Bailout requested - what now?

Bailouts are not the only thing the Portuguese and the Irish have in common. Both peoples can be darn stubborn. That is sometimes a beneficial trait, but it was somewhat embarrassing watching the former prime minister, José Sócrates, having to announce on television last night that Portugal needs a financial rescue package. He had spent months digging his heals in, saying such a measure was neither needed nor wanted. He was one of the very few people in economic circles who didn't think it inevitable.

What now? Details of the bailout have yet to be discussed. The request will be processed “in the swiftest possible manner, according to the rules applicable,” says the president of the European Commission, Manuel José Barroso. As a former Portuguese prime minister himself, Barroso said he had “confidence in Portugal's capacity to overcome its present difficulties.”

That is easy enough to say, of course. Now that the country's debt crisis has spiralled out of control, the Portuguese government will have to agree to tough austerity targets in return for a bailout. But who are the decision-makers going to be in the negotiating process? The country only has a caretaker government at present. The general election is still eight weeks away.

Greece needed 110 billion euros; Ireland needed 85 billion. Portugal may need a bit less, but it could be as much as 75 or 80 billion – not that a few billion here or there makes much difference to your average Portuguese man or woman who earns less than a thousand a month and can't possibly get their head around a million let alone a billion.

Even with a rescue package from the EU and the IMF on the way, the problem certainly doesn't end there. Portugal's economic, political and social problems are such that the country has a massive uphill struggle ahead.

And for the eurozone as a whole, things could get a whole lot worse. It remains to be seen if Portugal's bailout request satisfies the all-important bond markets. The fear is that the domino effect will now move to the very much bigger economy in neighbouring Spain.

Rising interest rates could have a devastating impact on Spain's trillion euro economy. The worry is that Spain, which, unlike Portugal, has suffered a huge decline in house prices and has unemployment running at far more than twice that of Portugal, may be too big to bailout.

This may be taking the doom and gloom scenario a bit too far. The Goldman Sachs Group are saying today that Portugal is likely to be the last euro country to seek an international bailout.

C.A.R. Hills - a writer troubled by love

I arranged to meet the acclaimed writer C.A.R. Hills in a beachside village in the eastern Algarve last weekend to learn more about why he had tried to hire contract killers to murder his mother's lover. I was also interested in why he had attempted to strangle a care worker. I knew he had served time for these crimes, but I was surprised to discover that he is now facing a recall to prison for breaching the terms of his parole licence by absconding to Portugal.

The one thing you can't fault Hills on is his openness and honesty. “In theory, I should feel remorseful about what I have done, but I don't,” he told me.

Charles Hills, as he is known outside the literary world, doesn't come across as a would-be murderer. Aged 55, physically he is short, overweight, unfit. Mentally he is the opposite: extremely alert, well-read and articulate. He smiles a lot, enjoys company and welcomes a bit of banter. Behind this façade, however, lies a lonely man who has always lived on his own and who suffers bouts of depression.

So how did he fall foul of the law? His story is one of surprising irrationality and ineptitude. Bizarrely, it is also a story of love. It is rooted in his love for his mother - an excessive, obsessive adoration that went far beyond the norm.

Maria José dos Reis was born into a peasant community near Mafra in 1923. After World War II she went to London and worked as a maid. She married an Englishman but it was an unhappy union. Charles was their only son. His father left his mother for another woman.

A bookworm throughout his childhood in Crawley, Sussex, Charles graduated from Oxford University and became a well-known figure in London literary circles. Under the name C.A.R. Hills he has written books, edited the journal PEN News and contributed to such publications as the Guardian, the New Statesman, and especially Prospect magazine.

According to Charles, his mother was “very independent, hard-headed, dynamic, lively and lovely.” Always smartly dressed, she ruled the Hills' household during the marriage. Having become a silver-service waitress, she stopped working in 1983 at the age of 60 and decided to return to Portugal.

Charles was 27 then. “I broke down and cried when I said goodbye to her at Crawley Station. I knew it was the beginning of a parting that would be for ever.”

Maria eventually bought a three-bedroomed house in Altura near the Algarve-Spanish border. On settling back in this country she could be rather snobby towards the Portuguese in an English sort of way, Charles said. Nonetheless, when she was well into her seventies she fell for the charms of a local gardener and handyman called Flávio Rosa. He was 30 years her junior, only two years older than Charles.

Although married with four children, Flávio moved in with Maria. Charles first learned they were having sex when his mother admitted it during a visit to London in 2000. It wasn't the sexual activity that bothered him. He became angry when his mother told him she had altered her will to give Flávio the right to permanently occupy the Altura house for the rest of his life. By that time Maria was suffering from Alzheimer's. Charles was convinced Flávio had exploited her confused vulnerability.

According to Portuguese law, as the owner's son, Charles would inherit his mother's house after her death. But he did not like the idea of sharing it with Flávio. Maria told Charles she had given Flávio the right to live in an upstairs flat. Later, on being allowed to read the will, Charles discovered that it was the whole house to which Flávio had living rights.

“The issue as I saw it was that my mother had tied me up in knots from which I could never escape. I wanted my freedom, and to be a whole person.”

For many years Charles lived alone in Clapham, London. It wa there that he went off the rails. The deaths of his mother in 2002 and father in 2004 worsened his delusional mental condition.

“The process of my gradual disintegration took about four years, during which I moved between England and Portugal and in many ways continued to live a normal life. Some people did not notice anything was wrong. Life in cities like London and Lisbon is an isolating process.”

There were, however, some very conspicuous and serious incidents. At times he raged. He tried to strangle the director of a social club for people recovering from mental illness. He admits he would have killed her had he been able to get both hands around her neck. He also tried to kill himself with an overdose. “As my mental health declined, I started fantasising that I was related to Goebbels. Soon it all became too much and I swallowed 100 pills,” he wrote while in Belmarsh prison.

He had already undergone psychiatric treatment by the time he decided to have Flávio killed. “I realised I couldn't do it myself. I became obsessed with finding a hitman.”

The first person he approached was a down-and-out drifter who disappeared with an up-front cash payment of £2,500. In 2006, indiscreet inquiries led to a series of meetings in London pubs with seeming 'professionals' and a £15,000 agreement: Flavio's death would look like and accident and his body would be dumped over the border in Spain.

Charles, who had always been broke and in debt, planned to fund the murder operation with a bank loan, dole money and help from the Royal Literary Fund. In the end no money was needed. He had been negotiating with undercover police officers.

In the Old Bailey in 2007, entirely in line with his open and honest character, Charles admitted his guilt to charges of soliciting to murder and grievous bodily harm. His seven-year sentence was reduced to five years upon appeal. With good behaviour he was paroled after serving two and a half. One of those years was so “unpleasant” he won't discuss it.

As if to emphasise just how absurd his criminal delusions had been, a Portuguese court overturned the will on the grounds that it had been made while Maria was suffering from dementia. In November 2009, Flávio was evicted.

After all he has been through, Charles doesn't like the house he has inherited and would like to sell it, but can't, not yet anyway. Apart from the state of the property market, the house is still in legal limbo. He is living off the proceeds of the flat he owned in Clapham and another near Lisbon.

Charles recently met his mother's lover again in Altura. The meeting was amicable, considering what had gone on before.

“I don't think I ever really hated Flávio,” he said. “It was just that he stood in the way of my freedom. When I saw him recently, when he came to collect his things, I didn't dislike him at all, nor, I think, did he me. We really got on very well and I helped him and his friends carry things to the van.”

Perhaps this attitude can be explained at least in part because Charles became a “liberal” Christian while in prison. “I'm not dogmatic, but I hold to the basics of Christianity,” he said.

Looking back on his murderous intentions, he does not see himself as a worse sinner than anyone else. “In theory I should feel remorseful, but I don't.” He conceded that perhaps it would be different if he had actually strangled the social worker, or succeeded in having Flávio eliminated.

But his days of wrong-doing are not yet over. Charles is now a writer on the run. After four months of regularly reporting to the authorities, he decided he'd had enough. He broke the terms of his parole licence and left Britain illegally.

Does he think he will be re-arrested and returned to prison? He doesn't know and doesn't seem to care. “It's in the hands of Jesus,” he told me with a shrug.

It is ironic that Charles' problems have stemmed not from hatred, but from love – his mother's love for him and his love for her. “She was certainly the most important person in my life. I think she spoilt me for love. I have never succeeded in finding any other love in my adult life.”

What of the future? Nine years after her death, Charles has come to terms with his mother's passing. The focus of his life now is not on his mother, nor the consequences of his infamy as Charles Hills, but on his quest for higher recognition as the writer C.A.R. Hills.

“I would like to leave Portugal, which has unhappy memories for me. I might travel a bit, and then buy a small house or apartment in Italy. I would need to find someone who is interested in my story and willing to pay a bit over the odds for my Portuguese house so that I could leave. Italy has something in common with Portugal, but the atmosphere is different, I do not think that I would find sadness there. Perhaps there, in a small city I already know, I can grow old gracefully, finish writing the story of my life, and at last learn how to love.”

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.