"Yes, Minister" explains the former European Economic Community (current EU) @ 1981

Season 2, episode 5 "The Devil you know" from 1981. Minister Jim Hacker and Permanent Secretary Sir Humphrey discuss the reasons why EU nations joined the common market © Youtube

Humphrey: Let's look at this objectively: it is a game played for national interests and always was. Why do you suppose we went into it?

Minister: To strengthen the Brotherwood of free Western nations.

Humphrey: We wanted to screw the French by splitting them of the Germans.

Minister: Why did the French go into it then?

Humphrey: To protect their inefficient farmers from commercial competition.

Minister: It certainly does not apply to the Germans.

Humphrey: No, they wanted to clean themselves of genocide and apply for readmission to the human race.

Minister: Such appalling cynicism! But at least the small nations didn't go into it for selfish reasons.

Humphrey: Really? Luxembourg is in it for the perks, the capital of the European Commission and all that foreign money pouring in, hun?

Troika’s legacy on health in Portugal

The austerity imposed in Portugal had a very negative impact on the overall capacity of the healthcare system. © Flickr André Carrilho

Devastating austerity measures slashed out years of progress in the Portuguese National Health System (NHS) with the arrival of the troika of international lenders – European Commission, European Central Bank and the International Monetary Fund.

The Portuguese government imposed an austerity package in September 2010, however the international assistance was officially requested in the first half of 2011, when Portugal was set to receive a €78 billion IMF-EU package in a bid to stabilise its public finances. Yet, the cost of this bailout deeply disregarded its social impact.

Since the 1980s, Portugal had undergone remarkable changes tackling material deprivation and improving access to healthcare. The government progressively increased expenditure on healthcare, particularly in the public sector. When the financial crisis first hit, in 2008, expenditure for healthcare represented nearly 10% of GDP. However, the intensification of the crisis led to a decline on healthcare expenditure by 5% per year in real terms in 2011 and 2012.

In total, the Memorandum of Understanding (MoU) demanded savings of €670 million in Portuguese healthcare. Drug expenditure was heavily hit, prescriptions, workforce and user charges were also targeted. Since the very beginning it seemed conspicuous these measures would harshly damage the entire capacity of the NHS and lower people’s living conditions.

 Impact of the recession on healthcare

A study published in the Health Policy Journal named “Effects of the financial crisis and Troika austerity measures on health and healthcare access in Portugal” (2016) reached the conclusion that unmet medical need doubled in the years 2010 to 2012 in the southern country and the quality of care saw a sharp decline as co-payments were introduced in public hospitals.

However, segments of the population (almost 56%) were exempt from increases in co-payments, though the struggle to have official eligibility was hard due to several bureaucratic obstacles involved.

Overall, the impact of the recession on health was huge.

Unit costs were forced down, the government negotiated lower prices for drugs while encouraged the marketing of generics and cut salaries of health workers. In addition, supplementary cuts were introduced in prevention, public health and research. Last but not the least were the already mentioned measures implemented to reduce demand for care, mainly by increasing co-payments.

What was the human cost of these reckless policies?

Mortality from respiratory diseases has increased by 16% between 2011 and 2012, following decades of continuing progress. Moreover, 2012 saw an increase in hospitalisations for respiratory diseases up by 9.9% since 2011. Excess mortality was largely associated to the seasonal flu outbreak as Portugal has one of the highest rates of people unable to keep their houses properly warm (28% in 2013).

Difficult access to healthcare resulted in a sharp decline of people's quality of life. © Flickr Frank Grace

 Access to healthcare

According to Eurostat, risk of poverty and social exclusion in the population rose from 24.4% to 27.5% between 2011 and 2013 whereas material deprivation increased from 20.9% to 25.5% with severe material deprivation rising from 8.3% to 10.9%. In addition, the poverty rate among children under 18 years of age also grew from 28.6% in 2011 to 31.7% in 2013.

The crisis was accompanied by rising deficits (9.9% of GDP in 2010) and the government debt reached 129% of GDP in 2013. Hence, the Portuguese government was required to reduce the deficit to 3% of GDP by 2013 while “minimising impact on vulnerable groups”. However, this formality under the MoU was rather overlooked throughout the implementation of wide-ranging structural reforms in the country.

“What is happening now in Portugal can be called invisible genocide,” said Rui Viana Pereira, a Portuguese citizen who was unemployed during five years until he decided to immigrate. “Because of the drastic Troika’s austerity measures, many hospitals and health centers in all parts of the country were closed and very poor people who are living in countryside can’t get the medical help.” Unemployment in Portugal saw a sharp rise already in 2008 (7,6%) reaching its peak in the first quarter of 2013 (17,3%).

Between 2011 and 2013, the NHS lost 2.3% of its workforce, including 3.2% of its nursing staff. In 2013 alone, 1,211 Portuguese nurses registered to exert in the UK, compared to 20 in 2006/07. It is thus important to point out that during this period, the NHS saw an increase on its workforce although their salaries were target of successive cuts.

According to a survey conducted among 3,448 physicians from the NHS, 65% reported a shortage of medical equipment/products in their facilities and 80% reported that cuts in the NHS budget compromised care quality and access.

 Medication Adherence

A 2012 patient survey including 375 patients provided a glimpse of medication adherence in patients suffering from chronic diseases. Its main findings revealed that 22,8% of patients did not purchase prescribed medication due to financial reasons. Physicians also estimated that 60% of patients failed to attend follow up treatment due to financial hardship.

Medical adherence was compromised with the troika's policies in Portugal. © Flickr zarathu90

Conclusions

It is undeniable that the troika’s presence in Portugal left behind a wave of destruction on the social structure of the State, particularly on the quality, delivery and access to healthcare.

Nevertheless, Portugal’s efforts to reform its drug pricing policy have contributed to significant reductions in pharmaceutical spending since 2010, even though greatly at the expense of the sustainability of pharmacies and wholesalers. Generic drugs have played a key part of the emphasis on cost control in Portuguese pharmaceutical policy.

Overall, the Portuguese NHS is gradually recovering and the different groups of health professionals - such as doctors, nurses and pharmacists - in the country have recognised the need to boost the capacity and sustainability of the NHS to deliver better outcomes.

The most remarkable reform to the Portuguese health system has been the introduction in 2014 of a new national system of health technology assessment (HTA), the Sistema Nacional de Avaliação de Tecnologias de Saúde (SiNATS), as part of Infarmed, the Portuguese drug authority. 

With SiNATS, Infarmed wants to contribute in particular to maximize health gains and quality of life. The resort to HTAs aims to ensure the sustainability of the NHS and the efficient use of public resources for health, monitoring the use and effectiveness of technologies, reducing waste and inefficiencies, promoting and rewarding the relevant innovation development, and finally promoting equitable access to health technologies. 

The health minister Adalberto Fernandes is confident that the NHS is on the right track. “The budget for 2016 was better than the budget from 2015 and the next year’s budget will be better. We are in the good way,” said the minister on RTP.

Zeitgeist

Why the Virgin? Why December 25th? Why dead for three days and the inevitable resurrection? Why twelve disciples or followers? WHY THESE ATTRIBUTES? Hint: the birth sequence is completely astrological. 

Food: what's on your plate?

Article published in Cafebabel

Prevention of food waste is a major ambition that needs the collaboration of all intervenientes in society. © Flickr Sundaram + Annam

Food, the engine that drives our daily lives, is currently a hot plate on the agendas of EU leaders. We rely on this basic commodity and almost take it for granted but it has been commonly understood and agreed that we have to protect and secure our basic needs.

In the era of Sustainable Development Goals (SDG) food security is a priority and the European Union as a global actor is playing a key role conducting a research framework building on a set of food security priorities. EU Commissioner for Research, Science and Innovation Carlos Moedas has put in place an ambitious agenda for food policy and environmental issues. This initiative aims to contribute to the setting of EU and global directions for food waste prevention.

“By World Food Day 2016 (Sunday 16 October), the European Commission will launch a research and innovation agenda for food and nutrition security. This will lead to a Food Research Area by 2020, created by both the EU and its global food and nutrition security partners,” announced Moedas in January 2016.

The EU Commissioner for Health & Food Safety Vytenis Andriukaitis addressed the Committee of the Region’s plenary debate on food waste in June 2016, where he defended the urgent need of protecting food and preventing food waste while contributing to a sustainable development. 

“This is unaffordable, immoral and unsustainable. To tackle food waste successfully, we need a thorough re-think of how we produce, market and consume food at each step of the food chain,” said Andriukaitis.“The Commission will also develop, in co-operation with Member States and stakeholders, guidelines to facilitate food donation in the EU,” he added.

From food shortages… 

After the disarray of the Second World War, some European countries were confronted with severe food shortages forcing populations to control their food through rationing practices. A Common Agricultural Policy (CAP) was thought through during the 50’s and finally in 1962 concrete mechanisms were adopted by the six founding member states of the EU. Market unity, community preference (chose local) and financial solidarity were the three major principles underpinning the CAP.

However, the common policy was never entirely accepted by the community and it was subject of several reforms up until today. In 1968, the European Commissioner for Agriculture Sicco Mansholt called on the Council of Ministers for reform claiming that the amount of land for cultivation should be reduced and uttered that the living conditions of farmers had not improved since the CAP’s implementation - despite a sharp peak in production.

 …To food waste

Today, there are over 500 million people living in the European Union. The world population is projected to exceed 10 billion by the end of the century. Such growth will put a massive strain on the global food supply. With a fasting growing population, demand for food is mounting but so does overproduction and ultimately vast amounts of wasted food.

It has been estimated that up to 30% of all food produced around the world is lost or wasted. According to the European Commission, staggering 88 tonnes of food are wasted every year in the EU reaching losses of €143 billion. However, the environmental impact caused by the waste is another reason for concern.

 Food waste reaches 88 tonnes of food annually, according to the Commission. © Google

Environmental impact

A report published in 2013 by the Food and Agriculture Organisation of the United Nations (FAO) revealed the perverse effects of food waste on climate, water, land and biodiversity.

"We all - farmers and fishers; food processers and supermarkets; local and national governments; individual consumers - must make changes at every link of the human food chain to prevent food wastage from happening in the first place, and re-use or recycle it when we can't," said FAO director general José Graziano da Silva.

Solutions

According to FAO, a combination of consumer behaviour and lack of communication in the supply chain leads to higher levels of food waste in affluent societies. The food subject is particularly complex and therefore it is vital to make the shift towards a collective awareness into a holistic approach.

From a public health viewpoint, good nutrition value is essential and so is the food labeling in order to empower the consumer to make informed and sustainable choices. It is commonly believed that food consumption and dietary choices can make an important contribution to meeting current environmental challenges.

Moreover, greening measures to the whole supply chain are paramount. Re-setting the economy to consume fewer natural resources and make the agro-food system more resilient to potential supply shortages.

Last but not the least, to abruptly reduce food waste and its byproducts it is crucial to harmonise the food supply chain worldwide and take into consideration the impact on the environment and climate change. It is time to use resources within our means such as innovation techniques as to improve the circularity of recycled products and waste management.

It is in our power to prevent food waste and act responsibly. © Google

Portugal responds to Oettinger’s second bailout warning with plummeting bond yields

Portugal exited the first bailout in May 2014. © Flickr

EU Commissioner Günther Oettinger, in charge of the Digital Economy and Society, dropped a bombshell on Portuguese politics, when he announced the possibility of a second bailout for the recovering country. “The worry is that Portugal will need a second bailout to finance its budget. I can’t tell you what the probability is, but it is higher than zero,” said the German Mr. Oettinger during a visit to Lisbon to discuss Portugal’s performance in digital areas.

The Portuguese government found the Commissioner’s declarations inflammatory and promptly reproached his behaviour. Foreign Affairs Minister Augusto Santos Silva dismissed the prospect of a second bailout and recommended “common sense and responsibility when they [politicians – including members of the European Commission] speak”, wrote the daily newspaper Público. “And if we do not know well the reality that we comment, we should not comment on it," Santos Silva added, accusing Oettinger of designing a gimmick to get media attention and startle the markets.

Budget (non)troubles

The Portuguese government is currently preparing the draft budget for the coming year and they are confident that the country will comply with the expected targets, despite a sluggish economy affected by slowdowns in exports to major markets such as Angola, Brazil and China. As a matter of fact, during the summer Portugal struggled – and succeeded – to avoid sanctions from the Commission for its failure to cut excessive deficits. The government’s battle with Brussels is now over the EU structural funds, an amount of €3.5 billion of which is in danger of suspension.

Nevertheless, Prime Minister António Costa reaffirmed that the idea of a second bailout ”is completely nonsensical” and insisted that “Even with the current level of growth, this year we will meet the deficit reduction objective for the first time and have a deficit comfortably below the 2.5 percent [of GDP] fixed by the Commission”.

Portuguese city Oporto. Flickr © Paola Spartà

Systemic banking crisis

However, the banking woes continue and are undermining the whole stability of the country. Since the onset of the financial crisis in 2008, Portugal witnesses its banking system slowly falling apart. Banco Privado Português (BPP) went bust and Banco Português de Negócios (BPN) was nationalised only to be sold in 2011 to the Angolan BIC bank. Bad investments, embezzlements and fraud were at the root of the banks’ failure.

Then Banco Espírito Santo (BES) came along. Once the second biggest bank in Portugal, BES was nationalised in 2014 when the State intervened to rescue it with €4.9 billion. This action split the bank in two – the “good” bank called Novo Banco and the “bad” bank where toxic assets were accumulated.  The government is still struggling to find a buyer.

In late 2015 was Banif’s turn. The government paid €2.2 billion to rescue Banco Internacional do Funchal (Banif) in a deal involving the bank’s sale to Spanish Santander for €150 million, following the same splitting scheme of “good” and “bad” bank. Finally, the state-owned bank Caixa Geral de Depósitos (CGD) is currently under restructuring plans including an injection of capital.

The government has spent around €14 billion of public money on safeguarding the “soundness” of the banking sector. However, it is doubtful that this money was put to good use and certainly much of it will never be seen again.

Throughout the crisis, Portugal was seen as the “good student”, religiously following the German medicine. Praises were even heard from the finance minister Schauble who applauded the Portuguese pragmatism in implementing the adjustment programme. However, these remarks were all but a strategy to continue implementing austerity policies – especially in Greece - making the public believe that they were indeed a great success and the path to prosperity.

Rating Agencies

The role of the rating agencies – mainly the “Big Three” – has been subject to condemnation during the financial crisis. Their favourable pre-crisis ratings of insolvent financial institutions like Lehman Brothers gave rise to better scrutiny and surveillance of the agencies’ work. Last year, Standard & Poor’s rating agency reached a €1.5 billion deal with the US over a lawsuit related to misconduct.

The single rating agency still holding a tough line on Portugal’s investment grade is the Canadian DBRS. On October 21, the agency is due to revise Portugal’s BBB (low) rating to a stable outlook. Confidence seems building up, as Portugal saw its ten-year bond yield drop since last June after Finance Minister Mário Centeno’s interview to Bloomberg.

“I heard very positive comments” said Centeno after a lunch meeting with DBRS last Friday October 14 in Washington. “Basically the position they have is that they feel very comfortable about our fiscal position, which they labeled ‘very strong.’ Of course, our expectation is that they will not change the outlook or the grading that we have.”

Moreover, PM António Costa’s official visit to China has also positively boosted the increase of confidence in the markets. In Beijing, Costa and Chinese Premier Li Keqiang signed eight agreements covering areas such as energy, healthcare, infrastructure and culture. Portugal is currently China’s fourth largest investment destination in Europe after the UK, Germany, and France.

Russia strikes strategic pipeline to Europe

Article published in Cafebabel

Vladimir Putin and Recep Tayyp Erdogan during the G20 summit in Antalya, Turkey, 2015. © Flickr G20 Turkey 2015

Russian president Putin and his Turkish homologue Erdoğan enhanced bilateral cooperation after signing a deal on the Turk Stream undersea pipeline, during the World Energy Congress, in Istanbul. With this move Russia will strengthen its position in the European gas market. The pipeline has an estimated budget of $12.7 billion and will run through the Black sea turning Greece into Europe’s energy hub.

"The new route will provide for European fuel needs, and would allow Greece to become one of the main power distribution centers on the continent, and could help attract significant investment into the Greek economy," Putin said at a joint news conference with Greek PM Alexis Tsipras.

"Today has been a full day with President Putin of discussing Russia-Turkish relations. I have full confidence that the normalization of Turkish-Russian ties will continue at a fast pace," Erdoğan said.

Energy is a highly sensitive issue for Europe and Russia. Whereas the European Union relies on the Russian energy giant Gazprom for about a third of its supplies, Moscow, in turn, earns significant revenue from selling gas to the old continent.

Europe’s energy dependence

Since Russian’s invasion in Ukraine in March 2014, the EU has been trying to diversify its energy sources and ultimately lessen its dependence on Moscow. In fact, the South Stream project – a similar pipeline intended to carry gas through Bulgaria bypassing Ukraine - was canceled in 2014 after divergences between Russia and the Union.

According to Eurostat, data from 2015 reveals Norway as the main natural gas exporter  (29.9%) into the European Union. Russia accounts for 16.7% of the exports while Ukraine provides 15.0% of natural gas and 12.27% runs from Belarus. Denmark and the Netherlands are the only net exporters. As for the level of energy dependency, in 18 member states is higher than 90%.

Nevertheless, the discrepancy on Russia’s gas reliance amongst Member States is substantial. Countries like Estonia, Latvia, Lithuania, Finland and Czech Republic are highly exposed to disruptions of gas supplies.  On the other hand, Portugal, Sweden, Belgium and Denmark have the capacity to cope with gas interruptions from Moscow.

Putin has long been using Russia's abundance of natural gas as a leverage to steer diplomatic relations. | Flickr ©Agustin Lapajufker

Concurrence overseas

However, European liquefied natural gas (LNG) demand is rising as domestic natural gas production is falling. Europe’s LNG imports climbed by 16 % in 2015 compared to a year earlier. In April 2016, Portugal was the first European country receiving a US shipment carrying LNG.

Nevertheless, Jonathan Stern of the Oxford Institute for Energy Studies believes that the “U.S. LNG supply to Europe may have strong geopolitical symbolism, but its current volume impact will be negligible, until the big volumes come on stream in 2018-19, and cargoes will probably go to higher value markets in Latin America and elsewhere,” said Stern in an email to Bloomberg.

Diplomatic relations

The pipeline business agreement has suddenly improved diplomatic relations between Moscow and Ankara. Nearly a year ago, in November, Turkey shot down a Russian warplane close to the Syrian border triggering tension and even speculation over the Kremlin’s reaction. Putin responded with economic sanctions and bans, which have partially been lifted with the deal.

Besides, Turkey and Russia differ greatly on the geopolitics of the Syrian war. Russia is supporting Assad’s forces while Turkey, fearing the rise of a Kurdish state near its territory, is backing the rebels.

The crisis in Syria has reached drastic humanitarian consequences with the city of Aleppo under siege. However, there is a common point of agreement between the two leaders: humanitarian aid must reach the besieged town. "We have a common position that everything must be done to deliver humanitarian aid to Aleppo. The only issue is... ensuring the safety of aid delivery," said Putin.