‘People power’ and Portugal’s economy

The March 2 anti-austerity demonstrations thrust Portugal into the limelight far beyond Europe in newspapers as diverse as USA Today and the Times of India, the Jamaica Observer and the Bangkok Post.

Editors and readers would have been struck by the scale of the event (hundreds of thousands of protesters in more than 40 cities). The name of the main organisers had gutsy appeal: Que se Lixe a Troika (variously translated as ‘Damn’, ‘Screw’ or ‘F***’ the Troika).

The story was enlivened because it was a display of ‘people power’ coinciding with a visit to Lisbon by representatives of the European Commission, the European Central Bank and the International Monetary Fund. Demands that the government must resign and renditions of the song that echoed the Portuguese revolution of 1974 added an extra edge.

One of the more searing quotes came from Fabio Carvalho, a filmmaker taking part in the protest in Lisbon. He told Reuters:  “This government has left the people on bread and water, selling off state assets for peanuts to pay back debts that were contracted by corrupt politicians to benefit bankers.”

The opposition Socialist leader, António José Seguro was succinct in his appraisal: “It is time to stop austerity, to stop the impoverishment of the Portuguese and Portugal.”

All in all, a mixture of zestful organisation and heart-felt spontaneity resulted in street drama full of sound bites and powerful images reflecting social angst - yet free from the violence that has marred similar protests in other countries in the Mediterranean region.

But what did it achieve?

The main messages certainly did not go unnoticed by Prime Minister Pedro Passos Coelho, his centre-right government or the Troika lenders who insisted on austerity measures as a condition for the €78 billion bailout in 2011.

In denouncing the present government in general and its imposition of severe austerity in particular, the protesters have added impetus to the Movemento 12 de Março formed by activists in 2011 to “make every citizen a politician” in the promotion of democracy in this country.

The 2011 demonstrations helped bring about the collapse of the last Socialist government and there is now renewed determination to oust the present conservative administration.

Declared Armenio Carlos, Secretary-General of the CGTP, Portugal’s largest trade union: “Today it is clear that this government has no political legitimacy, has no moral legitimacy, has no ethical legitimacy to continue to govern, because any visit by any minister is followed with protests and demands for the resignation of the government. The government has become the problem that prevents the solution.”

Widely condemned as they are, Passos Coelho and his government have a comfortable majority in Parliament. National elections are still two years away.

After chairing a meeting in Brussels of EU finance ministers, Jeroen Dijsselbloem of the Netherlands told reporters that Portugal is “on track and performing well despite challenging macroeconomic circumstances.”

Portugal’s Minister of Finance Vitor Gaspar said at the end of the Brussels meeting that the crucial message for the protesters and others was that “all the efforts and the sacrifices made by the Portuguese….will be successful.”

Furthermore, the Wall Street Journal pointed out: “The government's commitment to the bailout conditions has encouraged international investors, enabling Portugal to sell its bonds in the market and increasing its chances of covering its financing needs when the bailout program expires in mid-2014.” But, the paper added, “growing political and social opposition to the austerity measures could threaten the government’s control of its finances.”

The EU finance ministers have since agreed in principle to requests by both Portugal and Ireland for extensions to the deadlines for repayments of their loans. Analysts believe the Troika may go along with the requests in order to avert the growing danger of further political turmoil. We will have to wait a little longer to find out.

Bloomberg this week quoted the EU’s Economic and Monetary Affairs Commissioner Olli Rehn as saying: “I hope we can conclude this work and give a strong message of confidence” when the ministers meet in Dublin in April.”

The April message is unlikely to satisfy the anti-austerity, anti-Passos Coelho lobby.  Meanwhile, it is far from clear what alternative economic recovery plan would be better and who would be better equipped to implement it.