden by. By 35% for SMEs, 25% for big companies, and it is going full steam ahead on this idea of identifying where regulation creates burden and getting rid of it. So we are up to 10 omnibuses now on the table, as I have said in this podcast before, the first one. And the negotiations really showed the political division in Parliament and became an incredibly tense political file. And that kind of gives us a bit of foreshadowing on what negotiations for the other omnibuses could look like if the topics become politically sensitive. In the Council, diplomats are working nonstop to review these proposals at once. Meanwhile, companies are complaining that the simplification process also leads to a very uncertain regulatory landscape, which makes it difficult for them to make investment decisions.
- [09:11]
A
Yeah, I mean, I find that a bit bonkers. They've been asking for the rules to be rolled back, and now there are complaining about lack of predictability. And even, you know, the European Ombudsman, the EU's institutional watchdog, has been criticizing the sort of rushed process of these omnibus legislation.
- [09:29]
D
Absolutely. But I think also on your point about the companies, perhaps there is a tendency to think the business world is one coherent voice. In reality, it's a lot more nuanced and complex than it may seem. You'll probably have just as many companies warning of the dangers or the issues with deregulation as the ones calling for more. The Ombudsman. What she flagged was that the Commission, in its delivering of these omnibuses, is rushing to through the traditional policymaking process. And the executive is coming under fire and being accused of maladministration, effectively bypassing how the EU has always made laws and drafted policies, and using this sense of urgency as an excuse.
- [10:12]
A
What are some of the warnings about the consequences of this?
- [10:16]
D
Right now, what we're seeing is the Commission trying to change its own rules around how they draft regulation, and in order to make it easier, faster, so that they can propose policy changes and implement policy changes a lot quicker. That means fewer impact assessments. That means these are the.
- [10:34]
A
These are basically the research papers that say if we do this, then we Think that will happen?
- [10:39]
D
Exactly. Normally, when the EU proposes a law, it needs to also provide a thorough study of every single impact that this law will have on society, on the economy, on health, on the environment, on so many things. And the Commission is saying that this takes too long and that if, as EU leaders keep asking, as businesses keep asking, they want to see more deregulation, we need to act quicker. That probably means changing the rules.
- [11:02]
A
Okay, so Commission is embracing a CAFO approach. We'll see. See how that goes over. Zia, back over to you. The next target for this sort of regulatory rollback is a big one, the emissions trading system. So can you explain a little bit what that is? And why is the carbon market suddenly in the crosshairs?
- [11:21]
C
Yeah, as you said, it's a carbon market, which means that it requires companies that are particularly heavy polluters, like, think steel or cement, as well as power plants, airlines, shipping companies, to pay a price on the carbon they emit. And, well, the reason it is being targeted is sort of twofold. One, there's just an opportunity. The ETS happens to be up for review this year before the summer. So the lobbying is just going into overdrive as everyone tries to influence the way the Commission might reform this system. And the other is that, I mean, a huge complaint from industry is just that their operating costs in Europe are quite high. I mean, and a lot of that, really, the main reason for that is energy prices. They are quite high in Europe, but now they're sort of like, looking at the carbon price as sort of like an additional obstacle to competitiveness, which is unusual because that's not really been part of the conversation before. It's also, as the Commission pointed out at the summit on Wednesday in Antwerp, it's a very small fraction of kind of the costs that these companies have to bear. But, yeah, their argument is that this cost nevertheless puts the industry at a competitive disadvantage to other countries that don't have this carbon price. So they're arguing, you know, that's just too high, the price needs to come down, or we need to get sort of more freebie vouchers that give us some of these permits that they have to buy for free. So that's sort of the debate around that.
- [12:48]
A
That's a bit the point. It's supposed to be expensive to use polluting fuel. So if the ETS is significantly softened, would that be the biggest green deal rollback yet?
- [12:58]
C
Yes. So it's difficult to overstate just how important the ETS is. It's the bedrock of the EU's climate policy. It regulates around half of the emissions in the EU and including some of the ones that are sort of the stickiest, that are like the trickiest to get rid of. You know, it's a lot harder to decarbonize a steel plant than to let say road transport where we have like EVs more readily available than electric furnaces. But I think it's also really important to know that the ETS is not a Green Deal policy. It actually predates the Green Deal by over a decade. It's a 20 year old instrument that has been fairly uncontroversial. I mean, not everyone likes exactly how it's designed, but it's really the first big climate policy of the European Union. Yeah. So having it come under attack is really, that's what I meant with, it takes it really up another notch because it's, that's really the foundation of the EU's climate policy. If even that is now up for question, then I think really nothing's sacred.
- [13:59]
A
Really interesting point. And it feeds into this big overarching question that we've been asking here on EU Confidential, really since Even before the 2024 EU election, when Ursula von der Leyen's own European People's Party was running on a platform of hitting the brakes on the Green Deal, we've been wanting to know which way things are actually going. Commissioned bureaucrats have said, no, no, no, no, no, ignore that rhetoric. These Green rules are baked in. It's just a question of implementation. But you know, I see these rollbacks that you're talking about, including as you said, the bedrock of the EU's climate policy. And you know, on the surface it looks like the climate agenda is really being abandoned in favor of so called competitiveness. So Marianne zia, you are two of POLITICO's experts here. How do you see it at this point?
- [14:47]
C
I think sort of politics and the rhetoric have been turning away from and against the Green Deal for a while. The Green Deal regulation, what was passed, which is a lot of it is in place and is functioning, I think that's important to say like it is a reality now. What we're seeing is that a lot of what is in place, I mean, as it comes under pressure, it's sort of like being wound down, changed, altered. And the big question is what kind of impact that has in reality. Because I think the rhetoric we're often seeing from politicians is we're in favor of the climate targets. But you know, so, and it's like, okay, so you're tweaking all of these things constantly. Often, as Marianne said, without proper impact assessments as to what the impact will actually be. We had really no good overview over the last year of what the emissions impact of all of these changes will be. So with all of these changes, can we still reach our climate targets? I don't know, because at least a reduction in emissions seems to be slowing down somewhat. So it's like, are we putting our targets into danger? Kind of an open question that might not be answered for a few years.
- [15:56]
A
Marianne?
- [15:57]
C
Yeah.
- [15:57]
D
On environmental and particular nature laws, like the contradiction between what the commission says and then what it's willing to do is flagrant. Like the Commission insists that competitiveness and the simplification agenda can contribute to the implementation of the green deal. They insist that these two go hand in hand, that there is no opposition of the two priorities. However, in practice, when you look at the proposals that they put on the table, environmental protection is constantly opposed to economic growth. For example, they're willing to relax water protection rules to allow more mining. The Austrian Chancellor recently was quoted in Politico saying that becoming greener cannot be our goal. It means becoming poorer. I mean, the message is really clear that there is an opposition between environmental protection and competitiveness. And to hear the Commission insist that the two can go hand in hand is really not aligned with what we're seeing in terms of deregulation proposals.
- [17:00]
A
Okay, we need to take a quick break, but we'll be right back. Okay, let's bring Carlo in. You know what makes this interesting is the timing. The same leaders listening to COS on Wednesday are as we're recording now on Thursday at the Aldenbeson Castle. Carlo, how directly does Antwerp shape today's retreat?
- [17:24]
B
I think the whole fact that we've been discussing deregulation and rolling back environmental rules this whole time shows that what Wednesday was about was about setting the tone and shaping the content for Thursday's more formal meeting. So I think there's another version of today's meeting that would be much more focused on French style economic policy. So looking at things like by European clauses, protectionism, joint debt, state led industrial policy, and the fact that's not happening is really because of Wednesday's meeting, I think.
- [18:06]
A
Yeah, it's interesting that you know, these companies, in many cases, you know, multinational industries are not seeking this sort of more protectionist by European approach. Another influential figure at the Castle today is Mario Draghi. It's been over a year since his report on competitiveness was published and so far very Few of his recommendations have been implemented. What do you think he's telling all these leaders? He's still, you know, warning about a slow agony, or are we closer to the funeral already?
- [18:34]
B
It has been grimly amusing watching Mario Draghi get increasingly pessimistic, as if he's observing a patient dying. So indeed, he did talk about slow agony when presenting his competitiveness report. He then later warned that the window for change was closing. And most recently he said that there's a future in which Europe is subordinated, divided and deindustrialized. So at the end of the day, Mario Draghi doesn't actually have any power. He has a lot of standing. And I think in using this language, he's trying to make the most of his moral suasion to get leaders to take the problem seriously.
- [19:17]
A
So, Carlo, can you just remind us what Draghi's top recommendations have been? And as you said, leaders, they really respect him. We just hear tons of praise for Draghi. What's been holding them back from implementing these recommendations?
- [19:30]
B
Yeah, I mean, it is rather ironic, isn't it, that by all appearances it seems like everyone completely agrees with Draghi and is totally behind him, and yet when you look at the facts, barely any of his agenda has been implemented yet. And the same people who are praising him are the people in charge of pushing these reforms through. So it is a bit of a head scratcher. But I think what it comes down to is that what Draghi is recommending, let's say very generally, is a gradual move to greater federalism, especially in the economy. So anytime we look at some part of the European economic system, let's say, and we find that it is divided or siloed, he says, look, if we join these bits up, we'll get greater economic efficiencies, we'll get more scale, and that will help drive growth. For example, with the energy grids, he says we should join up the energy grid so that the places that are producing low cost renewable energy, or the case of France, nuclear energy, they can help power industry where it's more expensive, say in Germany. It's the same with the financial system. You know, we have 27 different banking systems and stock exchanges. And if we're able to take all of that money that's sloshing around and pool it together, we can then direct it much better and help European companies grow. Now why isn't that happening? Because even though in practice everyone agrees with the theory, politicians have constituencies that they need to cater to. So what happens in practice is that Each country will have certain things where they'll be in favor of greater European integration, but then when it comes to certain different parts of their economy, they're much more protective. And when you play that out over and over again, you see what we have now, which is really a stall and a very slow pace of progress.
- [21:31]
C
I think that's a really good point because what is competitiveness depends sort of a bit on who you ask. So you might ask in the case of, have, let's say cars, Sweden, which might be concerned about the competitiveness of its electric cars in Volvo or something like that. And then you might ask the Czech Republic and they might say, oh, but we produce combustion engines, you know, so it's exactly what Carlo said. And I think that's what also is why the commission is so frustrated and why Ursula von der Leyen on Wednesday might have started being like, well, actually time for member states to do their bit.
- [22:03]
A
Yeah. And I mean, von der Leyen is floating more cooperation if unanimity blocks progress. She and Andragi both have been, look, maybe we need to find some ways to link up, even if not everybody gets on board. How significant is that Carlo, out of.
- [22:18]
B
Everything that I've heard come out of the summit so far, that seems to me one of the more important practical things. Because I think more than a serious suggestion of a two speed Europe, I think what von der Leyen is doing there is she's threatening the member states that aren't joining on board. She's saying, look, we can get big Western European countries, France, Germany, Italy, Spain, to work together on a capital markets union. And, you know, if you don't want to join, so be it. But what the countries that are outside of that capital markets union will find is that all the investors and all the savings and all the investment is going to flow out of their countries into that big pool that will have been created. So I think politically it's actually a very clever threat and I think generally a threat works better than carrots when it comes to politics. So, yeah, good on her for doing that.
- [23:16]
A
Marianne, how much of this urgency that we're seeing in recent weeks is really about Donald Trump?
- [23:21]
D
You know, I don't know. I think Ursula von der Leyen is under a lot of pressure from EU leaders to go full speed ahead on the deregulation drive. And when you speak to EU diplomatic here in Brussels working daily on simplification files, they're not saying this is about EU US relations, they're really saying that this is coming from the capitals and it's a national priority and we're tired of overregulation. So perhaps the fact that it's so important for national capitals is because of this new geopolitical reality that we're facing and because Trump has made US EU relations so much more difficult. But let's not be fooled into thinking this is only about foreign relations. This is very much a national priority for many EU countries.
- [24:03]
C
Yeah, I think we have to keep in mind that the whole competitiveness rhetoric and the Green deal rollback predates Trump's election. For example, in adverb, you didn't hear the word us a lot. The country you heard most about was China. So I think really that is much more on industry's minds and perhaps also leaders minds, is that like China is now becoming this export powerhouse.
- [24:27]
A
Carlo, you recently spoke with the head of the International Monetary Fund, Kristalina Georgieva. She's also a former European Commissioner and she actually, she was a little more positive than those of us sitting in the studio.
- [24:40]
B
That's the ironic thing. Listening to leaders speak these past few days, you'd think that the European economy is cratering, that we're in the middle of a recession. But if you look at the numbers Georgieva pointed out, we're not doing that badly. I mean, the American economy is expected to grow, grow by around 2% in 2025. And for the EU, that number is 1.7%. So it's actually not a big difference. And if you drill down further, what you see is a very varied story in Europe. On the one hand, you have countries like Germany and France where there's definitely some pretty big issues. But then you can look at countries like Spain, Portugal or Greece, which are showing very healthy growth, Portugal in particular. So I think we need to be a bit careful about talking about the European economy as if it's this one monolith. And just to add to that point, I think if we were to scrap all the environmental regulation and do this big bonfire of red tape, I mean, we could probably eke out a few decimals of percentage points. But I don't think that is, is fundamentally what is holding Europe back. I mean, what leaders are really worried about at the end of the day as much as it is economic growth, it's technological development, which we're seeing out of the US and China, things like AI and semiconductor manufacturing. And I don't think there it's environmental regulation that is holding us back.
- [26:15]
C
And to what Carlos said about that, you can save a few euros here and there with with environmental deregulation. I think one thing that's always worth keeping in mind is that not doing anything about climate change has an economic cost. It's expensive to have a lot of extreme weather as we record this, as we speak. Portugal, for example, has been battered by one brutal storm after another. Like these kinds of storms, maybe not this precise ones. There's not been a study on it. But they do get more frequent, more intense with climate change. And, you know, they have an economic cost. One of their main highways is going to be shut down for weeks because of that. That does have an economic impact.
- [26:56]
A
I'm actually really glad that you have both brought up Portugal, because our next discussion is going to be with Aitor Hernandez Morales, who is just covering the results of the Portuguese election. And what he observed is that voters there are really angry and they perceive the economy to be garbage, even though, as Carlo just said, it's actually doing pretty well. They just see their costs going up. And that really helps, though, understand why politicians desperate to bring their voters a trophy and say, look what I got for you to try to reduce costs. But the message that I'm hearing from you is that, like, the thing that they're doing might not actually be solving the problem. Meanwhile, you know, the other headline in Politico this week was Friedrich Mertz coming to Germans and basically saying, hey, you guys need to work a bit harder. And that does not seem to be going very well for him. So maybe a bit easier to just complain about environmental risk as a German.
- [27:49]
C
Working on environmental regulation. You know, I think we're working quite a lot.
- [27:54]
A
Zia is a German who is working very hard. Carlo and Marianne are not Germans, but they are also working very hard. I will let you all get back to it.
- [28:01]
D
Thank you, Sarah.
- [28:02]
B
Thank you.
- [28:03]
C
Thanks, Sarah.
- [28:06]
A
Okay, as promised, we're going to discuss last weekend's elections in Portugal and what they tell us about the political dynamics around the continent. Joining me for that is Aitor Hernandez Morales, Politico's Iberian affairs expert, also here in the studio. Aitor, you're recently back from Lisbon, where you covered the presidential elections for Politico. First of all, glad you made it safe and sound, because there were some pretty gnarly floods there.
- [28:32]
E
It was the rainiest I've ever seen Lisbon, which is supposed to be one of the sunniest capitals in Europe, but I did not see the sun while I was there.
- [28:37]
A
Bad luck.
- [28:38]
E
It's funny you mentioned the weather, because actually they had a major part to play in this second round of the presidential Vote. We had an initial vote in January where the far right candidate, Andre Ventura made it in, as well as the guy who actually won or got the large share of the vote, center left candidate, Antonio Jose Seguro. And basically they were going into this election in the midst of relentless Atlantic storms hitting the country and really wreaking havoc. When the vote was held, you had mass disruptions on the railway lines. You had over 100,000 people without power. You had some areas that directly were flooded. Voting was suspended in certain municipalities. So they will be voting on Sunday, even though this election has already been settled. So it really was a situation with extraordinary circumstances. And this for presidential elections which generally don't have extremely high turnout. Despite the fact that the President of Portugal as head of state, has substantial powers, including the possibility of dissolving parliament and calling stop elections. He runs the army. Crucially, the President of Portugal kept Portugal out of the Iraq war, for example. So it really does give you some level of insight into how much power this, this figure does have.
- [29:44]
A
So who is the president elect of Portugal?
- [29:47]
E
So he's a really fascinating figure. This guy is Antonio Jose Seguro. If you've lived in Brussels long enough, you might have met him. He was an MEP here for a substantial amount of time in the 90s. Then he went back to Portugal to join Antonio Guterres, the current Secretary General of the UN when he was Prime Minister and he served as basically his right hand man. And this man became the head of the Socialist Party, really was positioned to become the next Prime Minister whenever the Socialist came into power. Until he ran into an up and coming political animal named Antonio Costa, at the time Mayor of Lisbon, who successfully overthrew him and essentially hounded him out of the party. So this guy has been in the political wilderness. Most people had forgotten he existed. And around 2023 he reappeared and gave this pretty noteworthy interview where he said that he was thinking of coming back into politics because he was so unhappy with the direction the country was going with the man who was then Prime Minister, Antonio Costa. And so last year he announced his long shot run for the presidency. Few people really thought he'd be able to pull it off. But in fact, as Ventura's possibilities for becoming president rose, people coalesced around him because he is a very moderate left wing figure and ultimately he's been able to be elected.
- [30:56]
A
Okay, so that's interesting because he basically had to overcome two political rivals, one from his own political family, Antonio Costa, who we'll get to a bit later. But this is one of those elections where we're just as interested in how well the second place party did.
- [31:12]
E
Yeah. So the guy that Seguro defeated on Sunday is Andre Ventura. He is the leader of the Chega party. He's a really fascinating figure because he actually started out as a politician for the center right Social Democratic Party. That's the party that's currently in power in Portugal. And he gained national attention in 2017 when he ran for local office and surprised everyone by making his campaign about his opposition to the Roma community. This was extremely unusual in Portugal and led to him receiving a lot of criticism, including from his own party. And even though he lost that election, he saw that this was mobilizing a part of the electorate that basically had been dormant since the 1974 Carnation Revolution. And so it's this electorate that's predominantly male, very, very conservative, in fact, ultra nationalist and pretty racist. And he saw that these people could be galvanized into action. Now. He later founded the chaiga party in 2019. Initially, it was a bust. They ran for the European elections that year, got nothing. But he successfully got into the Portuguese Parliament when legislative elections were held in the same year. And his dialogue began to change and wasn't just focused on this anti Roma line, but became a broader broadside against a corrupt establishment mainstream parties that weren't doing anything for the dissatisfied citizenry. And he really has been able to keep building up and building up with this really significant frustration that exists in Portugal against the state. Worth noting, this is not a Portuguese phenomenon. We have looked at this many times in the podcast. There is broad dissatisfaction with what we would have referred to as the working classes before with a lot of the mainstream parties that have governed in Europe over the past 50 years. And they really have flocked to extremist parties, sometimes on the left and increasingly to the right, as we're seeing now in Portugal.
- [33:00]
A
We actually had you on the podcast last year when Chega did really well. The name of the party means enough. And we talked about voter anger really fueling people. And indeed, it seemed like that anger was still pretty present in Portugal. Polls even showed that Ventura was ahead, at least in the first round. So what happened in the end?
- [33:21]
E
Yeah. So just to underscore the meteoric rise that Chaige is having, this party has gone from having one MP in the Parliament in 2019, Ventura, to now being the largest opposition party in Portugal. They really are a force to be reckoned with. And in terms of this election. So you are right that he was for Quite a bit projected to be the winner of the election in polls. Essentially what happened was when he made it into the second round, what you saw was a mass movement to stop him. So a lot of really established conservative luminaries, people who would never, ever, ever think of endorsing the left wing, came out and formally endorsed Antonio Jose Seguro. You had obviously all of the prominent centrist and then the entire center left came out for him. So you really had a broad representation of the Portuguese electorate and more importantly, the most significant public figures in the country coming out to back. Now, he did not win the election, but it is absolutely worth looking at the results because ultimately Ventura secured 33% of the vote. So that means one out of every three voters ended up going for him. I think these are results that we should absolutely keep an eye on because they are indicators that would suggest that Ventura has the possibility of performing very well when legislative elections are held, especially if he continues taking advantage of his anti establishment, anti corruption line.
- [34:44]
A
Speaking of corruption, corruption, allegation against an ally is actually what forced Antonio Costa to step down as Portuguese Prime Minister. There's been no direct evidence tying him to these fraud allegations. But from what you're saying, Aitor, it does strike me that the one thing that both candidates kind of had in common was that they were running on a change campaign from the sort of situation that Costa had created.
- [35:08]
E
So it's worth reminding our listeners, if they're not aware, that Costa left office in 2024 and then was duly elected to be President of the European Council. We know him well here in Brussels. We see him on the streets. He's definitely still in the headlines in terms of his figure in Portugal. I mean, he really has dominated the political landscape from 2015 to when he stepped down in 2024. And he is kind of this all consuming figure that we can identify with how the country has evolved over the past decade, for better or for worse. And the negative side to his legacy is that a lot of these core issues that are driving Chiga's voters so, anger at the cost of living and especially the cost of housing, anger over immigration, which has really grown dramatically over the past decade. And then just this perception that the mainstream political elites are corrupt. These are all issues that we can directly link to policies that were ongoing during Kosta's time in office. And so it's a pretty tough legacy that he has to. That he has to handle in that sense.
- [36:09]
A
I mean, strikingly, I think the vibe here in Brussels is that he's A pretty successful president of the European Council. Do you see him feeling any ripples of his sort of repudiation at home here in Brussels?
- [36:22]
E
I mean, look, Costa will always, I think, be cherished by left wing voters in Portugal, and he was certainly representative of a very important moment for the country. The country had been suffering deeply in the aftermath of the Eurozone crisis. It was intervened by the troika. They had no control over their finances. There were devastating cuts to public services, and people were really feeling that pain. And when Costa came in, he promised to turn the page on austerity. Now, there are many in Portugal who will tell you Costa essentially just delivered austerity with a smile because the investment in public services was very, very low for much of his time in office. But he gave. Gave the Portuguese people an opportunity to feel optimistic. This coincided with the tourism boom, so a lot of jobs were created. The problem that we're seeing in the long term is that much of the jobs that were created tied to that sector are low quality jobs. And ultimately, that tourism boom has raised the cost of living because it's attracted wealthy foreigners who are willing to pay a lot more for housing, a lot more for their local restaurants, and who are ultimately displacing locals from places like Lisbon and Portuguese. In Brussels, though, I think his legacy in Portugal doesn't really matter. Ultimately, he was selected for this job because Costa is a proven and extremely skilled negotiator. He's very good at talking with people from all sides of the aisle, as we know from his very good relations, for example, with Victor Orban, who could not be more ideologically opposed to him. So in that sense, I don't think anybody in Brussels is looking at, ooh, what did Costa do back in Portugal? I think they're more focused on can he handle these council meetings, which, which so far he seems to be doing very, very well.
- [37:55]
A
All right, thank you so much, Aitor.
- [37:57]
E
No problem.
- [38:01]
A
And that's it for this week. You know, we've given you even more to listen to this week. Welcome to those new listeners who are joining from our new daily Brussels Playbook podcast. You can subscribe to Brussels Playbook with EU Confidential on the same feed in your favorite podcast app. Rate us, leave us a review and send your ideas and feedback to podcast and at Politico. Thanks to Zoe De York for lending some extra production expertise and as always, to senior audio producer Deanna Sturris. I'm Sarah Wheaton. See you next week.