In three very important interventions, Jerónimo de Sousa, General Secretary of the Portuguese Communist Party, has laid down the foundations for establishing Portuguese popular sovereignty, breaking free from the subordination to capital entailed in membership of the European Union and membership of the euro zone and taking into public control the main institutions of finance capital.
The clarity of thought and political resolve in this strategic approach to taking the next steps on the road to revolutionary advance in Portugal have great significance for all working people in Europe and especially for those in Britain struggling for a progressive exit from the EU.
Speech by Jerónimo de Sousa, General Secretary of the PCP, Session “Public management of the banking system, requirement for the development of national sovereignty”
“Public management of the banking system is the only way to guarantee that the public and national interests are protected”
18 March 2016, Lisbon
Greetings to our guest and to all present in this seminar on «Public Management of the banking system, requirement for the development of national sovereignty», the first activity of a cycle which will run for the next two months and that means to approach debate and address some of the main constraints to the development of the country.
It is unquestionable that the country has been facing for a long time serious and complex problems which have been aggravated and have even progressively dragged the country into decline.
This escalation of the problems is very clear in lengthy situation of economic and social degradation of the country we have witnesses over the past years, resulting from the policies of deliberate impoverishment of the non-monopolistic classes.
A situation which has been dominated, among other characteristics by the deep deterioration of the national productive sector, the alarming economic recession and an enormous production and employment deficit, the accumulation of budget deficits of public and private investment, the unacceptable debt, the permanent bleeding of young human resources and the increase of poverty and social an regional inequality.
We believe that this situation, to be truly changed, needs a real rupture with the path followed so far by successive PSD, CDS and PS governments.
Without wasting any opportunity to restore the rights and income which the PCP is committed to, there is a particular need for a coherent and articulated process, for answers and solutions for a set of serious constraints created and fed by the right wing policies, that ate blocking and paralysing the development of the country, such as the debt and the debt servicing that mobilize resources in an unacceptable dimension, the results of the monetary integration on the Euro system and that which brings us here today and that comes from the financial domination of private banking.
In this new stage of the national political life, highlighted by the defeat of the PSD/CDS government and by the new correlation of forces in the National Assembly, these constraints and concerns need to be overcome by being face, aware that the longer it takes to address them the harder it will be to come to a solution.
It is now very clear that the private banking sector did not serve the interests of the country nor of the Portuguese.
Quite the opposite, it cared only about shareholder´s profits, not looking at any means, inclusive the most illegitimate and corrupt.
In fact, as we have mentioned previously, the private banking sector in Portugal, has never been part of any solution, on the contrary, it has always been a part of the country´s most serious problems. The privatisation of the banking sector, nationalised and developed since the April Revolution, was, and i tis, cause of unbalance, of instability, of economic and social degradation.
Unbalance, instability and degradation because it centred itself in the financial oligarchy, in the monopolistic capital, in the great economic powers and the capital monopolist and the great urban and rural ownership.
Because it disinvested and absorbed wealth from the product sectors, from the small and medium sized businesses for financial speculation, property bubble and the non-tradable markets of protected profit.
Because it introduced exploitative credit, an increase in charges, in spreads, in commissions, in abusive banking services which are disadvantageous to customers, to families, to micro end medium sized entrepreneurs, to farmers.
Because it channelled abroad considerable national resources, intensifying external dependency of the country and transferring wealth from the interior to the urbane coastal areas, deepening the internal poor planning of the territory.
Because it was unable to finance the economy having on the contrary decapitalised its own institutions, became dependent of public aid, damaged the State with the assistance and the loss of tax revenues, increased the deficit and the public debt, worsened the country´s financial situation, accumulated billions of Euro of private profit and public losses.
Because it enabled tax evasion, capital outflows, the access to offshores. It encouraged financial and public market deregulation and the privatisation of state business sector.
Because it misused public and community funding, attained unjustifiable tax benefits, plundered public and private assets and instigated income restrictions, instability and the destruction of jobs in the banking sector.
Because it financed and illegally privileged the respective corporate groups, hid accounts, multiplied partnerships to mislead monitoring, subjected itself to toxic assents, manipulated the markets, carried out adventurous, incompetent, damaging and even fraudulent management.
Because it got swamped in corruption, influence peddling, illegalities, wilful wrongs, appalling ethical behaviour, looting of personal and income and capital, illegal and obscure deals, in a pitiful succession of financial scandals which are in itself inseparable from contemporary monopolist capitalism.
Because it strengthened promiscuity with pressure and subordination of the political power along with the intense manipulation of public opinion.
No. We have said a thousand times, private banking is not part of the solution! It´s always been part of the country´s problems. Inequality and imbalances, social instability, degradation of the national situation, these were the natural, expected and confirmed of the creation, reinforcement and promotion of the private banking system instead of public banking.
Portugal needs a banking sector which instead of unbalance contributes to rectify the speculative bias of financial flow, the external dependency, the conflicts with the European Union, the regional differences, the social inequality.
Portugal needs a banking sector which instead of ensuring the stability and strengthening of profits of the great economic powers, of the high finance, of the lords of the money at the expense of workers families and the people´s unstable income, of unemployment, precariousness, living conditions and the rights of the citizens.
Portugal needs a banking sector which instead of forfeiting its sovereignty and aggravating its financial situation, defends its national autonomy and independence, its internal market, productive investment, the expansion and modernisation of its industrial capacity, creation of employment, economic growth, social development.
In a nutshell, Portugal needs to strengthen the public banking sector, in order to ensure public control and discipline the financial market, safeguarding the solvency and refocusing of the national banking sector.
Two things are becoming clear to the eyes of the people.
The first, is that there is a lot of ostentation in the private banking sector– and unfortunately PS does not disengage themselves from PSD and CDS in this thought – but the truth is that without the State, without the intervention of the State, without financial aid, without tax support and the State guarantees, the Portuguese banking system would be even weaker if not collapsed, as a result from this more management essentially geared towards the speculation and the systematic enhancement of shareholders´ capital.
A State involvement which has been strongly paid for by the people in general and by the workers of the banking sector in particular, victims of an option, orientation and practices which has led to the destruction of thousands of jobs, to the degradation of the working conditions and rights.
The necessity to restrain the large systematic risks which still exist for the economy, to stop further transferences of private losses to the Portuguese people, to ensure solvency, liquidity and the smooth functioning of the finance institutions, the need to ensure real regulation, monitoring and supervision of the banking sector, requires the public control of the finance system.
We demand that the compensation for damages suffered by private financial institutions, especially when caused by wrongful doing by their owns or representatives, its paid by their own capital and reserves and by using the resources, assets and estate of the relevant economic groups and main shareholders and not by public expenditure.
The second fact which is becoming clear, is the increasing trend of the banking sector being either public or foreign.
Transactional capital is increasingly prevailing and dominant in the sector, aggravating the transferal of wealth abroad and the country´s loss of sovereignty.
Privatizing financial institutions, leads, sooner or later, to its procurement or control by Europeans megabanks, purged from toxic assets and refinanced with public funds, as it is the case Banif´s handover to Santander.
A public banking sector is the only possibility to guarantee the public and national interests, to avoid wrongful orientation determined by transnational financial hubs, to limit the distortions of competition by the strong private banking core, to recover essential leverage for the sovereign development of the country.
With the Euro, the country lost its monetary sovereignty handing over the capacity to issue currency to the CEB, an external institution. With the privatisation and the progressive foreign governance of the banking sector, the external command centres are also in control of money creation by the commercial banking sector.
A problem, which, as we have mentioned, is exacerbated with the Banking Union and the so called “single supervisory mechanism” which is yet another unacceptable blow in national sovereignty and a political measure to expedite the process of centralisation and concentration of capital within the European Union aiming banks, mergers, concentration of deposits and investments in the great financial powers.
The new banking settlement mechanism, with the contribution of shareholders, creditors and wholesale deposits to the benefit of bailouts, instead of support provided by the State is another perplexity.
What we need is the political will and courage.
Single banking sector supervision and resolution further alienate the capacity of solving, in a way that we find more adequate to our reality, the hardship of Portuguese banks, weakening even more the capacity of the Portuguese State controlling the national banking system, increase the dependency and subjugation to ECB pressure, and even more seriously, stimulate the monopolistic domination of the great continental finance groups.
We don´t need a European single supervisory mechanism and of banking settlement to shift the costs of the banking system resolution on those responsible, the private owners and bank creditors.
We don´t need examples of regulation formatted by the ECB, driven by the standards of the big European banks, to stop Portuguese workers to be made to pay with their taxes the degradation of the public services and the flaws of the banking system.
As it´s been highlighted, and in a wider point of view, the need to bar financial speculation, to channel savings and resources to be invested in national production, to boost growth and defend the sovereignty, demands that the currency, credit and other essential financial activities are progressively switched to be under public domain and control, serving national interests.
With the increasing number of those who as we do defend a public solution for national banking, two opposite ideas, which we believe to be wrong have been instilled.
The new public institutions, of a significant dimension, such as the Novo Banco, which we have suggested to be totally nationalised, should not be integrated and converged in the CGD, leading the State banking sector a mega bank, nor the new public institutions should be split in a dismembered, irrelevant and inefficient set of regional banks.
We devise a public sector, progressively wider and reinforced, articulated and balanced, formed by distinct and autonomous well sized institutions, eventually with distinct geographic and operational expertise, maintaining amongst each other a certain rivalry and which alongside the remaining private, mixed or targeted segments of the finance under a greater public regulation, supervision and monitoring by the national authorities.
We learn with the valuable experience of nationalisation and development of the public corporate sector, which truth be said, despite its mistakes, the management and guidance of the right wing policies, contrasted with the continuous outflow of public resources used to cover the loopholes of the current private banking sector.
A great historical experience, which nevertheless the shortcomings and difficulties, showed that it is possible a reorganisation of the banking system, in the interests with interest of the national economy, the people and the country and not in the interests of the profit and accumulation of the national and foreign economic groups which exploit them.
The gradual expansion of the public banking sector can combine diverse paces and shapes.
These can be nationalisation, emergency interventions to defend the public interests, banking resolutions, negotiations, purchase of shareholdings in favourable conditions and eventual at a symbolic price. The path to rebuilding a powerful public finance sector is the reinforcement simultaneously quantitative with a raise in market shares and qualitative, with the liaison and refocusing of the system and a strong public regulation.
It is however essential that no opportunities are wasted. The definitive nationalisation of the Novo Banco, as proposed by the PCP at the National Assembly, provisionally allocated to the Resolution Fund, is in fact already paid for – by the contribution and state guarantee, the contribution of CGD and the loss of tax income from the banks which contribute to the Fund – would allow to increase clearly over 40% the position of the public sector in the banking market. Besides from safeguarding jobs, branches and the important role in financing small and medium size business, it would reassure depositors and consolidate the institution.
Nothing justifies, much less community law which in fact forbids it, subsidies by the Portuguese government, reflected in the difference between public aid and the income from a hasty sale to whatever private economic group, most certainly foreign, that bought the Novo Banco.
As it was mentioned in the opening speech, the problem is not in choosing from capital from this country or other, as main actor or in exclusivity, nor in the negotiated and concerted split of the banking market amongst economic groups. The problem is the control of these groups and capital over the national banking sector.
The Portuguese people do not have to and should not have to pay to the big transnational banking sharks the handover of institutions restructured with public funds. This was the case of the recent purchase of Banif by Santander, which in fact was its recapitalisation at the expense of the public funds drained on it.
The Portuguese state does not have to keep the losses and furthermore lose the banks.
Portugal needs to prepare and materialise a different path. It needs different solutions to its problems. It needs to free itself from the ties of subjugation and enslavement.
As a matter of fact, nothing can force Portugal to accept the position of subordinate state and alienate its Independence and national sovereignty by renouncing the right of choosing through its own socio-economic structures.
We truly believe that Portugal is not doomed to backwardness. It is possible and necessary to follow other policies, reversing the path followed so far. There are proposals, and many of those have been presented today, highlighting the existence of a policy alternative to the right wing policies, capable to solve the problems of the country at development level.
“Renegotiation of the debt, condition for development and national sovereignty”
15 April 2016, Lisbon
Greetings to our guests and all those present in this Public Session in which we debate one of the main and most serious constraints to the development of the Country – the problem of the enormous Portuguese public debt and the resultant suffocating and paralyzing debt service.
This is problem we identified long ago, and for which we presented a solution, some time ago, on April 15th 2011, practically alone in the national party panorama. A solution that has evolved, because more and more Portuguese understand that this is a real problem that needs to be faced with a different determination, in the framework of a truly alternative policy, if we want to solve the deep problems of the Country, upon which weigh, among others, the aggravated degradation of the national production sector, an enormous deficit in production and employment, the low levels of public and private investment, a permanent drain of human resources, the increase in poverty and social inequalities, and an increasing dependence of the Country.
And if it is certain that in this new stage of the national political life, marked by the removal of the PSD/CDS government and the new correlation of forces in Parliament, has been making the achievement of some positive measures possible, the solution to the problems of development and sustained growth demands a new availability and initiative in facing the tasks for liberating the Country from the chains of submission and foreign limitation and that are, to a large extent, at the origin of the visible path of decline of the Country.
We know, and we ourselves have stated, that the solution to the deep problems of the Country is limited by options of the PS [Socialist Party] and its government, such as its unchanged policy regarding the liberation from the constraints resulting from the public debt, the submission to the Euro and domination of national life by monopolistic groups. But life is demonstrating, and will continue to show, that to effectively change the situation the Country requires a true rupture from the path followed so far by successive governments of PSD, CDS and PS.
Five years ago we publicly presented to the Country a proposal of renegotiating the public debt, with a reevaluation of the deadlines, the interest rates and the amounts payable, and an alternative policy to the intervention of the troika and its violent agenda of exploitation and impoverishment, which the then PS government, with the support of PSD and CDS, was preparing to summon.
Over all these years, we have never ceased to coherently propose and declare this brief formula, which was popularized and generalized: “the renegotiation of the debt in its deadlines, rates and amounts”.
The pertinence, justice and need to renegotiate the debt can be expeditiously recognized if we note that in the last five years, from 2011 to 2015, the State paid in interest 40.8 billion euros, the equivalent of 23% of the GDP in 2015. If we add what is predicted to be paid this year, an additional 8.5 billion, then the total nearly reaches 50 billion. To have an idea of the scale of this brutal amount, consider the 25 billion in structural funds that Portugal receives from the European Union, in the current EU framework of 2014-2020.
These are billions of euros lost annually and unavailable for public investment and social spending, for the promotion of economic growth and jobs, for fighting poverty and inequalities.
The Portuguese State cannot afford the luxury of spending every year, just in debt interest, almost as much or more than is spent on healthcare or the education of the Portuguese. On top of which, getting to the end of the year and realizing that the public debt remained practically the same.
This is throwing away money into an bottomless pit. There is no significant reduction of the debt, nor investment in the Country or its people. The debt has simply become a mechanism of extortion of the public and national resources, mainly from abroad, which is perpetuated, when not aggravated.
The workers, the population and the Country make sacrifices to pay an unpayable debt, the problem repeats itself year after year and who profits is those who speculated with the debt securities, like the banks and investment funds, or those who took advantage of the weaknesses of the Country, like the troika creditors.
And the Country doesn’t escape this absurdity: the debt is a tribute paid to international loan sharks for the strange privilege of keeping it as it is. Portugal does not solve any of its problems, on the contrary many of them are aggravated, with the maintenance and permanent extension of the usurious debt.
Several European Union countries have similar problems. Portugal has only advantages in promoting, at a European level, a concerted movement of negotiation of public and foreign debts, with the European Commission and the ECB, with the restructuring of the amounts and the payment conditions, that frees resources for productive investment, animates economic growth and confers reasonability and sustainability to the restructured debt.
But independently of this external action, the Country cannot remain idle.
Firstly one need understand that the debt is structurally unsustainable. Unsustainable, unpayable and unbearable. Socially and financially.
In certain contexts, like the present and as we stated earlier, namely of low interests rates and a massive monthly acquisition of debt securities from the banks by the ECB, the public and national debt may seem controlled, manageable, and even slightly overcome. The extension and reinforcement of the program of monetary expansion of ECB acts towards conserving low interests rates.
There are even those who have the illusion of returning to the situation, shattered by the international crisis in 2008, in which the euro countries, Portugal as well as Germany, have about the same cost in issuing debt. Or that prolonged low interest rates of new issuance of debt refinancing should substantially decrease the interest paid regarding the volume and value of the debt.
But this is not understanding that the European situation, and the national one more so, is hanging by a thread. That the country will not always count on this sort of “favorable alignment of the stars”, and in fact does not depend upon it. That whenever the interest rates increase, there is the risk of the debt increasing uncontrollably. That even if the interest rates remain low, the debt is so colossal that its service will continue to weigh upon and constrain the application of resources, the recovery, growth, the social action of the State, the public accounts, the reduction of the deficit and the debt itself.
The debt is comparable with incomes. This is how it works for a person, a company or a Country. The public or foreign debt is assessed in relation to the national income. If the product grows, the debt, in relative terms, decreases. It is essential for the Country to grow. For that one needs investment, particularly public investment. One needs resources, namely those wasted servicing the debt. The Country is at an impasse, the trap of debt. Growing only a little it cannot decrease the debt and the debt doesn’t allow the Country grow as it should.
The Portuguese public debt and foreign debt are, both of them, among the largest in the world. At the end of last year, the public debt (from the perspective of Maastricht) was 128.8% of GDP and the foreign debt (given the position of international investment) was 109.4%.
Since the net foreign debt of the Country is made up largely by the foreign component of the public debt, renegotiating the public debt is to simultaneously do the same regarding the foreign debt.
This debt renegotiation is a national imperative, to remove one of the most powerful obstacles, the deviation of resources to financial capital and abroad, resources that are necessary towards the development of the Country.
Renegotiation is an imperative and the reconsideration of the amounts payable, not only the deadlines and interest rates, an indispensable necessity. Smoothing the peaks of the next amortizations, the extension of deadlines, the decrease in interest rates, by themselves will not allow a satisfactory release of the resources committed towards the payment of the debt.
Therefore, PCP proposes a renegotiation of the State’s direct debt, including the troika’s loan, that strongly knocks down the amount of debt (at least in 50%) and that, together with the decrease of interest rates and deadline extension, ensures a substantial reduction (in at least 75%) of its annual burden.
Independently of subsequent evolutions, the successful experience of numerous restructuring of sovereign debts, from the situation in post-war Germany, to the experience of Argentina or Ecuador, demonstrates the possibility and viability of our Country also taking that route.
A renegotiation that begins with a profound audit of the dimension, origin, nature, creditors and foreseeable evolution of the State’s direct debt and that, well-grounded on this basis, resorts if necessary to the founded suspension of the payment of the State’s direct debt.
A renegotiation certainly implies a discussion with the creditors, but also a firm defense of the national interests. The General Assembly of the United Nations itself, on September 10th of last year, recognized this right of sovereign States, “which should not be frustrated or impeded by any abusive measures”.
But attacking the debt is not enough. It is necessary to attack the profound causes of the national indebtedness, so that it doesn’t repeat itself.
The abandonment of the productive sector, the lack of protection of the internal market, the privatizations, the financialization of the economy, the support and deviation of colossal public resources towards the banks, the favoring of big capital and financial speculation, the submission to the impositions of the European Union. And specially the membership of the euro, which contributed towards the degradation of the productive sector and replacement of national production by imports, which stimulates the indebtedness abroad and speculation with debt securities.
The Country did not “live above its possibilities”, it produced below its possibilities (and distributed the created wealth poorly). It is necessary to defend national production. It is necessary to produce more in order to owe less.
The banks stimulated the indebtedness inside our borders and entered into debt abroad. They were a prominent agent of the Country’s external indebtedness. When it found itself in difficulties it benefited from the aid of the State and liquidity from the Eurosystem. It is necessary to discipline and reorient the financial system. It is necessary to publicly control the banking system.
The Euro contributed much to the public and foreign debt of the Country, that began rising with membership or its preparation. We need a currency adjusted to the productive and exporting ability of the Country, that helps finance the economy instead of promoting austerity. It is necessary to recover monetary sovereignty.
It is essential that the Country, and the current government, not mislead itself with a false normality, of apparent stabilization of the debt volume, nor resign itself to this usurious and pillaging normality that entraps the Country and hinders growth.
Any strategy that refuses to touch the debt, namely in its amounts, with the justification that it will be gradually reduced with the contribution of the expansionist European monetary policy, is fooling itself and the country.
The interventions of the ECB can contribute towards reducing the interest rates, but are demonstrably more and more inefficient and, eventually, perverse. The money doesn’t reach the real economy, but is deviated towards speculation. The volatility of the mass flows of created liquidity retracts credit from companies. The negative interest rates affect the profitability of the banks and the supply of credit. The enormous indebtedness discourages investment, despite the low interest rates.
In addition to the worsening of the crisis, the Country is singularly unprotected, more than in 2008. The gigantic debt constrains the use of public spending, the null or negative short term European interests rates and the saturation of liquidity in the financial sphere rob the margin of progress of the monetary policies, as those advanced by the ECB.
In this regard, we know that there will be no lack of defenders of paralyzing inaction with their fallacious reasoning guaranteeing that the debt is sustainable, and also defenders of half solutions, that are no solution whatsoever, hiding behind dubious and misleading concepts, under the pretext of not frightening creditors, which can increase interest rates or lead the famous Canadian rating agency (DBRS) to declassify the rating of the Portuguese debt as trash.
But it is now, and not when it is too late, with the Country debilitated and with less negotiating power, that one must renegotiate the debt.
From our part we will not refrain from initiatives that advance towards this achievement, certain as well that the solution to the problem of the debt is also inseparable from achieving other axes of the patriotic and left-wing policy that we propose for the Country.
Sure that the Country is not condemned to economic and social decline nor to growing dependence and subjugation, we once again reaffirm that there are solutions for the national problems and that the path of economic and social regression can and must be interrupted by the convergent action of all democrats and patriots, giving strength to a true alternative project for the Country.
“The release of the country from submission to the euro, condition for development and national sovereignty”
10 May 2016, Lisbon
First a word of appreciation on the debate promoted here today with many speeches that have and will enrich the legacy of reflection and intervention by the PCP on issues related to the euro. Special thanks to the contributions of Professor João Ferreira do Amaral and Professor Jorge Bateira who agreed to share with us their thoughts, joining other economists from our country who have been present in other initiatives that we have promoted on some central issues that we face and the necessary answers we need to give.
A second observation to emphasize that this initiative closes a cycle of three debates promoted by us. In March, on the public control of banking, in April on the renegotiation of the debt and now this, on the release of submission from the euro. Three fundamental issues that are at the centre of the necessary rupture with the right-wing policy and the patriotic and left-wing alternative policy that the PCP proposes. Three options that are related to each other: private banking, increasingly owned by foreign capital, a devourer of public funds, a source of harmful and fraudulent processes, unable to respond to the country’s credit needs; an unsustainable public debt, the country’s financial stranglehold, source of speculation and blackmail and factor of national impoverishment; and a single currency, contrary to national interests and which binds the Country to submission and external dependence.
The third note is to highlight the timeliness of this initiative. When we hear the European Commission, as we heard last week in its quarterly spring report on Portugal, when we recall the statements during the recent ECB President’s presence in our country, when weekly EU institutions and bodies continue to make pronouncements, all and in a single voice, condemning the devolution, although insufficient and limited, of rights and incomes that were stolen from the Portuguese people, demanding a return to the forced march of exploitation and impoverishment of SGP’s and the Troika that PS and PSD/CDS governments materialized, or by electing the Constitution of the Republic as an obstacle to their purposes that must be removed, we realize that more than in the past, the present and the future holds for us a struggle that will be very challenging for the recovery of our sovereignty, for the affirmation of the inalienable right of the Portuguese people to decide their future. Behold Greece, behold Cyprus, behold Spain, behold all across Europe and we realize that to the European Union, to the interests of big capital, there are no limits. Using all the tools that they control, they want and will want more, more sacrifices, more exploitation and impoverishment to satisfy the greed of their profits, regardless of poverty, regardless of unemployment, emigration, the destruction that their policies cause. This is the combat that lies ahead.
Since Portugal joined the euro in January 1999, it virtually ceased to grow. Since 2002, the year that the euro began to circulate, growth has been zero. One of the countries with the worst performance in Europe and the world!
The weak growth it was experiencing was lost with the recessions. Stagnation turned the recoveries extremely slow.
Last year, Portugal was still producing less wealth than in the year when euro banknotes were introduced. And it is still far from recovering the economic level it had before the impact of the worsening of the 2007/08 capitalist crisis.
Portugal, with the single currency, does not lose years, it loses decades!
The euro is a currency that suits the needs and interests of European high finance and major European economic groups. With an exchange rate tendentiously pegged to the productive and export capacity of Germany, its wage levels and productivity, to its industrial and commercial profile, to the requirements of its financial institutions.
It does not serve the workers and the Portuguese people, does not serve Portugal. Worse still. Affects Portuguese productions, severely affects our people and our country.
The euro deprives States of monetary, financial, foreign exchange and budget tools to promote a development that takes into account their national realities.
In Portugal, public and private investment was reduced to historic lows, the lowest level at least since the 50s. This is already the fifth consecutive year that the gross fixed capital formation does not pay its consumption, that is, wherein the investment made does not cover the wear of equipment, machinery and other instruments of economic activity. The national productive apparatus is being decapitalized, degraded, obsolete.
A country that does not invest does not grow, much less sustainably. Monetary integration is destroying the national productive capacity and seriously jeopardizes the future of the country.
The single currency also conditioned the productive activity with its excessive valorisation, made exports more expensive, domestic production was replaced by imports (instead of replacing imports with domestic production) contributed to ruin the industry and agriculture and fisheries.
The whole primary sector, plus the industry, energy and construction, which was a third of the national production on the eve of joining the euro, is now less than a quarter and lost about a third of its workers.
The single currency creates unemployment, which has more than doubled, precariousness, impoverishment, emigration, aging and desertification of the country.
It stimulates foreign debt, outflow of capital and financial speculation.
In the absence of a national central bank with all the prerogatives as last resort lender, submits the country or to the blackmail of the “markets”, i.e. of the speculators, or to the blackmail of the ECB, the European Union and the IMF, i.e. the troika.
We cannot pretend that the problem does not exist. In broad strokes, within the euro the country does not grow or grows very poorly, does not develop, does not recover employment and is at the mercy of speculators, of the ECB and rating agencies.
Joining was a disaster and remaining is an even bigger disaster. To recover monetary sovereignty is to refuse this sentence. It is not conforming to underdevelopment, nor impoverishment, or to the submission of the country.
Integration in the euro is a major obstacle to national development, which has to be removed.
It would be more appropriate, in concert with other European nations, to dissolve the Economic and Monetary Union and have compensatory measures for countries with greater difficulties in the process, but no one can become dependent on this possibility.
This is not any magic wand, but it is necessary to recover backwardness, combat exploitation, impoverishment, stagnation and dependency. It is not a sufficient condition, but it is a necessary condition.
Much will also depend on the policies that are put into practice with the abandonment of the Euro Zone. Hence we include the release from submission to the euro as a component of a patriotic and left-wing policy that we propose to the country.
Especially with the public control of banking, progressively extending ownership and public management, redirecting its activity to productive financing rather than speculative, supporting small and medium-size enterprises and families with criteria and without wasting, at the outset, the integration of the Novo Banco in the public sector, as has been proposed by the PCP.
Public control of banking is essential to ensure national control of monetary creation, from the issuance by the Bank of Portugal to the creation of currency (which is a public good) by commercial banks, rescued from increasingly foreign monopolist domination, ensuring solvency, liquidity, the viability and soundness of banking activity.
Especially also with the renegotiation of the public debt, in its terms, interest and amounts, which substantially reduces the volume of annual costs and the foreign debt, releases funds for investment and social functions of the State, stops the foreign drain of resources.
But it is not enough to combat the debt; we need to tackle the causes of indebtedness.
Within the euro, the Portuguese public and external debts have become one of the world’s largest. With the stagnation of the economy. With the constraints on investment first of all public, which leads to the withering away of our productions. With excessive currency appreciation, unbearable to the domestic industry. With a stimulus for imports. With the encouragement of financial speculation and foreign debt of banks.
It is ironic to observe, in another implicit recognition of the inadequacy of the single currency to the national reality, that with the current public debt of 129% of GDP, into which the country was led with the decisive contribution of the euro, Portugal could never have joined the euro, since it exceeds twice the permissible maximum of 60% of GDP, the entry criteria.
Given the country’s situation, the release of submission to the Euro, must be carefully prepared, with a view to defend the income, savings and living standards of the population as a whole.
In PCP’s view, it is fair that any costs should be borne by the speculators, financial capital, large economic groups who benefited from joining the euro.
It is not the introduction of the new currency, but the stay in the Euro, maladjusted and coercing our economy, which impoverishes the people and the country.
Since 2007, the PCP has been proposing the dissolution of the Economic and Monetary Union, which would be the ideal solution to break this constraint, negotiating compensatory and transitional measures for the peoples who have suffered the impact of the euro. But the course of capitalist integration of the EU is not going in that direction, quite the opposite.
The country has to study and prepare its release from submission to the euro, whether this option arises from a sovereign decision of the Portuguese people, or an external imposition or a process of dissolution of the Economic and Monetary Union. This preparation is essential to ensure the full use of the benefits of an exit while minimizing its costs. Costs that we do not delude or ignore.
To those who accuse the PCP of irresponsibility for putting forward this proposal, seeking to sow confusion and fear that the PCP proposes an immediate exit, without preparatory or compensatory measures, we must say that irresponsibility is not to negotiate and open this prospect in the European Union, is not to activate all the mechanisms to study how to defend national interests against an option that marks a path of rupture with the interests of big business and focuses on the aspirations of the workers, the people and the country.
The opening of this prospect in the European Union and the study and preparation that the Portuguese State must undertake to the necessary release from the Euro is urgent and necessary. To protect the income of workers and families, to ensure their savings, to ensure the normal operation of international trade, to ensure the liquidity of the financial system, safeguarding at safe levels reserves of capital and currency of the country.
If measures and options were needed to bind the country to the Euro, similarly measures and policy options are needed to ensure the release of the country from the single currency, with the central idea that this is a political process. We can quickly summarize some of the main concerns of the preparation for the recovery of monetary sovereignty, with corresponding several concrete proposals that we have, over the years, been discussing in the Party, some mentioned in the draft resolution we presented in September 2014, namely:
Unbinding of the Bank of Portugal from the Eurosystem and the full resumption of its functions as issuer, regulator and last resort lender.
The adoption of the necessary transitional technical provisions for the new currency (including the initial equivalence between the new currency and Euro).
Ensure the regular functioning of the economy and foreign trade and control of capital.
The stability and convertibility of the new currency.
The solvability and liquidity of the banks, possible only in a framework of recovery of public control of the banks.
Reassurance of the population and economic agents regarding their savings.
The conversion of debt, public and private, generated in the country to the new currency and which would necessarily be part of a process of renegotiation of the public debt that the country needs.
Translation into the new currency of the economic and financial life of the country.
Restriction of speculative activity.
Guaranty of supply of energy and other essential goods.
Defence of wages, income and consumption of the population.
The release from the euro is necessary. The release from the euro is possible.
Some say that we did not learn from Greece. But this is turning the tables. Because Greece, unlike for example the United Kingdom or Sweden, is in the euro. The Greek economic and social debacle is an example of what can happen to a country within the euro.
The big mistake of the Greek government was not wanting to leave the Euro. On the contrary, it was feeding illusions that it was possible to eliminate the policy of exploitation, impoverishment and downfall and develop the country within the euro, was not having prepared the country to free from it. A great lesson for all European peoples.
Monetary sovereignty is a structural need of the country.
To adapt the currency to reality, to the national needs and potential.
For a monetary, financial, foreign exchange and autonomous budget management, adjusted to the country’s situation.
To retrieve a central bank at the service of the country, ending the dependence and blackmail of “markets” or the troika in the last resort financing of the banks and the State.
To free from the Stability and Growth Pact, the Budgetary Treaty and substitutes, from Stability Programmes and National Reform Plans, from policies of exploitation and impoverishment, constraints on investment and productive activity.
To protect the loss of competitiveness from appreciations of the single currency.
To free from the Banking Union, which pressures privatisation and sale of national banks. As was clearly visible in the impositions made by the ECB in the process of BES and BANIF, or the blackmail that is underway on the public recapitalization of Caixa Geral de Depósitos.
To better withstand financial speculation, the outflow of capital and foreign debt.
To defend the democratic regime and the right of the Portuguese to decide their fate.
To make viable a patriotic and left-wing policy and answer the most pressing needs of the population.
The release of the country from submission to the Euro must win support from the workers and population. And the political will of a government determined to carry it out. It is, we insist, a political process.
Do not feed the illusions and learn from the past two decades.
If in this or that year, due to the exceptional combination of favourable conditions – low interest rates, low oil prices, depreciated euro, enhancement of ECB policy of injection of liquidity – we can see insufficient growth, let us be prudent not to extrapolate estimates at rhythms that reality, in all likelihood, will prove wrong.
Within the euro, the necessary improvement of income, rights and people’s living standards will quickly collide against the concrete walls of its architecture and will be curbed by its increasingly constraining rules.
Economic governance, the European semesters, previous approval of budgets do not serve the Portuguese people and the stability programmes, that follow and implement them, collide with the recovery of incomes, restrain the fight against impoverishment, undermine investment, crush growth, disrupt distension of national life, hinder a patriotic and left-wing policy, give continuity to key aspects of the right-wing policy.
We opposed and contributed to the defeat of the CDS draft resolution in the discussion on the Stability Programme and the National Reform Plan, which insidiously sought to whitewash its own responsibilities and promote a policy of exploitation, and reverse the restoration of incomes and rights.
But we demarcated from those documents that the government sent to the European Commission, which are the responsibility of the PS and its government, as well as all instruments of interference, control and domination of the EU on member states.
Within the Euro, Portugal is tied to stagnation and recession, to a waste of its potential, to underdevelopment, impoverishment, dependence and national submission.
The release from submission to the euro is a necessity and a possibility. Without the release from the euro, as proposed by the PCP, without the recovery of public control of the banks, without renegotiation of the debt, it will not be possible to consolidate a policy of restoration of rights and income to which we are committed. Gone are the times when it was the PCP, and almost only the PCP, who warned of the consequences that we are experiencing today. Despite all the propaganda and mystification surrounding the supposed virtues of the euro, the collective awareness that the country is facing a problem that needs to be solved has been broadening. An idea that is gaining strength and around which converge many democrats and patriots.
On the part of the PCP, we will continue to intervene in a serious, committed and responsible way to hand back to the country and to the people what belongs to them. The country is not condemned, people do not have to live with the sword of the euro over their heads. And as so often life has shown, in the lives of people there are no dead end situations.