[Editor’s Note: This is the first entry in our symposium on the “The Euro-Crisis Ten Years Later: A Constitutional Appraisal.” The introduction to the symposium is available here.]
–Teresa Violante, Goethe University Frankfurt and Max-Planck Institute for Comparative Public Law and International Law
The story of how the Eurozone crisis was particularly harsh on Portugal is well known. Its most visible side concerns austerity policies particularly following the international loan agreed with the International Monetary Fund (IMF), the European Commission (EC) and the European Central Bank (ECB). As the government’s report on the execution of the Adjustment Programme claimed, «these were the years of the deepest and most wide-reaching reforms in the history of our democracy».
Poverty increased near the most vulnerable parts of the population such as children and youngsters. Despite the entrenched belief that the least-off had been spared to the harshest consequences, a recent study shows that it was the poor who were most severely affected: whereas the highest incomes suffered an average decrease of 13%, the 10% lowest incomes endured a reduction of 25%. General welfare and the provision of public services were also affected by increase in costs and cuts in their direct provision. Unemployment raised to the highest level registered under a democratic regime. From 7.6% in 2008 the figure skyrocketed to 16.2% in 2013 whereas the GDP decreased 7%. The budget deficit, on the contrary, decreased from 11% of the GDP in 2010 to 3% in 2017, when the Excessive Deficit Procedure against Portugal was finally closed.
The effects of the crisis are still unfolding.
Politically, the broad reaction to austerity on the left allowed for the formation of a political “arc of the Constitution” as opposed to the “arc of government” by means of an innovative parliamentary coalition. The first legislative elections following the implementation of the bailout programme (October 2015) were particularly fragmented and provided the opportunity to left radical parties to support, for the first time, a parliamentary coalition.
The new political solution has proved sustainable and Portugal is now featured as the “best student from the South” as Le Monde has recently stated. The Portuguese finance minister has even been elected President of the Eurogroup – what better way to show that the country is on a good financial track after the bailout and, at the same time, to prevent any “unsound” temptations?
The “arc of the Constitution” rhetoric was framed as a discursive reaction to hegemonic austerity. This leads us to another well-told story concerning the extensive and rich body of constitutional case law delivered on austerity measures enacted in accordance with the demanding rescue package. During the Eurozone crisis, the Portuguese Constitutional Court (PCC) rose to stardom by preventing or invalidating restrictive measures that were either directly requested by the MoU or enacted in order to abide with its goals. More than often this national court brought international and EU institutions to the brink of a panic attack. Debtor countries’ courts had never dared to push the integration process this far.
A reflection on the changes that the Eurozone crisis has triggered on the Portuguese constitutional system brings immediately to the table the topic related to the role of the PCC as the prime guardian of the Constitution.
Before the Eurozone crisis, the PCC was a secondary creature of the political system. The few empirical studies available show that social awareness of the court has been traditionally low. Moreover, a strong countermajoritarianism of the court, or a strong attitude as a veto player, have never been salient characteristics of this institution. Its existence has occasionally been contested but in relation to specific problems, such as regional issues or the concrete institutional design of constitutional review. As I have explained elsewhere, these episodic claims have not been framed as a typical contestation of the Court because of its alleged judicial activism.
This peaceful landscape was shaken by the crisis. After an initial phase when the judges showed a considerable self-restraint when reviewing restrictive measures regarding increase in taxation and cuts on public wages and pensions, the Court issued a strong alert in 2012, warning the legislature that no matter the pressures to decrease public expenditure it was time to look for more efficient options regarding the fair share of public burdens. From here on, the Court blocked further pay cuts on public workers and cuts in social benefits for unemployment and sickness. Permanent measures were also halted by the Court such as several provisions of an amendment to the Labor Code, a new framework on the dismissal of public workers and permanent cuts on social security pensions. At the same time, the judges cleared several restrictive measures of a temporary nature based on the financial emergency context. The most relevant ones were cuts on public monthly wages above 1.500 euros (between 3.5% and 10%) and retroactive taxation and surcharges on income tax which is bound to a constitutional principle of a single rate. The Court was also receptive towards structural reforms such as amendments to the Labor Law aimed at slashing pay costs and reducing the importance of collective bargaining.
The PCC’s reaction to austerity legislation was complex and simply claiming its activist nature runs the risk of telling just one part of the story. However, the Court signaled not only national politicians but also international and European institutions that the Constitution has an autonomous value that prevents a swift judicial endorsement of a political narrative on the inevitability of concrete austerity measures even if a financial rescue of a Eurozone country is at stake.
By doing so, the PCC confirmed its pedigree: as a constitutional court, it can interfere with political decisions even when high political and economic interests are at stake. The integration process and economic demands are not red lines for the PCC when it comes to upholding fundamental constitutional values such as the principles of equality and proportionality. This is the most remarkable effect of the Eurozone crisis on the Portuguese constitutional system: the empowerment of a traditionally shy Constitutional Court.
It is to soon to tell whether this is a temporary or a permanent change. Most importantly, we should inquire on the consequences that this empowerment of a relatively shy court can bring in the future.
The influence of a powerful constitutional court can be reduced in different ways. The most blatant ones concern the reduction of its jurisdiction, the direct interference with the appointment of judges or the refusal to implement judicial decisions. But before backlash is put on the table, under normal times other devices can be employed to gently domesticate courts. The most obvious one is not to request their intervention since courts usually do not act ex officio.
From 2016 onwards, an alignment of circumstances has prevented both legal and political litigants from taking significant cases to the PCC. For instance, two of the institutions that were key in bringing austerity cases to court (the President of the Republic and the Ombudsperson) are now held by individuals that publicly envisage constitutional litigation as a (very) last-instance mechanism and have thus far not initiated any proceeding near the Court (the President took office in March 2016 and the Ombudsperson in November 2017). Moreover, they have both publicly affirmed their restrictive approach to their powers to initiate constitutional control proceedings as they favor a more cooperative and dialogic approach with the legislature. The broad left coalition in Parliament is supporting the Government based on an anti-austerity narrative whereas the right-wing parties are naturally suspicious of a court that stroke so many blows against their policies in the past – we should not expect significant constitutional litigation from that side either.
The PCC has thus faced a significant decrease in abstract control requests. There are still contested matters where the Court has been asked to have its word (surrogacy motherhood, data protection and, more recently, the right to private property). But none of the new requests deals with budgetary or social security issues, workers’ rights, or protection of the most vulnerable individuals. This peculiar context is combined with a concrete review mechanism that does now allow for constitutional complaints nor incidental review at the request of other courts, and that entails complex and usually long-last judicial proceedings, where access to the Court relies on the initiative of the parties (or of the Public Prosecutor in fewer cases).
Will the Court remain a preferential forum for contestation of highly controversial political policies? Perhaps only the next crisis will tell. However, for the time being, this newly empowered Court is being smoothly cast aside.
Suggested Citation: Teresa Violante, I-CONnect Symposium on “The Euro-Crisis Ten Years Later: A Constitutional Appraisal”–Part I: The Eurozone Crisis and the Rise of the Portuguese Constitutional Court, Int’l J. Const. L. Blog, Feb. 20, 2019, at: http://www.iconnectblog.com/2019/02/i-connect-symposium-on-“the-euro-crisis-ten-years-later:-a-constitutional-appraisal”–part-i:-the-eurozone-crisis-and-the-rise-of-the-portuguese-constitutional-court
 C. R. Farinha, et al. Desigualdade do rendimento e pobreza em Portugal – As consequências sociais do programa de ajustamento. Lisboa: Francisco Manuel dos Santos, 2018, available at https://www.ffms.pt/publicacoes/grupo-estudos/1700/desigualdade-do-rendimento-e-pobreza-em-portugal.
 A. Araújo and P. Magalhães, “A justiça constitucional: uma instituição contra as maiorias?”, Análise Social, vol. XXXV (154-155), 207-246.
 T. Violante. “The Portuguese Constitutional Court and its austerity case law”, in: A. C. Pinto and C. Pequito (eds.). Political Institutions and Democracy and Portugal. London: Palgrave MacMillan, 2019, 121-143.