Costa’s corruption scandal: a set back for Europe’s Green Deal

By Scarlett Clarke

Portugal’s Prime Minister, Antonio Costa, has just resigned amidst the ongoing corruption scandal over lithium mines and hydrogen production in Portugal. His resignation comes after his residence was searched by investigators. Costa’s chief of staff, his personal adviser, and the mayor of the municipality of Sines, have all also been arrested.

The issue is an alleged “misuse of funds, active and passive corruption by political figures, and influence peddling.” It has been alleged that the Portuguese government have shown favouritism to Portuguese firms in awarding contracts for big lithium mining projects, as well as a green-hydrogen energy plant. It would seem that lobbying efforts and powers of political patronage have led to a lack of transparency.  This news comes off the back of a separate scandal involving the state-owned TAP airline regarding severance package and consequential appointment of TAP director, Alexandra Reis, to state positions.

Although the Portuguese Prime Minister has not been named as a suspect, Costa has resigned stating “the dignity of the functions of prime minister is not compatible with any suspicion about his integrity, his good conduct and even less with the suspicion of the practice of any criminal act.” However, it should be noted that Costa denies any wrongdoing, stating he has a “clear conscience.”

Prior to his shock resignation, Costa was seen as potential candidate to succeed Charles Michel as the head of the European Council. He impressed Europe with boosting Portugal’s economy and tourism. Having been appointed Prime Minister of Portugal in 2015 with a minority government, Costa won an outright majority in the 2022 election. 

The effects of this scandal will be felt beyond Portugal’s borders

Portugal’s President, Marcelo Rebelo de Sousa, has since dissolved Parliament and called a snap election. In doing so he has rejected Costa’s proposal of Mario Centeno, Portugal’s central bank governor, as his successor. This has now caused tensions between Centeno and the President. The proposal was seen to undermine the power of the President, with the appointment of prime ministers falling under presidential purview. It was initially Costa to whom Centeno owed his position as head of the central bank. Following Costa’s proposal, Centeno is now facing an ethics review by an independent watchdog. As it stands, the optics are not great. The President has called a general election for the 10th March.

The effects of this scandal will be felt beyond Portugal’s borders, with the scandal likely to negatively impact Europe’s efforts to go green. Portugal is seen as a central player in these plans due to their natural lithium reserves. With lithium being used in the production of electric car batteries, by 2050 the EU estimates its demand for the material, which is now being referred to as ‘white gold’ on account of its global demand, will be 57 times what it is today. The EU’s Green Deal goal of climate neutrality by 2050 requires the production of these green technologies at scale, meaning the demand for lithium is already intense.

Europe are keen for Portugal to start mining the metal because currently it is largely imported from Australia and China. The ability to source it within the EU would reduce reliance on external players. Recent events in the Russia-Ukraine conflict have highlighted this to be imperative as Russia restricted gas supplies in response to sanctions imposed against them over the war.  With reliable sources of fossil fuels within the EU lacking in number, Russia’s move was effective in exerting pressure and exposing their weaknesses. Consequently, there are fears China could use their abundance of raw materials and their key role in the production chain to similarly dominate the EU in the future.

Furthermore, Portugal is already receiving pushback from its citizens over the mining of these raw materials due to the fear that the local environment will suffer as a result. With many of the local community being farmers by trade, there are fears that the mining, albeit for green energy purposes, will be damaging for their livelihoods. 

Now facing accusations of corruption, the Portuguese government have intensified the opposition they face to move forward with these plans. Portugal is now entering a time of political upheaval, and all of Europe risks being caught in the storm.

Image: Web Summit via Flickr

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