Many people were surprised by the high level of optimism expressed by the President of the Azores Regional Government, José Manuel Bolieiro, regarding the state of the region. The coalition speaks of a “booming economy,” while the opposition criticizes the “deterioration of social, economic, and financial indicators.”

So, which side is in denial?

1 – THE FRAGILE “BOOMING ECONOMY” – Analyzing the arguments on both sides, the most surprising thing is that both are right.

The economy has indeed grown, convergence—albeit modest—has advanced, the SREA Economic Activity Indicator has been increasing for 34 consecutive months, there is full employment, and taxes have decreased. However, it is also true that public debt has risen sharply, resulting in significant delays in payments to suppliers, which compromises the private economy. Additionally, there is a deterioration in access to some health services, and public companies are more likely to become bankrupt.

In just four years, 14 guarantees were granted for bank loans, valued at more than 270 million euros. The financial liabilities of public companies now exceed €380 million. Added to this unbridled madness are the famous letters of comfort, which now total €92 million, 70 million of which are for SATA, this “enormous bottomless pit,” as Luís Montenegro says about TAP.

In other words, it’s the same story as in the days of Sérgio Ávila. Nothing has changed. In fact, the privatization of SATA is a real “case study.”

TAP was privatized in 2015, returned to state ownership within a few years, and is now being privatized again.

SATA has been going through this since 2018, with a first failed privatization attempt with Iceland Air, and now, seven years later, another attempt, initially unsuccessful and now resumed with the same consortium that “gave no guarantees” because of the requirements of the tender specifications. A soap opera that has already cost us hundreds of millions of euros.

From all this, it can be concluded that, between the PS and coalition governments, the state of the region is not very different.

The difference is that one was in power for 24 years and proved incapable of sustaining a development model that convinced the Azoreans, while the current coalition, in five years, has yet to confirm that it is capable of doing anything different, acquiring the same vices and abuses of socialist governance.

One has already been judged at the polls, and the other has not yet gained the confidence of voters to govern with the absolute majorities of the past.

The “booming economy” is based solely on tourism, while other sectors of activity, such as agriculture and fisheries, exhibit enormous weaknesses due to misguided investments and poorly designed strategic plans.

Basing economic growth on a single sector is a weakness, with the risk of being further threatened by what may happen to SATA. Either it closes down by order of Brussels, or the private companies that take it over will have to rationalize their operations, leading to a reduction in the number of seats available and, consequently, a decline in tourism. The strategy followed so far has not been very resilient, with many losses year after year. Therefore, it would be advisable to start negotiating with other airlines now to fill the gap that will be left by SATA, starting next year. Additionally, we have a strategic cycle that is at risk of being lost: the Recovery and Resilience Plan (RRP).

It is an instrument that has been poorly designed by the Region from the outset, not to mention the huge mess that was the “mobilizing agendas”—with no time for major implementations or adjustments, as we are currently witnessing. The intention was good, but almost all the money is allocated for consumption, with very little left for production. When it ends, we will no longer be able to consume as much, and we will not have strengthened production.

It is no surprise that private consumption, like public consumption, is rising in the Region (driven by tourism), as locals are rightly complaining about the rising cost of living, confirmed by high inflation in food products. A recent study revealed that the national minimum wage does not cover the basic expenses of an adult in almost all European Union countries, with Portugal among the worst. Given the higher cost of living in the region, imagine how an adult in the Azores can live on the regional minimum wage.

2 – THE DRAMA OF THE WELFARE STATE – It is impossible to look at the economy of the Azores without looking at the social side.

With an increasingly aging population and a significant demographic challenge, the Azores will face even more concerning consequences if they do not reverse this trend. The fact that we are already at virtually full employment—which is a good thing—also presents another problem: the economy cannot grow further if there is no more labor available.

Our demographic problem will impact our economy if we do not resort to alternative resources, namely immigration.

Unable to retain young talent, we have to deal with another problem that affects those who stay: high rates of toxic substance use, mental health issues, inability to access housing, and consequent dissatisfaction with quality of life.

A recently published international study by Global Flourishing found that among 200,000 people surveyed in more than 20 countries, the majority of young people between the ages of 18 and 29 reported dissatisfaction with life, linked to physical and mental health issues, a lack of purpose, financial insecurity, and poor-quality interpersonal relationships.

Experts confirm that young people are spending less time with friends than they did a decade ago, with a prevalence of social isolation attributed to increased interaction in digital media. Those who have children and grandchildren know what this is like.

3 – THE LEAP WE NEED TO TAKE – The Azores have missed many opportunities in the last two decades compared to the rest of the country.

Years of productive investment have been lost that could have boosted wealth creation on each of the islands and on the archipelago as a whole.

Instead, we have channeled the bulk of our resources into social policies (some essential, such as education and health) and into uncontrolled, unregulated, and indiscriminate subsidies.

We have abandoned far-reaching reforms in key sectors of our economy due to electoral cycles. Now, as we need to make strategic investments to achieve the leap we require, we lack sufficient resources and are seeking assistance from the national government.

We have projects that are fundamental to our productivity and competitiveness, which have been stalled for several years: ports, airports, more efficient transportation, and a more agile regional administration to leverage our development.

Work is needed on the ports of Ponta Delgada, Praia da Vitória, and Horta, as well as the expansion of the runways at Faial and Pico. Additionally, there is a need to break the oligarchic system of maritime freight transport, creating the promised ‘regional market’ that has yet to materialize. Even the urgent expansion of the Ponta Delgada airport is at a standstill, with the Regional Government’s notorious passivity in the face of ANA/VINCI’s contempt, which is moving forward with the expansion of the hub in Porto, investing 50 million euros, and forgetting the islands.

We need smart policies for different times.

In an aging region that struggles to retain its younger talent, we cannot continue with a closed economy, one that lacks innovation, relies on constant state intervention, offers low wages, and employs poorly qualified resources. According to experts, the economic scenario ahead is uncertain, and if we do not prepare for a possible cycle of external risks, the internal imbalance will be exacerbated.

We have already received the bad news that the next Community framework will bring less aid and that the most fragile regions, such as ours, will be the most affected. Added to this are investments in security and defense, which will further complicate our lives. Our resources are scarce, and we must make them more productive, with a better distribution of wealth. At the same time, we must accelerate the attraction of investment, which is the only way to retain talent that leaves universities and vocational training. Drowning in debt, with no money to pour into the economy, our region must set an example in curbing its spending.

The country is celebrating the end of budget deficits and a return to balanced accounts.

In the region, we are sinking into public spending, giving free rein to public companies, and continuing to hire friends and sycophants of the regime, all of which are abuses of long years of mistakes that we stubbornly refuse to correct. Now we are all going on vacation, and no one wants to feel the pain of the state of the region in the middle of a barbecue.

We will talk again in September.

Osvaldo Cabral is an emeritus journalist with over 40 years of experience covering the Azores. He was the director of RTP-A (the public television station) and the Diário dos Açores newspaper. He is a regular columnist for many newspapers throughout the Azpres and the Diaspora.

NOVIDADES will feature occasional opinion pieces from various leading thinkers and writers in the Azores, providing the diaspora and those interested in the current state of the Azores with insight into the diverse opinions on some of the archipelago’s key issues.

Translated to English as a community outreach program from the Portuguese Beyond Borders Institute (PBBI) and the Modern and Classical Languages and Literatures Department (MCLL).