Big week: Tuesday in Lisbon

Portugal's new government officially starts running the country today. The new prime minister, Pedro Passos Coelho and his 11-member cabinet will be sworn in by President Aníbal Cavaco Silva.

The government's most pressing task will be to implement the stringent terms of the EU/IMF €78 billion bailout agreement. But even before taking office, Passos Coelho has suffered the embarrassment of parliament rejecting his party's first choice of as leader of the assembly, Fernando Nobre, an independent.

"I am sad that Parliament decided not to take the step to select a true independent to head it," Passos Coelho said yesterday. Parliament will vote on an alternative candidate later today.

A spot of good news: Portugal's budget deficit continued to fall sharply last month from a year ago, according to the ministry of finance in Lisbon. Investors and authorities from the European Union and International Monetary Fund are obviously keeping a close eye on the figures. Last year, the country's deficit was 9.1% of gross domestic product. Under the terms of the EU/IMF bailout, Portugal is committed to cutting its deficit to 5.9% of GDP in 2011, to 4.5% in 2012 and to 3% in 2013.

The news is mostly bad, though. The professional services agency Ernst & Young is describing Portugal’s bailout as “a temporary oxygen balloon” . Other analysts say the €78 billion loan is just a short-term solution to cover upcoming deficit repayments. Portugal’s structural problems (weak competitiveness and low economic growth) remain unaltered.

Like the air temperature in the Algarve, which is forecast to soar in the next couple of days, the political climate in Portugal is about to hot up.

Big week: Monday in Luxembourg

Eurozone finance ministers meeting in Luxembourg have failed to agree on releasing a loan payout to spare Greece from default. There is talk of Portugal being dragged further into the mire because of Greece's problems.

Greece is awaiting €12 billion earmarked for July as part of the country's €110 billion bailout negotiated last year. But Europe's finance ministers are insisting that the Greek government first introduce laws to cut the country's deficit and sell state assets.

This demand comes amid mounting domestic opposition, including a three-day parliamentary debate over a no-confidence vote that could bring down the government of Prime Minister George Papandreou.

Said Luxembourg's Prime Minister Jean-Claude Juncker who is chairing the eurozone meeting: “We forcefully reminded the Greek government that by the end of this month they have to see to it that we are all convinced that all the commitments they made are fulfilled.”

The Greek crisis is expected to dominate the EU summit in Brussels on Thursday and Friday this week. Fear of further contagion remains high. Germany is increasingly seen as the vital bulwark against an uncontrolled spiral of default in Europe.

There is growing speculation in financial circles that the 17-nation eurozone will not be able to survive in its present form. There are suggestions that Greece could be forced to leave as early as 2013. Portugal and Ireland may follow. Of course, at this stage it is only speculation. 

Big week for Portugal and eurozone

It's the start of another big week in the midst of the current economic and financial crisis. Eurozone finance ministers are meeting in Luxembourg today and tomorrow. Portugal's new cabinet under Prime Minister Pedro Passos Coelho will convene on Tuesday. The prime minister will then attend a key European Union council meeting in Brussels on Thursday and Friday.

The new government here faces the massive initial task of navigating the country through what Coelho has referred to as two “terrible years” of deep recession and record unemployment.

At least the right-of-centre Social Democrats in coalition with the conservative CDS-PP party can look forward to a comfortable overall majority in the 230-member parliament. Coelho has kept to his promise and reduced the cabinet from 16 ministers under the previous Socialist administration to just 11 - four from the PSD, three from the CDS-PP and four independents.

One of the independents is Vítor Gaspar, the new finance minister. An economics professor, Gaspar has worked as a research director at the European Central Bank, led the European Commission's Bureau of Policy Advisers and most recently been a special adviser to Portugal's central bank. He will need all his experience and expertise in the daunting task he has taken on.

The main focus of the new government's work will be administering the tough and broad-ranging conditions of the EU/IMF rescue package, a consequence of a debt that had risen by the end of 2010 to €160 billion and a deficit for the year of 9.1 percent of GDP, more than triple the permissible EU rate first breached by Portugal back in 2002.

The meeting of EU finance ministers in Luxembourg is being dominated by the crisis in Greece, but they will also be taking stock of the Portugal's €78 billion bailout. Economic policy will again be top of the agenda in Brussels on Thursday and Friday. Warning that the ongoing debt crisis could spread to Italy and Belgium, Jean-Claude Juncker, who is chairing the eurozone finance ministers'' meeting, reportedly said yesterday: "We are playing with fire.”

In the light of the acute difficulties in Greece, one commentator said the other day: “Continuing to agree last-minute emergency measures to avoid the immediate collapse of a eurozone country is unlikely to create financial trust. And it is even less likely to create the required political trust to effectively tackle the crisis at its root. The EU heads of government and above all Merkel (the German Chancellor) need to take over the agenda and set out a credible narrative for a sustainable and prosperous eurozone or face the inevitable consequences.”

There has been an upsurge in fears about a possible collapse of the euro. Mind you, there has been talk of that ever since the common currency was introduced more than a decade ago. 

State of the nation on Portugal Day

June 10, Portugal's National Day honouring Luís Camões, who wrote the epic poem Os Lusíadas in celebration of the glorious 15th and 16th century explorations and achievements that brought the country such fame and wealth. How things have changed.

Saved on the verge of bankruptcy by an international bailout, Portugal today is a member of that group of countries humiliatingly referred to by international bond and currency traders as PIGS.

But not much has changed since last Sunday's general election in that the country still does not have a working government to get on with the job of administering the sweeping reforms demanded by the bailout conditions.

Urged by President Aníbal Cavaco Silva to start the process of forming a government as a matter of urgency, the Social Democrat prime minister-in-waiting, Pedro Passos Coelho, got around to opening formal coalition talks with the right-wing CDS-PP party on Wednesday. Even so, it's not expected he will be able to swear in a new cabinet for almost another two weeks. The hope is he will make it before a European Council meeting on June 23-24.  

Tax hikes, spending cuts and structural reforms are expected to follow. So are more job losses, strikes and public demonstrations. Today, a 24-hour strike by the staff of the national rail company has forced the cancellation of all passenger and freight services. 

Meanwhile, noting that money isn't everything, the Paris-based Organization for Economic Cooperation and Development (OECD) has produced a survey suggesting that Portugal has made significant progress over the last few years in improving the living standards of its citizens.

In a 'Better Life Index' survey covering its 34 member states, the OECD places Portugal 9th in terms of the balance between work and private life. In this regard, Portugal is way better off than Britain, for example, but well below Denmark, which always tops these sorts of lists.

In terms of employment, nearly 66% of people aged 15 to 64 in Portugal have a paid job. They work 1,719 hours a year, close to the OECD average. 67% of mothers are employed after their children begin school, suggesting, according to the orgnisation, that women are able to successfully balance family and career.

In terms of the life expectancy (79.3 years), environmental pollution, safety from crime and housing, the Portuguese fair reasonably well, but household earnings are less than the OECD average.

As to the quality of its educational system, the average student scored 489 out of 600 in reading ability according to the latest PISA student-assessment programme, lower than the OECD average. Only 28% of adults aged 25 to 64 have earned the equivalent of a high-school diploma, the lowest rate in the OECD, which stands at 72%.

The sense of community and civic participation in this country is only moderate, with 83% of people believing they know someone they could rely on in a time of need, lower than the OECD average of 91%.  Public trust in government is also low.

Only 36% of Portuguese surveyed said they were satisfied with their life, well below the OECD average of 59%.

Portugal swings to the right and braces itself for increased austerity

The pendulum swung even further to the right than predicted. It was the lowest turnout for the Sociatists of any general election in Portugal since 1987.

The number of abstentions yesterday was greater than the number of people who voted for the winning Social Democratic Party (PSD).

Abstentions totalled more than 40%. With less than 39% of the vote, the centre-right PSD will be able to form a government with an absolute majority in coalition with their traditional partners, the conservative CDS, who finished with nearly 12%.

Former Prime Minister José Sócrates stood down as leader of the Socialists who finished with just 28% having won the previous two elections, in 2005 and 2009.

The PSD leader Pedro Passos Coelho now has the task of overseeing tough, wide-reaching and highly unpopular reforms as laid down by the EU and the IMF in return for a three-year €78 billion bailout. Unpopular with the ordinary people, all the main parties supported the international rescue package.

Lower living standards and even greater hardships in one of western Europe poorest countries are now on their way. Tax hikes and welfare cuts are expected. It will be easier to hire and fire workers. And the EU/IMF are insisting on a raft of other measures which will plunge the country into recession for two years.

The new government has a clear mandate to impose this greater austerity. The Social Democrats will have 105 deputies in the 230-seat Parliament compared with 73 Socialists. The CDU will have 24.

Pedro Passos Coelho said last night his government would do everything in its power to overcome the great difficulties facing the country and not be a financial burden on Europe.


In the Algarve, the PSD won 37% compared with the Socialists' 23%. Of the nine Algarve deputies in the next parliament, four will be PSD, two Socialist and one each from the CDS, BE and Communist parties.

A general election devoid of joy

Disillusioned by politicians in general and knowing that hard economic times lie ahead whoever wins, Portuguese voters will go to the polls in Sunday's national election with little enthusiasm.

The new government will have little room to manoeuvre. It will have no choice but to abide by the EU/IMF bailout reform rules.

The most likely election result will be a coalition government formed by the centre-right Social Democrats (PSD) and the third strongest party, the conservative CDS. Opinion polls indicate the Social Democrats led by Pedro Passos Coelho will win more votes than the Socialists but not enough to be able to govern on their own.

The possibility of an inconclusive result fermenting a coalition involving the Socialists under former Prime Minister José Socrates is not being ruled out. It was the collapse of the minority Socialist government amid financial turmoil in March that led to this election.

Whatever the make-up of the new government, its main task will be to implement the tough and wide-ranging reforms demanded by the EU/IMF rescue package. These include increased taxes, deep cuts in spending and greater competitiveness.

In the election campaigning, none of the parties have been able to raise customary hopes of a better future. There is a strong perception that corruption, wealth and power, supported by a deeply flawed justice system, have brought this country to the verge of bankruptcy. 

The Bank of Portugal is on record as saying economic hardship will be particularly severe over the next two years. The young in particular are feeling deeply frustrated and are reportedly leaving the country in droves. Further strikes and street demonstrations can be expected in the weeks ahead.

Whatever the outcome this Sunday, there is unlikely to be much rejoicing in the land. 

Conman Ken on the run in the sun

A wily Welshman by the name of Kenner Elias Jones, a much convicted conman according to the BBC, is now believed to be operating in Portugal.

Charged with stealing thousands of pounds from an employer in the UK, Jones absconded from a crown court before his trial in the UK eight years ago. He has been on the run ever since.

Already convicted more than 60 times for theft, forgery and fraud, Jones has allegedly cheated several companies in Portugal.

Previously deported from Canada and the United States, he is wanted in Kenya where he is alleged to have debts of more than 100,000 dollars. He is said to have posed as a doctor in Kenya and to have administered medicines to children, even though he had no medical qualifications. It is claimed he also posed as a priest.

BBC Wales tracked him to Portugal and interviewed a travel agent in Palmela, south of Lisbon, who claimed Jones did not pay for tickets obtained for his family to join him in this country.

BCC Wales believe he is living in the capital but, of course, it is possible he has moved south to the Algarve and is trying to continue his 40-year criminal career here. 


For more, including images of Jones:
http://www.bbc.co.uk/go/em/fr/-/news/uk-wales-13607280