“Portugal’s Scandal Involving Data Center Project Paves Way for Election”

Accident – Death – Obituary News : Bloomberg: Scandal Surrounding Portuguese Data Center Project Sparks Political Turmoil

A truck navigates through the muddy construction site in Sines, a coastal town south of Lisbon, where a massive data center is under construction. The towering decommissioned power plant and the silhouette of Portugal’s only oil refinery loom over the area, while the cranes of the deepwater port are visible in the distance. This ambitious project, powered by clean energy, is poised to become one of the largest data centers in Europe and a crucial part of Portugal’s plan to modernize its economy. However, it has also become the center of a scandal that has rocked the nation and led to an unexpected election.

The €3.5 billion ($3.8 billion) development is currently under investigation over allegations that government officials were influenced to expedite the planning stages of the project. Although the investigation could take years to conclude, the political repercussions have been swift and profound. Portugal, often associated with its booming tourism industry, property market, and digital nomad community, has not witnessed such a high-profile scandal since a former prime minister was detained for tax fraud a decade ago.

The scandal has exposed widespread discontentment among the public regarding an economy that lags behind once-poorer Eastern European nations, low wages, a sluggish legal system, and political cronyism. Antonio Costa, the outgoing Prime Minister, who was re-elected by a landslide two years ago, abruptly resigned on November 7 in the wake of the investigation involving the data center project and two lithium exploration concessions.

The upcoming election on March 10 will see Costa’s incumbent Socialists leading in the opinion polls. However, a surge in support for the far right, a large number of undecided voters, and the potential for disruption make this election a significant moment for Portugal, as noted by Antonio Barroso, the managing director at political advice firm Teneo.

The scandal began with a police raid on government offices and the subsequent arrest of Costa’s chief of staff. The CEO of Start Campus, the company responsible for constructing the data center, was also detained along with another executive. Although both individuals have resigned from their positions, no criminal charges have been filed against them.

Costa’s resignation was prompted by a statement from prosecutors suggesting that a Supreme Court inquiry could investigate whether he intervened to expedite certain procedures related to the projects. The Prime Minister vehemently denies any wrongdoing, arguing that governments need to attract investments, combat bureaucracy, and streamline licensing processes. Start Campus and Costa both maintain that the data center project adheres to all environmental regulations and is committed to maintaining the highest standards.

While the prosecutors have yet to find evidence of criminal activity, the police discovered envelopes containing cash in the office of Costa’s chief of staff. Although Costa has dismissed the aide and apologized on national television, he believes it is unlikely he will hold public office again due to the ongoing investigation.

The Socialists have chosen Pedro Nuno Santos, a former infrastructure minister, as Costa’s replacement. Santos aims to usher in a new era for the country and address the numerous challenges Portugal faces, including housing shortages, rising living costs, and controversies surrounding state-owned airline TAP SA.

Costa’s leadership has also faced criticism for relying on a small group of individuals, some with familial connections, to form his cabinets and teams. Luis Montenegro, the leader of the center-right PSD party, has accused the Socialist Party of exerting excessive control over the state and failing to address critical social and economic issues.

Sines represents both Portugal’s past and its aspirations for the future. Situated at the intersection between major energy facilities and a protected coastline, the town has historical significance as the birthplace of Vasco da Gama, the 15th-century explorer who sailed to India from Europe. Today, Portugal seeks to position itself at the forefront of technology and green energy.

While some locals, like Carlos Grulha, the manager of a restaurant near the town’s castle, have expressed optimism about the economic benefits brought by the data center and other new projects, the issue of affordable housing remains a pressing concern. Many worry that the influx of workers will exacerbate the shortage of affordable housing in the area.

Despite the controversy surrounding the data center project, Start Campus remains committed to the venture. Its shareholders, investment firms Davidson Kempner Capital Management LP and Pioneer Point Partners LLP, believe in the project’s potential. The company expects to create up to 1,200 direct highly skilled jobs and 8,000 indirect jobs by 2028. Located in a strategic position, the data center will be connected to networks of fiber optic cables linking Europe, the Americas, and Africa.

As the election approaches, opposition parties will seek to capitalize on the scandal and its aftermath. Meanwhile, Portugal’s future hangs in the balance, as the outcome of the election and the subsequent government formation will determine the country’s path forward..