Decisive days......Friday 25

Portugal's continued stubbornness in resisting a bailout is frustrating EU leaders who have reached agreement in Brussels on a comprehensive financial bailout fund that they hope will resolve Europe's debt crisis.

After months of negotiation, only details remain to be tidied up for a permanent new version of the European Stability Mechanism to help troubled eurozone countries.

Meanwhile, caretaker Prime Minister José Sócrates is sticking by his insistence that Portugal will not follow Greece and Ireland in seeking a rescue package.

It is generally accepted in Brussels, however, that it is only a matter of time before Portugal will have to bow to pressure and request outside financial help.

The political as well as economic mess Portugal finds itself in has overshadowed what was to have been an upbeat summit in Brussels.

In Lisbon, the outcome is awaited of discussions between President Aníbal Cavaco Silva and the six political parties represented in parliament on whether they would prefer to form a coalition government or go for an early election. The latter seems more likely, probably in May or early June.

An opinion poll published today showed that the lSocial Democrats would win an absolute majority if elections were held now.

Decisive days....Thursday 24

Today's EU summit meeting in Brussels has been thrown into some disarray by Portugal having neither a prime minister nor an elected government at a time of financial crisis.

The resignation of José Sócrates and the collapse of his Socialist government in Lisbon yesterday have left negotiators in Brussels unsure of who they should be negotiating with. Sócrates is attending the meeting but only as head of a caretaker government. A new general election in Portugal is weeks away.

Meanwhile, the question of a bailout for Portugal appears to be in limbo. The EU is willing to provide one of about €60 to €80 billion, but Sócrates and the Socialists are adamant they don't want or need it.

On resigning yesterday, Sócrates warned yet again of what he called “the profoundly negative consequences of seeking foreign aid."

No formal talks on a bailout have begun in Brussels, but EU member states are believed to be putting pressure on Portugal to ask for an assistance package amid concerns that continued resistance would endanger the stability of the 17-member euro zone.

It is thought a snap election could be held in May. “In the meantime, it's going to be a rocky few weeks” for Portugal, said Angel Gurria, the secretary-general of the Organisation for Economic Co-operation and Development, in a speech in Washington.

Decisive days...Wednesday 23

Prime Minister José Sócrates resigned after Parliament rejected austerity measures proposed by the minority Socialist government to help Portugal avoid having to seek an international bailout.

Sócrates and his party had long opposed a bailout because of the tough fiscal conditions it would bring.

Parliament's rejection of the proposals “has taken away from the government all conditions to govern," the out-going prime minister said in a televised statement after the vote. He said his government would remain in power in a caretaker capacity.

All of the opposition parties spoke against the government's austerity measures, which called for reduced pensions and state spending.

Finance Minister Fernando Teixeira dos Santos warned that a rejection of the government's plan "will provoke an immediate rise in the country's risk and immediate consequences in terms of credit ratings."

To have its  measures accepted and thus avert the collapse of the government, the Socialist Party needed 116 votes.The government has only 97 of the total of 230 seats in parliament.

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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Prince Charles and Camilla to visit Portugal at a time of turmoil

There was something surreal about yesterday's announcement from Clarence House in London that the Prince of Wales and the Duchess of Cornwall are to pay an official visit to Portugal this month.

A delightful diversion for Portugal's upper echelons provided by their oldest ally?  An unintentional red rag to the hoi polloi in a debt-ridden republic at a time of political, economic and social turmoil? Maybe a bit of both.

This latest royal tour, which begins in Lisbon on 28^th March, will also take Charles and Camilla to Spain and Morocco. Although it was probably arranged many months ago, the timing and objectives now seem unfortunate.

It's a ten-day freebie intended to fly the flag for Britain. To be fair, it wasn't the royal couple's idea. They are making the trip at the request of the British Government. The main themes are trade and investment promotion, as well as climate change and the construction of low carbon economies.

In Lisbon, the Duke and Duchess will celebrate long-standing co-operation between the Portuguese and British Navies, support British trade and investment opportunities and highlight the work of the sizeable resident British community. The President of Portugal, Aníbal Cavaco Silva, will host an official dinner in the capital. There will be a morning trip to the historic city of Évora in the Alentejo, north of the Algarve.

This will be Camilla's first official visit to Portugal. Charles has been here twice before. Both are much more familiar with Spain. Charles has been there 10 times already and after Lisbon he and Camilla will be received in Madrid by the Prince and Princess of Asturias. Later they will be wined and dined by King Juan Carlos and Queen Sofia, old chums of Charles.

In Morocco they will be the guests of King Mohammed VI who has recently announced constitutional reforms in the face of demonstrations broken up in Casablanca last weekend by riot police. Clarence House would not comment on security arrangements for the tour except to say they would be “closely monitored.”

To put things further into context, the announcement by Clarence House came just three days after the Socialist Government in Lisbon introduced more controversial austerity measures. They did so without informing President Cavavo Silva or the opposition Social Democrats beforehand.

The new measures include cuts in operational and administrative costs for the state-run health service. Labour costs and unemployment benefits are also to be reviewed at a time when unemployment is at a record level of more than 11%. Manuel Carvalho da Silva, head of Portugal's largest union, CGTP, said the new measures "will create an even more severe recession in a country that is already stricken by poverty.”

Portugal is now close to the brink of political collapse. An early general election seems inevitable and all the indications are that the Socialists will be replaced by the centre-right Social Democrats with an absolute majority in parliament.

Meanwhile, hundreds of thousands of frustrated young people, the so-called Geração à Rasca, took to the streets of Lisbon, Oporto and elsewhere last weekend to air their feelings of hopelessness and protest about abysmal pay and job prospects. Today the Metro train system in Lisbon was brought to a total standstill because of a strike over pay cuts. Tomorrow, truckers protesting about rising diesel prices are expected to stymie filling-station supplies. In the Algarve, further disruptive protests are planned against the introduction of motorway tolls seen to be harmful to tourism and other local busineses.

In some ways, of course, nothing much has changed. There are the haves and the have-nots. The travails of the real world are still a far-cry from the niceties of royal receptions.

Modern values:
Money tops today's worries
The American Business Insider website reminded its readers on Monday this week that “the Portuguese are the most fearful people in Europe.” The comment referred to a survey conducted in 2002 by the US-based National Bureau of Economic Statistics. The survey concluded, for example, that 71% of Portuguese were fearful of a world war, 87% were scared of epidemics and more than half had anguish about mad cow disease. As worriers, the Portuguese were rated top of the EU pile, more angst-riddled than the Greeks and much more so than the Irish. And that was long before the emergence of the current economic crisis!

Another often commented upon feature of the Portuguese psyche is a well-developed concern about honour. That came to the fore on Tuesday when the news agencies reported Portuguese Prime Minister José Sócrates as saying that if Portugal accepted a Greek or Irish-style bailout it “would lose its prestige and dignity.” It would no longer be able “to present itself to the world as a country that succeeds in solving its problems.”

While the media are often keen to emphasise and even exaggerate difficulties, Sócrates cannot be accused of that - not when it comes to the bailout issue anyway. For months he has been insisting that Portugal does not need or want a bailout. He has been at pains to downplay the problems that many analysts believe make a bailout inevitable. He did so again after meeting German Chancellor Angela Merkel in Berlin last week.

“I believe that the responsibility of any political leader is to have confidence in the Portuguese people, confidence in his country," Sócrates declared yesterday, with a summit meeting of 17 eurozone leaders scheduled for this Friday.

But do the Portuguese people have confidence in their prime minister? He has done much to try to stabilise the economic situation but he has not done enough, say his critics. They include a large section of the country's youth who are expected to join street protests in Lisbon, Oporto and other cities on Saturday. The organisers are hoping for a massive, non-partisan and peaceful turnout.

The idea for the protests originated with three friends meeting last month in a Lisbon cafe. João Labrincha, 27, Alexandre de Sousa Carvalho, 26, and Paula Gil, 25. They decided to use Facebook to mobilise and give voice to the country's disenchanted youth, the so-called 'lost generation'.

In a few weeks, without spending a single euro, the trio had spread the word among tens of thousands of young people who see little prospect of secure, decently paid employment – or any employment at all.

Protesters will be encouraged not only to put their reasons for protesting in writing, but to suggest solutions. The plan is to deliver the paperwork to parliament. “With greater social dialogue between politicians, employers and civil society, you can change the situation in which we live,” said one of the organisers.

President Aníbal Cavaco Silva seems to agree. In a speech today marking the start of his second term as Head of State, he pointedly reaffirmed his "great confidence" in the country's youth. He expressed his "profound conviction" that young people could make a crucial contribution to building a more developed and fairer country, and one with greater credibility internationally.  

Money may continue for some time to be a major worry, but mercifully just now there is much less talk of a world war, epidemics or mad cow disease.

Beware the Ides of March!

March is shaping up to be a key month politically, economically and socially in Portugal.

If the Portuguese went to the polls tomorrow, the present Socialist government would be humiliated. The latest opinion poll shows that the centre-right Social Democratic Party (PSD) would win an absolute majority of nearly 48 percent. The Socialists (PS) would be left trailing in second place with just 29 percent.

Although a general election is not scheduled until 2013, the recently re-elected President Aníbal Cavaco Silva has the power to dismiss the prime minister and dissolve parliament if he feels the situation is serious enough to warrant such a measure. The President, although in theory above party politics, is a former leader of the PSD and it was the PSD who backed his re-election campaign.

The small left-wing Left Bloc in parliament has proposed a vote of no confidence in the government in March. Of greater importance is that for many weeks now, PSD members have been calling for the resignation of Prime Minister José Sócrates if Portugal is forced to go cap in hand and ask for a bailout. Most analysts now agree that it is not 'if' but 'when'. It is likely to happen in March - or April at the latest.

Despite Portugal's stubborn efforts to avoid it, ever-spiralling debt levels will almost certainly force the government to concede and ask for help from the European stability fund. It is already under pressure from EU countries, especially Germany, to follow Greece and Ireland in seeking a bailout. German Chancellor Angela Merkel has asked Sócrates to go to Berlin for a meeting to discuss the issue on Wednesday, 2^nd March. This is believed to be by way of preparation for further discussions on the same subject during EU summit meetings scheduled for 11^th March and 24^th March.

The economic and political tightrope walking is going on amid growing social unrest about pay-cuts, job losses, dwindling employment prospects, increasing unemployment rates and higher prices.. A huge turn out is expected in the streets of Lisbon on March 12th to vent public anger and make demands, such as cuts in senior civil servant benefits.

There is disquiet throughout the country, not just Lisbon, and not just among the young. In the Algarve, the major economic activity, the region's 'life-blood' -  tourism - is struggling. On top of everything else, Easter, the traditional start of the summer season, is late this year.

Tourism is not going to be helped by the introduction of tolls on the A22 trans-Algarve motorway. The tolls have been denounced by just about everyone in the Algarve - but the government seems determined to impose them anyway – starting on 15th April, exactly a week before Good Friday.