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The Costa Doctrine, a Conversation with the President of the European Council

Following your tour of the European capitals, which, in your words, allowed you to listen and reflect, how would you describe the current European context, and what are your priorities after a particularly difficult summer for the Union?

This tour was very important to me. I wanted to establish a dialogue and to listen to each head of state and government individually.

European unity is built by listening. That’s why this tour was a necessary step for laying out a shared road map for the new political season.

Two clear priorities emerged: defense and competitiveness. Europe stands by Ukraine and wants peace. At the same time, we also know that it is essential to develop our own defense capabilities more efficiently and quickly in order to guarantee our continent’s security.

The second priority is improving competitiveness.

We want a strong economy that allows us to increase growth, to be more competitive, and to preserve our social cohesion. This is a fundamental point. Beyond just diagnostics, I have noticed that there is real political will and that the multiyear finance framework will have a strong influence.

Last week Mario Draghi pointed out that Europe tends to confuse unity with complacency, and that the never-ending search for consensus serves as a pretext for inaction. How can we break the political deadlock and implement the priorities that you yourself consider urgent?

Mario Draghi’s report should be used as a bible.

Leaders recognize that we must implement the main points laid out by Mario Draghi and Enrico Letta.

We agree on the fact that we must become more agile by removing barriers that exist within the internal market, recognize that the price of energy remains a problem for our businesses, and that we must complete the capital market.

These three points are fundamental.

The Commission has already presented proposals for implementing them and is preparing new measures for the months ahead. We’re talking about simplification, simplification, and even more simplification.

I understand those who are demanding that we move even faster because the historical situation that Europe is living through requires it. Time does not stop and neither does our competition. But we must be honest about the complexity of our situation.

How so?

The process for decision making within our Union is not simple.

We are not a federal government.

We are a union of 27 member states, each with its own vision and political orientation. Add to that control of the European Parliament and the Commission. This combination of actors creates a complex machinery, but it’s the system that we have chosen to continue to move forward together while respecting our democratic diversity.

Aren’t you afraid that the Draghi and Letta reports will remain tucked away in a drawer somewhere?

No, because we don’t have a choice. Either we use them, or we are lost. The answer is therefore very simple: we must follow it.

When you were Prime Minister of Portugal, you spoke out in favor of a common European debt in order to respond to the Covid-19 pandemic, and you have since praised the results. Today the threat comes from Russia. Does European defense require a plan for common debt similar to that which was adopted during the Covid crisis?

This year we will primarily focus on financing as the debate on the new European budget will begin.

We have big ambitions which require a sufficient level of financing in order to achieve them. I think that European aid to Ukraine and the security and defense plan should not compromise other important areas for Europe such as agriculture and cohesion. The idea of doing more with less is very appealing in theory but rarely works in practice.

If we wish to achieve our goals and respond to our expectations, we must have the necessary financial tools at our disposal. Several options are possible, and I do not want to predict the result of these negotiations, but I want to make myself clear: we should not rule out any tool. None.  

The debate around issuing common debt doesn’t bother you?

No, it doesn’t bother me because in Europe we must be able to discuss everything in a calm manner, listening to everyone. Without dogma.

I understand perfectly well those who say that we cannot take on more debt if we don’t already have own resources for financing the cost of the debt already issued. This seems reasonable to me.

At the same time, I also can understand the arguments made by Isabel Schnabel, a member of the executive board at the European Central Bank, who has pointed out that, in order to have a true capital market, the list of European assets considered safe and liquid must be expanded.

Others are suggesting that greater liquidity would allow a reduction in the cost of European debt. There are, therefore, advantages to common financing.

We must reflect on this pragmatically and without dogma because we need a budget that fits the urgency and scale of the challenges we face.

Are there any taboos for António Costa?

No. We will listen to everyone in a pragmatic way, without dogma.

That is how we build unity.

There may not be taboos, but are there enemies? How would you characterize Vladimir Putin and his strategy in Europe?

The least that can be said is that he is showing clear imperialist ambition in the former Soviet space. Does he have further ambition? What we are seeing in Poland, Estonia, and Romania suggests a power struggle with Europe and NATO.

If Russia were to prevail in Ukraine, this would pose a great threat to Europe as a whole, to our security and our defense. And when I say “Europe”, I mean all of Europe.

This is one of the messages that I conveyed during my tour. We must not make the error in thinking that the Russian threat only concerns the Eastern countries. The reality is that it will affect all of us.

Do you think that the continent’s Southern countries are also all committed to European security?

I will tell you an anecdote.

In 2005, while I was serving as Portugal’s Minister of Internal Administration, the southern countries began to attract attention on the matter of immigration and the challenges it presented. At the time, immigration was considered a southern, more Mediterranean, problem.

Today we can see that that is not the case. It concerns all of us. Within a union the challenges of one become the challenges of others. The Russian threat is not limited by physical borders; it is also hybrid. It concerns Portugal, Spain, and Italy.

You mentioned the word “imperialism”. Some would say that imperialism has also reached the White House. Our Eurobazooka survey shows that a majority of Europeans consider the result of trade negotiations with the United States as a “humiliation” for Europe. You have said that you understand this frustration, but what should be the political response?

I understand this feeling, as well as the fact that certain photos and publications on social networks were not well received. But we must remain pragmatic and strategically analyze the current situation.

The United States is an historic ally of Europe, an important economic partner with a very powerful market for European businesses, and a country which maintains very strong ties with our continent, which have been forged throughout the decades.

Our goal is to stabilize this relationship.

We must view things within this context.

The same goes for NATO. We have all shown great creativity as evidenced by the coalition of the willing on Ukraine, which plays an important role. Is it easy? No, but we must do it in the current situation.

This is not the end of the story.

Should we understand that, despite this lopsided trade agreement, Europe does not intend to make it a model? Does accepting Trump’s demands this time around mean that Europe will give in again in the future?

I would like to highlight two points.

First of all, the negotiations with the United States were not only about trade. It was a triple negotiation: defense, Ukraine, and trade.

If trade had been the only topic, the approach would have certainly been different. If Ukraine had been the only topic of discussion, the negotiation would have also been different. And if the only matter had been maintaining relations with NATO countries, the negotiation would have probably been entirely different.

But I must emphasize that this was a negotiation on multiple fronts. In order to evaluate the result, it is important to understand this triple approach.

Whenever I hear that the agreement is lopsided, I think it’s important to understand that no other country obtained better results than us in their trade relations with the United States. This means that our relative competitiveness is greater compared to Japan, China, and the United Kingdom. Our conditions are identical, or even better.

One of the criticisms I have heard the most is that we didn’t impose tariffs on American products in retaliation. But this would have meant imposing a tax on our consumers and businesses. This would have been an economic misstep.

The tariffs imposed by the United States on European products will not be paid by European businesses, but by American consumers. These tariffs will have an impact on prices and inflation in the United States.  

Thanks to this agreement, we succeeded in putting an end to economic uncertainty (which was the most negative factor), maintaining the conditions of our businesses in relation to third countries, and preventing our consumers from paying the tax that tariffs would have represented.

In this triple negotiation, was there any consideration given to the United States’ meddling in Europe intended to bring about a regime change, as J.D. Vance’s speech in Munich clearly demonstrated?

All these elements were left to the side during negotiations. When the United States asked us to change our digital rules, we refused. That is not part of the trade agreement.

Whoever listened to J.D. Vance’s speech in Munich understands that today, the United States has different values from ours.

But we haven’t changed position. We will continue to protect our citizens with our rules against the social media oligarchy. Others have a different vision, which we respect, but we made our values clear.

You mentioned uncertainty. Do you believe that Donald Trump will respect the agreement and won’t change his mind in a month or in a year? Do you trust the American president?

What I can say is that, without this agreement, the uncertainty would have been both greater and more serious.

Do the quasi-structural instability of certain European countries and the intergovernmental difficulties that we just mentioned increase Europe’s political ineffectiveness? If so, how can it be remedied?

Democracies are much more effective than any dictatorship, even if their ability to react is slower. Effectiveness is not only measured in terms of speed. It is also important to take into consideration the form. Democratic and social consensus has and more lasting and positive impact on society.

But it is true that we are witnessing a major fragmentation of European politics.

Practically no government has a majority; we have governments made up of complex coalitions at the national level, a large coalition in the European Parliament, and the European Council has also wound up reflecting this fragmentation.

This implies a greater need for dialogue.

We are democracies and this result is the fruit of the free and democratic expression of our citizens. If we are to call ourselves democratic, we must learn to live with that.

Since becoming president of the European Council, meetings among leaders are much shorter and centered around policy matters. You’ve decided not to concentrate on the countries that block decisions, but rather to seek out agreements with the others. Hungary’s opposition is now only a footnote in the Council’s final decisions. Should Europe apply this method to all other decisions when unity is impossible?

This questions raises several points.

First of all, the responsibility of the 27 heads of state and government is to exercise their political leadership. This does not mean spending hours debating one word, whether to add it or to replace it with another one, or whether or not to add a comma to a paragraph of the Council’s conclusions. The important thing is to send a clear signal about the direction we wish to take.

This new approach allows us to have discussions which are more political and more intense.

Secondly, the meetings are shorter, but also more productive. During all meetings we have respected the agenda, all member states were able to speak, and we succeeded in advancing things. This is what I mean by political leadership.

If leaders are meeting together, it’s to advance major political matters. This is where unity happens.

This is my responsibility.

How is this responsibility put into practice?

I will never tire of seeking unanimity, but unanimity does not confer the right of veto.

The veto should not be considered a right.

Unanimity implies extra responsibility in order to arrive at an agreement of 27. When unanimity is not achieved, we mustn’t sink into paralysis. Quite the opposite; we must find creative solutions.

Since the beginning of the war in Ukraine we have reached unanimity on all the major issues, demonstrating creativity when necessary.

Is Victor Orban your greatest conundrum?

I have no problems with any of the leaders; I maintain good relations with everyone.

What truly concerns me is Ukraine: achieving peace, regaining our competitiveness, and giving it new momentum.

I ask about Orban because many consider him to be an obstacle to attaining these objectives. How can a Union be built with Viktor Orban at the negotiating table?

This question raises a fundamental debate about the future of the Union, which we will have to address when the time comes.

A few years ago, I presented what I believed should be the approach to guaranteeing our unity. The first thing to understand is that there exist different sensibilities as to the nature of the European Union. Some would like to see deeper integration, others want to remain as we are, and some would even like less integration than what we have achieved. In my opinion, we have the duty to respect all points of view. Living as a family is not always easy.

As I already stated, I had proposed a Europe conceived as a multifunctional building.

If Europe was a shopping center, some people would want to go to the cinema and do their groceries, all in the same place. Others would simply like to go to the cinema. The Union is a shared space in which each country can take advantage of this flexibility. I am not certain that requiring everyone to go in the same direction all the time is the most effective solution.

In reality, greater internal flexibility allows us to achieve a more effective unity by integrating those who desire more integration, while also respecting those who do not want that. Everything is a question of balance.

Today, France and Saudi Arabia are holding a meeting aimed at advancing recognition of the Palestinian state, joining several other European nations, including Spain and Belgium. What is your analysis of this development?

It is very important that the international community unequivocally declares that the two-state solution is the only way to guarantee peace and stability in the Middle East.

The initiative between France and Saudi Arabia is very important.

This week, we will be able to affirm that most of the Union’s member states recognize a Palestinian state. Some may only see a simple declaration, but it is a very strong and very clear political statement. The solution lies in the coexistence of two states.

Washington does not support this initiative. How do you explain the United States’ current position?

I do not wish to speculate. What I can say is that the European Union holds a clear position: we firmly and wholeheartedly condemn Hamas’ terrorist attacks; we demand the immediate and unconditional release of all hostages; and we wish to strengthen the Palestinian Authority. Our objective is to guarantee that the Authority gains effective control of the entire Palestinian territory so that the future of Palestine is democratic and free of the Hamas terrorists.

Europe’s position towards Israel seems to have changed these last few months…

Since the beginning, we have recognized Isreal’s right to its legitimate defense, including outside its borders. However, it is not clear that Isreal’s military action in no longer a matter of legitimate defense.

Words cannot describe the humanitarian tragedy that is happening in Gaza. Using hunger as a weapon of war is unacceptable. Israel must accept a cease fire, authorize the entry of humanitarian aid, and respect international laws in Gaza. It must also put an end to the illegal activity of settlers in the West Bank. Israel’s goal is to compromise the viability of a Palestinian state.

Some fear that the aim of the military operation in Gaza is to annex the Palestinian territory and displace its population. Without territory, there won’t be a Palestinian state. Is this Europe’s red line?

Yes. This cannot happen.

It is clear that, in military terms, Israel’s objective has either been an incredible failure, or something completely different than the destruction of Hamas. After two years of war, tens of thousands of deaths, and massive destruction in Gaza, Hamas still maintains its operational abilities.

There are two possible explanations for this situation: either the operation has been a failure because it did not succeed in destroying Hamas, or its true objective was something else.

What objective would that be?

The destruction of Gaza in order to make any peaceful existence with Palestinians in a sovereign state impossible.

The Spanish president, Pedro Sánchez, qualified the war in Gaza as a “genocide” and invited others to not be afraid of using this term, even if it does not enjoy unanimity. Is the difference in opinions within the European Council on this matter too great to overcome?

It’s an example of the difficulty that we run into in building a common position based on very different national sensibilities.

For months, it has been very challenging to establish a common position within the Council. During the last meeting, we were able, however, to reach an agreement condemning the blocking of humanitarian aid and demanding a cease fire. But the path to get there was very difficult. The Austrians, Czechs, Germans, and Hungarians have views which are very different from other member states. It is very difficult to achieve unanimity on feelings.

There is, however, growing political will and a shared awareness that the situation in Gaza is unacceptable.

What does this mean in concrete terms?

Germany, for example, has approved an embargo on exporting arms to Israel. The Commission also just proposed sanctions against two ministers and the partial suspension of its trade agreement with the country.

The Gaza issue will remain on the Council’s agenda.

Beyond the shared awareness, we must make decisions and demonstrate coherence in regard to Israel. It is the scale of these consequences that is at the heart of the current debate.

Eighty years after the Holocaust, antisemitism has returned to Europe and our history sadly shows that, once that fuse is lit, it is very difficult to contain. What measures should be taken to prevent a new rise in antisemitism in Europe?

We must fight against all forms of intolerance and discrimination. And we must do it within the framework of this conflict in particular.

Our actions have nothing to do with the Jewish community in Europe, the Israelis, or Israel.

Our actions concern the way in which the Israeli government is carrying out a military action that violates international and humanitarian law. It is unacceptable. At the same time, we must not conflate the Israeli government with Israel, with the Israeli people, or with European Jews.

We must be very clear on this matter.