The economic story or Portugal written in its motorways

The only country in Europe with more kms of motorways per head of population than Portugal is Luxembourg (which has a population that is 13% Portuguese anyway). Any Germans looking at their measly 15cm of motorway per head of population must be foaming at the mouth to see that the Portuguese get 25cm each, most of which were half paid for by European development grants and have now contributed heavily to the country going bankrupt in trying to pay for the other half (although now also being paid for by the Germans, via the bailout funds).

Infrastructure projects were the big idea of the recent centre-left administration, headed by the laughably economically illiterate José Socrates. His genius insight was that as infrastructure projects were heavily co-financed by European development money, they could be a great way of getting free money into the country as well as creating jobs when they were being built; then at the end of it, you had a better infrastructure which would in turn make Portugal into an economic powerhouse (and whisper it, but successive Governments have been particularly good friends with the private sector construction groups who happened to win these big contracts, which tends to lead to a more comfortable semi-retirement for Ministers after they leave office).

The end-result is terrifying – where I live in the North of Portugal, just south of Porto, there are 3 toll motorways running parallel with each other within a strip of around 20kms. One of them is 4 lanes (A1), one of them is 3 lanes (A32) and the other 2 lanes (A29) . I was on the 3 lane one the other day in the middle of the day and I counted the cars that I crossed coming towards me on the other side of the motorway for 5 minutes – 11 cars. Meanwhile the untolled A-roads that run alongside these motorways are choked up with traffic (lorries and cars alike) as they seek to avoid the tolls.

So there you have the story of Portugal’s economic tragedy – money spent like it was going out of fashion on foolish projects part-funded by the EU that in the end had virtually zero economic benefit anyway, now having to be paid for by private sector taxes and tolls so preventing money being spent on something productive and ultimately curtailing economic growth.

The moral of this story is twofold – first, that European development money will almost invariably be badly spent and second that Portugal (and it seems most southern European countries) will always vote for irresponsible centre-left Governments that promise an effortless path to economic success and don’t worry about paying the bill. The paymasters of the EU will one day have to grapple with this reality and either accept that they will constantly be stumping up for Southern European excess and irresponsibility or accept that the Euro currency in particular and the EU in general needs to be completely reworked. At the moment there still lingers the vague hope that the Portuguese (and other Southern Europeans) will learn to behave more like Germans (and other responsible Northern Europeans). No way, José….

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