Tuesday, March 22, 2011

Decisive days: Portugal on the brink

Portugal's minority Socialist Government could fall tomorrow. This is likely if the opposition centre-right Social Democrats (PSD) vote, as expected, against austerity measures designed to ease the country's huge debt burden and stave off a bailout.

Deadlock emerged yesterday when the PSD under Pedro Passos Coelho again refused to back new measures, thus making it likely that Prime Minister José Sócrates and his government will resign. (Coelho is on the left, Sócrates on the right of this photo).

Resignation would thrust Portugal into political limbo pending an early general election. Political limbo would further complicate an economic crisis at the very time Portugal and other Eurozone countries are trying to build investor confidence.

The Social Democrats, who are virtually assured of winning the next election, agree that the country must take radical steps to reduce the country's debt. They agreed to previous tax increases and pay cuts, but say proposed further measures, such as freezing old-age pensions, would be deeply unfair to more vulnerable members of society.

Hundreds of thousands of protesters have made their feelings clear in recent weeks by taking to the streets and holding strikes. Further demonstrations are in the offing.

The current frenzy of activity relating to Portuguese affairs continues on Thursday with Eurozone leaders meeting for a two-day summit on problems facing the bloc and, in particular, its weaker members. Then Portugal will be faced with finding cash to meet April and May bond repayments amounting to almost €9.5 billion.

Into the maelstrom next Monday at the start of a three-day visit will step the Prince of Wales and the Duchess of Cornwall who, among other things, are hoping to promote British business interests in Portugal.

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