• A lesson for new EU members on dealing with hard times

    Editorial by João Vieira, T&E board member Portugal is not normally the socio-economic laboratory of Europe, but a recent debate that has crossed traditional party-political lines shows that some lessons are gradually being learned that might be of wider relevance.

    When money is tight, as it is now, what you spend it on becomes an increasingly important judgement. Portugal had a plan to spend masses of money on transport infrastructure, including a new airport for Lisbon, high-speed rail network and new roads.

    But following criticism of the plan both by the conservative leader (in opposition) and by 28 leading economists from various political fields, including some former finance and economics ministers who said investing in transport as part of an anti-crisis plan made little sense economically, the socialist prime minister decided to postpone
    decisions in these investments.

    For the time being, further transport investments are ‘on hold’, and many people from various political fields believe they should be totally re-analysed.

    That in itself is nothing exceptional, indeed there are those who take a different view and argue for investment in transport infrastructure as a way of boosting employment.

    The significance lies in Portugal’s massive investments in transport in the 1990s, mostly in a dense road network and expansion of air-
    ports. The 28 economists said: ‘In the last decade, the Portuguese economy has had the worst performance for the past 80 years’ and they called for ‘an in-depth reassessment of the mega-public projects in the transport sector’.

    In other words, there an increasing perception that that the spending on transport has not brought the benefits that were initially expected, and that the country needs to re-think what it spends its money

    This is particularly relevant for the nations that have joined the EU this decade and are now benefiting from EU funds in a similar way to the way Portugal did in the 1990s. They should be looking at the problems Portugal is facing today and the picture painted by the 28 economists – so they do not repeat the same mistakes. The
    biggest mistake is to overestimate the benefits from new infrastructure and thus concentrate too much of EU money in transport while downplaying
    other areas such as education, research and development, social justice, etc.

    Many decisions on education and other social provision are not taken at EU level, but the EU could play a useful role in highlighting the lessons learned from past use of EU funds. If it does this, it is likely to conclude that investing in long-distance transport does not deliver the economic benefits, however ‘European’ it looks and however good a
    photo it makes when a prestige transport project is opened.