General election two months away

Following the formal dissolution of parliament yesterday it was announced that the next general election in Portugal will be held on June 5.

In making the announcement, President Aníbal Cavaco Silva said: “I took the decision to call a general election given the clear degradation of the political situation, shown by the growing difficulty of the minority government and the opposition in agreeing on measures to overcome the economic and social problems Portugal faces.”

He called for a "sober, constructive and enlightened” campaign and said candidates should not make promises that cannot be fulfilled. It is not a time for "illusions or false utopias," he said.

The centre-right Social Democrats, the main opposition to the Socialist government under José Sócrates, say they are confident of winning a majority in the next parliament. This is in line with recent opinion polls.

The next government is expected to face an unprecedented economic crisis. The presumption of most analysts and commentators remains that Portugal will be forced to follow Greece and Ireland in seeking a bailout from the European Union and International Monetary Fund.

Portugal today sold 1.65 billion euros in an extraordinary sale of short-term bonds, but analysts said its high cost of borrowing was still likely to force it into an international bailout within months, according to Reuters.

"Revised budget figures for last year have added to Lisbon's woes as it faces making 12 billion worth of debt payments in April and June that investors speculate may push state finances over the edge," the agency reports.

Royal couple locked out of their limo

Compared with Portugal's other current problems, the one in Sintra today turned out to be easily solved, though somewhat embarrassing.

On the second day of their visit to Portugal, the Prince of Wales and Duchess of Cornwall were supposed to plant two roses in the magnificent rose garden at the Palace of Montserrat. For security reasons, this plan was adjusted and they just planted roses in a couple of pots next to the palace.

Diário de Notícias reports that as they were about to leave amid tight security, it became apparent that the car key had been locked inside the royal limousine. This caused great mirth among the 200 or so guests present. Charles and Camilla had to leave the palace in another car.

No doubt Lord Byron, who famously referred to Sintra as "glorious Eden", would also have been amused.

Charles and Camilla exude warmth during cool and wet reception

The Prince of Wales and Duchess of Cornwall were given a less than rapturous welcome at their first engagement in Portugal today, but it had much to do with the weather which, the Duchess later joked, they had "brought with them from Britain".

The few spectators awaiting their arrival at the 16th century Jerónimos Monastery got cold and wet. Many were pupils from the English-language St Peter's school.

The car carrying the royal couple came armed with umbrellas, but Camilla was wearing a lovely dark blue coat much better suited to a pleasant spring day. As it was, there was a chilly wind and it was pouring with rain. 

Despite the weather, those who spoke with the royals were taken by the genuine warmth of their personalities. In their chatty exchanges, both Charles and Camilla came across as very open and natural, said Lú Batley who took these photographs.

The royal couple placed a wreath at the tomb of the iconic Portuguese poet Luís Vaz de Camões at the monastery. The Duchess was presented with a posy of flowers by seven-year-old Ilona Verdon-Roe.

Later, the royal couple were guests of honour at a state dinner at Lisbon's Queluz Palace hosted by President Aníbal Cavaco Silva and his wife, Dr Maria Cavaco Silva. The 100 guests sat down to tomato soup, sea bass and a traditional Portuguese fig-based dessert. In a toast, Charles paid tribute to the long tradition of mutual respect and cooperation between the two countries.

This was the start of a 10-day tour of Portugal, Spain and Morocco, mainly to promote UK trade.

Decisive days....Saturday 26

An earthquake measuring 4.0 on the Richter scale shook the western Algarve this morning but caused no damage. It was a mild and untroubling event compared with the shattering problems of the past few days that seem set to continue well into the future.

The President of the Republic, Aníbal Cavaco Silva is expected to call for a snap election in late May or early June. This has been requested by all the political parties, including the centre-right Social Democrats (PSD).

The PSD leader, Pedro Passos Coelho, told the President he wanted an election as soon as possible. He said he was optimistic that his party would win an absolute majority.

The political turmoil has heightened concerns that Portugal will need an EU bailout. Even as EU leaders in Brussels agreed their comprehensive new plans aimed at calming markets and making the euro less vulnerable, Portugal's 10-year bond yields rose to 7.80 percent, a record high that shows investors fear the country might not be able to pay off debts that are coming due.

Portugal must make a large debt repayment in May, while the country is still in political limbo, and an even larger one in mid-June, probably shortly after a new government takes over from the current caretaker.

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.