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Portugal has questions to answer

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The Portuguese judicial system has attracted considerable criticism in recent years and demands for reforms have gained prominence, writes Colin Stevens.

Such calls have gained fresh momentum in recent months following the recent controversial decision to drop serious criminal charges against Portugal's former Prime Minister Jose Socrates.

On 25 May 2019, EPP’s candidate for new Commission president , German Manfred Weber wanted to apply sanctions against Portugal. Right-wing Paulo Rangel and Nuno Melo do not miss a chance to point out that it was a socialist government – at the time led by José Sócrates – that had asked for the intervention of the “troika”(European Commission, International Monetary Fund and European Central Bank). 

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A judge in Lisbon ruled that, more than six years after his arrest in a major corruption investigation, Socrates will stand trial, but only on lesser charges of money laundering and falsifying documents. In a decision that sent shockwaves through the country, the judge dismissed corruption accusations against Socrates as weak, inconsistent or lacking sufficient evidence, and noted that the statute of limitations had run out on some of them.

Rosa also dismissed tax fraud charges against Socrates, who will be tried on three counts of money laundering worth some €1.7 million and three others of faking documents related to service contracts and the purchase and renting of an apartment in Paris.

In a country notorious for its slow justice system, it had actually taken prosecutors three years after Socrates’ initial arrest to formally charge him with 31 crimes allegedly committed in the 2006-2015 period.

Those included financial crimes in an alleged scheme involving the disgraced former head of Banco Espirito Santo (BES), which collapsed in 2014 under a mountain of debt.

BES was the second largest private financial institution in Portugal. Run for nearly 150 years by one of Portugal's most wealthy and powerful families, the Espírito Santo family, its activities included tourism, health and agriculture.

But the bank failed and, in 2014, it had to be rescued and BES was subsequently split into a "good bank", renamed Novo Banco, and a "bad bank". Novo Banco was recapitalised to the tune of €4.9 billion by a special bank Resolution Fund which included €4.4bn from the Portuguese state. It is not known if NB is still receiving money from the Portuguese state.

On 25 January 2019 a letter from Ana Gomes MEP claimed that the BES resolution was steered by the EC and the Troika, so that Portuguese taxpayers would pay, and continue to pay to Lone Star up to €3.9 billion 

But this did little to restore confidence and Novo Banco would later cut 1,000 jobs to help to reduce operating costs by €150 million as part of its EU restructuring plan.

Back in 2011 at the time of his arrest, a photo of Socrates in a police car on his way to face corruption questioning shocked many Portuguese.  Socrates resigned in the middle of his second four-year term in 2011 as an escalating debt crisis forced him to request an international bailout. At about the same time, Portugal’s then Interior Minister Miguel Macedo also quit following yet another investigation into alleged corruption linked to the allocation of residence permits.

So, what do these and other scandals,  such as Mario Centero’s elevation to the post of Governor of the Bank of Portugal in July 2020, tell us about the state of Portugal’s justice system?

Well, the  original indictment accused Socrates of playing a pivotal role and receiving millions of euros in a scheme involving the disgraced former head of the Espirito Santo banking empire. BES may have since ceased to exist but only after its demise inflicted billions of euros in losses on taxpayers and shareholders and with their former top brass having been accused of other crimes in separate investigations.

It was not the first time Socrates, now 63, had found himself at the centre of unwanted headlines. He originally studied to become a civil technical engineer, but that career ended with his dismissal for allegedly shoddy construction. In 2007, a scandal blew up over whether he had ever really got a proper degree. Among his other low points, he fell under suspicion for activity while he was Minister for Environment in 2002, and approved a licence to build a giant mall outside Lisbon, partly on supposedly protected land. Socrates was the object of allegations that illegal payments were made. That corruption case was eventually dropped.

Way back in 2014 Transparency International said the justice system in Portugal was “bottlenecked” with its report adding that inquiries related to the economy, finance and corruption had resulted in very few indictments, let alone prison sentences.

“There is a big problem of lack of efficiency of justice,” it concluded.

According to the latest EU Justice Scoreboard from 2017, Portugal is amongst the EU countries with the highest number of pending civil and commercial cases, with 12 cases per 100 inhabitants, against just 2 in France and 6 in Italy. In recent years alternative means of dispute resolution, such as arbitration, have mushroomed due to the lack of reform and investment in the legal system.

Despite this, little seems to have changed in the intervening years and, in the latest Corruption Perceptions Index of Transparency International, Portugal scored a lowly 62/100 and ranks 10th in the European Union and 30th globally.

Some 94% of Portuguese respondents to the 2020 Special Eurobarometer survey on corruption consider corruption widespread in their country (EU average 71%), and 59% of people feel personally affected by corruption in their daily lives (EU average 26%). As regards businesses, 92% of companies consider corruption to be widespread (EU average 63), and 53% of companies consider that corruption is a problem when doing business (EU average 37%).

The EU 2020 Rule of Law report on Portugal  says: “The Portuguese justice system continues to face challenges as regards its efficiency, in particular in administrative and tax courts.
- constraints as regards an effective anti-corruption prosecution result from a lack of resources and specialisation of the law enforcement bodies.”

MEPs are now weighing in to the debate with the EPP Group calling for a European Commission inquiry and action to be taken over serious allegations of an improper process by the Portuguese government concerning the appointment of the Portuguese Prosecutor to the European Public Prosecutor's Office (EPPO), which is tasked with fighting crimes against the EU budget.

“The misleading approach used by the Portuguese government to push their preferred candidate for appointment to the newly-formed EPPO is of grave concern. There are questions to be answered over the methods used and the legitimacy of the prosecutor’s appointment in light of this new information”, warned EPP Group Vice-Chairman, Esteban González Pons.

“We are requesting that the Commission President, Ursula von der Leyen, launches an immediate inquiry into this matter and takes whatever action is necessary to rectify the situation. We do not want to see the mistakes of the Portuguese government unfairly tarnish and damage EPPO at this crucial time. We have made our request in writing to the Commission President”, Pons confirmed, speaking on behalf of his MEP colleagues who co-signed the letter, Monika Hohlmeier and Jeroen Lenaers.

It is vital that the integrity of EPPO is protected, according to MEP Hohlmeier, Chair of the European Parliament’s Budgetary Control Committee, who adds, “The behaviour of the Portuguese Justice Minister risks the independence and credibility of the European Public Prosecutor’s Office. The Portuguese Government should withdraw the candidate, especially at the time when Portugal presides over the Council of the European Union. The selection of Mr Guerra was based on false arguments presented by the Portuguese government and made against the recommendation of the European selection panel."

Elsewhere, in an official  letter to the President of the European Council and the Prime Minister of Portugal - the country that holds the Council presidency - Renew Europe requests an immediate public clarification about this appointment. It must be stated if there has been political interference, then all the information provided about the candidate must urgently be confirmed. If the legitimacy of the appointment fails to be verified, Renew Europe will ask for a debate on this issue during the next plenary session and do not rule out calling for an independent enquiry. 

Renew Europe President Dacian Cioloș, says, “If the reports are correct, then the Council has chosen to appoint a candidate going against the recommendation of the independent selection panel possibly based on false information and for political reasons. In doing so, the Council has potentially jeopardised the functioning of the EPPO.

Prosecutors and judges have intensified a campaign against corruption in a country notorious for its flawed justice system but the Socrates case and such findings will make depressing reading for those who say little has changed, not least for the independence of the judiciary and access to justice for the poor.

In 2016, Joao Costa, director of metal-parts manufacturer Arpial, said, “Justice works terribly, never has worked and I doubt it ever will.”

Today, some judges and entrepreneurs in Portugal say the system was never really fixed and a deeper analysis of case-load data shows it has improved less than the official statistics suggest.

Belgium

Cars and pavements washed away as Belgian town hit by worst floods in decades

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The southern Belgian town of Dinant was hit by the heaviest floods in decades on Saturday (24 July) after a two-hour thunderstorm turned streets into torrential streams that washed away cars and pavements but did not kill anyone, writes Jan Strupczewski, Reuters.

Dinant was spared the deadly floods 10 days ago that killed 37 people in southeast Belgium and many more in Germany, but the violence of Saturday's storm surprised many.

"I have been living in Dinant for 57 years, and I've never seen anything like that," Richard Fournaux, the former mayor of the town on the Meuse river and birthplace of the 19th century inventor of the saxophone, Adolphe Sax, said on social media.

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A woman works to recover her belongings following heavy rainfall in Dinant, Belgium July 25, 2021. REUTERS/Johanna Geron
A woman walks in an area affected by heavy rainfall in Dinant, Belgium July 25, 2021. REUTERS/Johanna Geron

Rainwater gushing down steep streets swept away dozens of cars, piling them in a heap at a crossing, and washed away cobbles stones, pavements and whole sections of tarmac as inhabitants watched in horror from windows.

There was no precise estimate of the damage, with town authorities predicting only that it would be "significant", according to Belgian RTL TV.

The storm wreaked similar havoc, also with no loss of life, in the small town of Anhee a few kilometres north of Dinant.

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Czech Republic

NextGenerationEU: European Commission endorses Czechia's €7 billion recovery and resilience plan

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The European Commission has today (19 July) adopted a positive assessment of Czechia's recovery and resilience plan. This is an important step towards the EU disbursing €7 billion in grants under the Recovery and Resilience Facility (RRF). This financing will support the implementation of the crucial investment and reform measures outlined in Czechia's recovery and resilience plan. It will play a key role in helping Czechia emerge stronger from the COVID-19 pandemic.

The RRF is at the heart of NextGenerationEU which will provide €800bn (in current prices) to support investments and reforms across the EU. The Czech plan forms part of an unprecedented co-ordinated EU response to the COVID-19 crisis, to address common European challenges by embracing the green and digital transitions, to strengthen economic and social resilience and the cohesion of the Single Market.

The Commission assessed Czechia's plan based on the criteria set out in the RRF Regulation. The Commission's analysis considered, in particular, whether the investments and reforms set out in Czechia's plan support the green and digital transitions; contribute to effectively addressing challenges identified in the European Semester; and strengthen its growth potential, job creation and economic and social resilience.

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Securing Czechia's green and digital transition  

The Commission's assessment of Czechia's plan finds that it devotes 42% of its total allocation to measures that support climate objectives. The plan includes investments in renewable energy, the modernisation of district heating distribution networks, the replacement of coal-fired boilers and improving the energy efficiency of residential and public buildings. The plan also includes measures for nature protection and water management as well as investment in sustainable mobility.

The Commission's assessment of Czechia's plan finds that it devotes 22% of its total allocation to measures that support the digital transition. The plan provides for investments in digital infrastructure, the digitalization of public administration, including the areas of health, justice and the administration of construction permits. It promotes the digitalisation of businesses and digital projects in the cultural and creative sectors. The plan also includes measures to improve digital skills at all levels, as part of the education system and through dedicated upskilling and reskilling programmes.

Reinforcing Czechia's economic and social resilience

The Commission considers that Czechia's plan effectively addresses all or a significant subset of the economic and social challenges outlined in the country-specific recommendations addressed to Czechia by the Council in the European Semester in 2019 and in 2020.

The plan provides for measures to tackle the need for investment in energy efficiency and renewable energy sources, sustainable transport and digital infrastructure. Several measures aim at addressing the need to foster digital skills, improve the quality and inclusiveness of education, and to increase the availability of childcare facilities. The plan also provides for improving the business environment, mainly through extensive e-government measures, a reform of the procedures of granting construction permits and anti-corruption measures. Challenges in the area of R&D shall be improved by investment geared at strengthening public-private cooperation and financial and non-financial support to innovative firms.

The plan represents a comprehensive and adequately balanced response to Czechia's economic and social situation, thereby contributing appropriately to all six pillars referred to in the RRF Regulation.

Supporting flagship investments and reform projects

The Czech plan proposes projects in all seven European flagship areas. These are specific investment projects which address issues that are common to all member states in areas that create jobs and growth and are needed for the twin transition. For instance, Czechia has proposed €1.4bn to support the energy efficiency renovation of buildings and €500 million to boost digital skills through education and investments in upskilling and reskilling programmes for the entire labour force.  

The Commission's assessment finds that no measure included in the plan does any significant harm to the environment, in line with the requirements laid out in the RRF Regulation.

The arrangements proposed in the recovery and resilience plan in relation to control systems are adequate to prevent, detect and correct corruption, fraud and conflicts of interests relating to the use of funds. The arrangements are also expected to effectively avoid double funding under that Regulation and other Union programmes. These control systems are complemented by additional audit and control measures contained in the Commission's proposal for a Council Implementing Decision as milestones. These milestones must be fulfilled before Czechia presents its first payment request to the Commission.

President Ursula von der Leyen said: “Today, the European Commission has decided to give its green light to Czechia's recovery and resilience plan. This plan will play a crucial role in supporting a shift towards a greener and more digital future for Czechia. Measures that improve energy efficiency, digitalize public administration and deter the misuse of public funds are exactly in line with the objectives of NextGenerationEU. I also welcome the strong emphasis the plan places on strengthening the resilience of Czechia's health-care system to prepare it for future challenges. We will stand with you every step of the way to ensure that the plan is fully implemented.

Economy Commissioner Paolo Gentiloni said: “Czechia's recovery and resilience plan will provide a strong boost to the country's efforts to get back its feet after the economic shock caused the pandemic. The €7bn in NextGenerationEU funds that will flow to Czechia over the next five years will support a wide-ranging programme of reforms and investments to build a more sustainable and competitive economy. They include very sizeable investments in building renovation, clean energy and sustainable mobility, as well as measures to boost digital infrastructure and skills and the digitalisation of public services. The business environment will benefit from the promotion of e-government and anti-corruption measures. The plan will also support improvements in healthcare, including reinforced cancer prevention and rehabilitation care.”

Next steps

The Commission has today adopted a proposal for a Council Implementing Decision to provide €7bn in grants to Czechia under the RRF. The Council will now have, as a rule, four weeks to adopt the Commission's proposal.

The Council's approval of the plan would allow for the disbursement of €910m to Czechia in pre-financing. This represents 13% of the total amount allocated to Czechia.

An Economy that Works for People Executive Vice President Valdis Dombrovskis said: “This plan will put Czechia on the path to recovery and boost its economic growth as Europe gears up for the green and digital transitions. Czechia intends to invest in renewable energy and sustainable transport, while improving the energy efficiency of buildings. It aims to roll out greater digital connectivity across the country, promote digital education and skills, and digitalize many of its public services. And it places a welcome focus on improving the business environment and justice system, backed by measures to fight corruption and promote e-government – all in a balanced response to the Czech economic and social situation. Once put properly into practice, this plan will help to put Czechia on a sound footing for the future.”

The Commission will authorize further disbursements based on the satisfactory fulfilment of the milestones and targets outlined in the Council Implementing Decision, reflecting progress on the implementation of the investments and reforms. 

More information

Questions and answers: European Commission endorses Czechia's recovery and resilience plan

Recovery and Resilience Facility: Questions and answers

Factsheet on Czechia's recovery and resilience plan

Proposal for a Council Implementing Decision on the approval of the assessment of the recovery and resilience plan for Czechia

Annex to the Proposal for a Council Implementing Decision on the approval of the assessment of the recovery and resilience plan for Czechia

Staff-working document accompanying the proposal for a Council Implementing Decision

Recovery and Resilience Facility

Recovery and Resilience Facility Regulation

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Belgium

Death toll rises to 170 in Germany and Belgium floods

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The death toll in devastating flooding in western Germany and Belgium rose to at least 170 on Saturday (17 July) after burst rivers and flash floods this week collapsed houses and ripped up roads and power lines, write Petra Wischgoll,
David Sahl, Matthias Inverardi in Duesseldorf, Philip Blenkinsop in Brussels, Christoph Steitz in Frankfurt and Bart Meijer in Amsterdam.

Some 143 people died in the flooding in Germany's worst natural disaster in more than half a century. That included about 98 in the Ahrweiler district south of Cologne, according to police.

Hundreds of people were still missing or unreachable as several areas were inaccessible due to high water levels while communication in some places was still down.

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Residents and business owners struggled to pick up the pieces in battered towns.

"Everything is completely destroyed. You don't recognise the scenery," said Michael Lang, owner of a wine shop in the town of Bad Neuenahr-Ahrweiler in Ahrweiler, fighting back tears.

German President Frank-Walter Steinmeier visited Erftstadt in the state of North Rhine-Westphalia, where the disaster killed at least 45 people.

"We mourn with those that have lost friends, acquaintances, family members," he said. "Their fate is ripping our hearts apart."

Around 700 residents were evacuated late on Friday after a dam broke in the town of Wassenberg near Cologne, authorities said.

But Wassenberg mayor Marcel Maurer said water levels had been stabilising since the night. "It's too early to give the all-clear but we are cautiously optimistic," he said.

The Steinbachtal dam in western Germany, however, remained at risk of breaching, authorities said after some 4,500 people were evacuated from homes downstream.

Steinmeier said it would take weeks before the full damage, expected to require several billions of euros in reconstruction funds, could be assessed.

Armin Laschet, state premier of North Rhine-Westphalia and the ruling CDU party's candidate in September's general election, said he would speak to Finance Minister Olaf Scholz in the coming days about financial support.

Chancellor Angela Merkel was expected to travel on Sunday to Rhineland Palatinate, the state that is home to the devastated village of Schuld.

Members of the Bundeswehr forces, surrounded by partially submerged cars, wade through the flood water following heavy rainfalls in Erftstadt-Blessem, Germany, July 17, 2021. REUTERS/Thilo Schmuelgen
Austrian rescue team members use their boats as they go through an area affected by floods, following heavy rainfalls, in Pepinster, Belgium, July 16, 2021. REUTERS/Yves Herman

In Belgium, the death toll rose to 27, according to the national crisis centre, which is co-ordinating the relief operation there.

It added that 103 people were "missing or unreachable". Some were likely unreachable because they could not recharge mobile phones or were in hospital without identity papers, the centre said.

Over the past several days the floods, which have mostly hit the German states of Rhineland Palatinate and North Rhine-Westphalia and eastern Belgium, have cut off entire communities from power and communications.

RWE (RWEG.DE), Germany's largest power producer, said on Saturday its opencast mine in Inden and the Weisweiler coal-fired power plant were massively affected, adding that the plant was running at lower capacity after the situation stabilized.

In the southern Belgian provinces of Luxembourg and Namur, authorities rushed to supply drinking water to households.

Flood water levels slowly fell in the worst hit parts of Belgium, allowing residents to sort through damaged possessions. Prime Minister Alexander De Croo and European Commission President Ursula von der Leyen visited some areas on Saturday afternoon.

Belgian rail network operator Infrabel published plans of repairs to lines, some of which would be back in service only at the very end of August.

Emergency services in the Netherlands also remained on high alert as overflowing rivers threatened towns and villages throughout the southern province of Limburg.

Tens of thousands of residents in the region have been evacuated in the past two days, while soldiers, fire brigades and volunteers worked frantically throughout Friday night (16 July) to enforce dykes and prevent flooding.

The Dutch have so far escaped disaster on the scale of its neighbours, and as of Saturday morning no casualties had been reported.

Scientists have long said that climate change will lead to heavier downpours. But determining its role in these relentless rainfalls will take at least several weeks to research, scientists said on Friday.

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