PORTUGAL TODAY

Here's to a happy and austere New Year

Another miserable week of tedious but crucial European economic manoeuvrings ended yesterday with Portugal's parliament approving its austerity budget for next year.

The budget contains a raft of tough measures aimed at sorting out the country's high debt and low growth problems. The hope is that they will restore market confidence and avoid the indignity of a bailout similar to those thrust upon Greece and Ireland.

It remains to be seen if the austerity measures quell alarm among investors and dampen speculation that Portugal is next in line to fall to 'contagion', the much-hyped European economic domino scenario.

The austerity measures officially approved yesterday are going to be felt by all in this country. Prime Minister José Sócrates admitted after yesterday's parliamentary vote that Portugal had "no alternative at all" but to accept them.

FT Deutschland said a majority of euro-zone states and the European Central Bank were leaning on Portugal to follow the example of Ireland and Greece in seeking a rescue plan from the European Union and International Monetary Fund.

Reuters yesterday reported a Portuguese government spokesman as saying: "This news article is completely false".

José Manuel Barroso, European Commission president and former Portuguese prime minister, was adamant that an aid plan for Portugal had neither been requested nor suggested.

"I can tell you that it's absolutely false, completely false," he told reporters in Paris.

PORTUGAL TODAY
Parliament to vote on austerity measures

Big day in Lisbon following Wednesday's shut-down. Parliament will vote on the Socialist government's plan to introduce highly unpopular austerity measures, including pay cuts for civil servants, lower welfare benefits and an increase in value-added tax to 23 percent.

If passed as expected, the measures will be introduced on 1^st January.

The vote comes the day after a lengthy European Commission report on the labour market shows that by working longer hours for the same money workers in Portugal have helped the country weather the current financial crisis better than some other member states.

Although unemployment stands at nearly 11 percent, the average hours worked per person has increased and this has boosted productivity.
The government hopes the austerity measures starting on 1^st January will help solve the country's debt crisis and quell speculation that Portugal will be next, after Ireland and Greece, to request an international bailout.

Prime Minister Jose Socrates insists that the economic situation in Portugal is very different to that in Greece and Ireland and that this country does not need a lifeline from the European Union and International Monetary Fund.

Yesterday, investors kept up pressure on Portugal amid fears that we could be the next victim of the current 'contagion' crisis. If Portugal succumbs, Spain is likely to be next. The focus may then shift to Italy.


ALGARVE HOTWIRE
The Russians may be coming

News that Britain's second biggest tour operator, Thomas Cook, has bought a controlling interest in the huge Russian travel company, Intourist, brings a ray of hope for an improvement in the number of visitors coming to the Algarve next year.

The deal is expected to enable Thomas Cook to meet the growing demand in Russia for holidays in the sun. Egypt and Turkey are likely to be the biggest beneficiaries, but the Algarve may pick up a significant amount of business.

More than six million Russians went on overseas packaged holidays last year. The market is expected to grow by a double-digit percentage in the coming years, according to a statement from Thomas Cook.

This is refreshing news in the wake of Thomas Cook's cancellation of package holidays to the Algarve this winter. They will not resume until April.

Alex Ellis, Britain's 'digital diplomat'

Alex Ellis, who is soon to move on from his post as British ambassador in Portugal, is not your average fuddy-duddy diplomat.

A BBC correspondent described Ellis as “our bicycling, open-shirted and youthful man in Lisbon.”

After three years as “an unfeasibly young” envoy, Mr Ellis is to return to London to take up the post of Director for Strategy within the Foreign and Commonwealth Office.

What makes him different from all of his predecessors is not only that he's a youthful cyclist; he's also a blogger. He has had a blog running in Expresso online since 2008. This was in response to an Expresso invitation. Unlike many people in high positions, he writes his own blogs – and he does so in Portuguese.

What he likes about blogging for Expresso is that it allows his messages to reach a much wider audience across Portugal than they would through the British Embassy website. (To view his blog, go to http://aeiou.expresso.pt/um-bife-mal-passado=s24971.

"I blog to change the brand,” he explained, "to reach a new audience, to learn myself, and to make people laugh."

At a conference in the UK earlier this year he revealed that his mother had asked him what exactly he did as ambassador. He told her: “If you go to jail we visit you – once!”

He was jesting of course but this reply inadvertently highlighted a bone of contention in some circles in the Algarve. Modernisation within the FCO during Ambassador Ellis' tenure in Lisbon has meant less personal attention to British nationals abroad who get into trouble with the law, and more focus on such things as efficiency and cost-cutting.

Ambassador Ellis, however, showed considerable concern for those caught up in the flooding and mud slides in Madeira in February this year. He flew to the island with a consular rapid reaction team to provide support to affected Britons.

He started his Foreign Office career with the UK team supporting the transition to multi-party democracy in South Africa following the release of Nelson Mandela. He was in Brussels while negotiations were going on to establish the euro. In Madrid he worked on EU and economic issues and then in London on the 2004 EU enlargement. Between 2005 and 2007 he was an adviser to José Manuel Barroso, President of the European Commission, on energy, climate change, competition, development, trade and strategy.

Having served as a junior member of the political team in the Lisbon Embassy in Lisbon between 1992 and 1996, he was an old Portugal hand when he arrived here as ambassador in 2007. And now another chapter in his rapid career rise is ending.

Last night, on probably his last visit to the Algarve, he was guest of honour at a British-Portuguese Chamber of Commerce dinner. Today he will attend a consular lunch to mark the recent appointments of Clive Jewell as British Consul to the Algarve and Miguel Sengo da Costa as British Honorary Consul in the Faro area.

When Alex Ellis relinquishes his post at the end of December. Joanna Kuenssberg O'Sullivan, counsellor and deputy chief of mission at the embassy, will hold the fort until a new ambassador arrives.

FOCUS
Deepening anxiety in the Algarve

Today's nationwide general strike is unlikely to do anything to dispel deeping public anxiety about unemployment, job insecurity, pay cuts and rising prices in the Algarve.

The prevailing mood among workers seems to be despondency rather than outright anger, a feeling of fatalistic pessimism rather than demonstrative outrage.

The mood had set in long before the Government announced its 2011 budget, which includes cuts in civil servants' pay along with a hike in value-added tax from 21 percent to 23 percent. These austerity measures are only part of the story.

Although the Government is taking the brunt of today's nationwide expression of dissatisfaction, it is only partly to blame. External factors have been at work.

From time immemorial, fishing and farming were the twin pillars of the Algarve's economy. Tourism and property development started taking over in the 1960s but were interrupted by the 1974 revolution.

Once democracy had become firmly established, tourism and property development greatly expanded. Boosted by Portugal's entry into the EEC in 1986, they quickly eclipsed the traditional sources of income and employment.

During the first six years of the new millennium the Algarve had never had it so good. Then came the crunch. The warning signs emerged in 2007. The storm broke in 2008. It worsened in 2009. The crisis has rocked us this year and will almost certainly continue throughout 2011.

Tourism has taken a bashing because of conditions in our main market, the UK. Suffering austerities of their own at home, British holidaymakers were insisting more than ever on value for money. The exchange rates put a lot of visitors off. The pound and the euro now have almost the same value. The competition from inexpensive destinations in eastern Europe is fierce. In some ways – golf for example – the Algarve is in danger of out-pricing itself. Fortnights of fun in the Algarve sun at little cost are a thing of the past.

For the first time in decades, major tour operators have discontinued winter flights, thus adding to the already alarming number of job losses and business closures in the tourism sector.

The slump in the property market is even worse. Construction companies, suppliers of building materials, estate agents, decorators, furniture firms, landscape gardeners and everyone else involved are having a very hard time in a once booming sector that is now virtually moribund.

The knock-on effects are being felt in all other sections of the community. Wth so many people out of work, worried about being forced out of work, or having no option but to accept lower incomes in the face of ever-increasing prices for everyday needs, it is no wonder there is anxiety out there.

Interestingly, a recent poll in the United States showed that the things disturbing Americans the most are the economy, the government and unemployment. A similar poll in Portugal might come to the same conclusion.

Today's general strike is focusing on the Government's new austerity measures. It will be an opportunity to let off steam, but what lasting good will it do? Is the strike in the country's best interests?

It is unclear if the motives of today's action are directed by objective reason, fairness, balance and public-spiritedness, or whether they are essentially selfish.
Are we talking about abuses of power, either by the big unions on the one hand, or by the big bosses and the state on the other?

Are the protestors dutifully obeying union demands, displaying admirable togetherness in adversity, or acting out of fear of losing their livlihoods upon which the well-being of their families depend? Perhaps all three.

The right to strike is firmly respected in Portugal and this was reiterated the other day by Prime Minister Jósé Sócrates whose Government is now in the firing line.

The most unpopular man in the country today is Finance Minister Teixeira dos Santos. He has been dismissive of today's strike. “Trade unions have called it, they have a right to do so, but that won’t change the government’s mind about what needs to be done,” he said during a recent press conference.

“The country’s financing capacity is at stake” and that fiscal consolidation will be “harsh and demanding” but it needs to be done, otherwise “the nation’s situation will be much worse than people imagine,” said the finance minister.

Of course the whole thing comes down to money. The strike itself is going to cost the country many millions of euros in lost productivity. It remains to be seen whether it will be worth it.

PORTUGAL TODAY

Shutdown expected in nationwide protest

The two biggest unions promoting tomorrow's general strike predict it will be massive.

The protest by public and private sector workers has been sparked by an unemployment rate of about 11%, increased taxation, cuts in social benefits and increased job insecurity.

Hundreds of flights have been cancelled. Public transport, schools, hospitals, government officees and local authority services are all expected to be affected.

The police are not allowed to strike but are said to be sympathetic to the walkout.

“Crazies” moving in on the debt crisis

It's much stuffier, but the Great Debt Crisis is a bit like Strictly Come Dancing, with all eyes on who's most likely to go down next.

“This country does not need any help,” declared Prime Minister José Sócrates yesterday. He was referring of course to speculation about a financial bailout in the wake of Ireland's acceptance of emergency funding from the EU and the IMF.

“What the country needs is to do what is necessary, to approve the budget, and to continue in its efforts." In other words, keep dancing.

Sócrates hoped Ireland's U-turn in asking for international help would end the uncertainty and contagion in financial markets.

"I think what was happening recently, was that Portugal was being hit by the lack of confidence over Ireland," Sócrates said. "I hope that the Irish government's decision will end this uncertainty and restore confidence to markets. There is no reason to have a lack of confidence over Portugal."

The Daily Telegraph quoted Claude Juncker, Luxembourg’s prime minister and chairman of the eurozone finance ministers’ group, as saying that “crazy” financial markets could now turn on Portugal and Spain.

Writing in the same paper, Ambrose Evans-Prichard noted that according to the OECD, Portugal will have a current account deficit of 10.3pc of GDP this year, 8.8pc in 2011, and 8.0pc in 2012. “That is to say, Portugal will be unable to pay its way in the world by a huge margin even after draconian austerity. This is the worst profile in Europe.”

Reuters news agency reported yesterday that Portugal had only a few months to pursuade markets it can avoid becoming the next domino to fall by folowing Ireland in seeking a bailout. "Its growth and fiscal outlook suggests it faces an uphill battle," said Reuters.

Le Monde thinks it is inevitable that Portugal will have to ask for outside help as has happened with Greece and Ireland.

INSIDE ALGARVE

Watch out for wobbly Wednesday

The nationwide general strike planned for Wednesday in protest against the Government's austerity measures is expected to cause a fair amount of chaos across the country. Among other things, Faro airport is likely to be brought to a standstill.

The strike has been called by the country's leading trade unions and could bring out tens if not hundreds of thousands of disgruntled employees.

A Faro airport spokesperson told me she would be unable to comment until tomorrow. Others seem to have a pretty good idea of what we can expect: total paralysis.

The announced intention of air traffic controllers to join the strike has forced the cancellation of many if not all of Wednesday's flights in and out of Faro.

Ryanair have cancelled 14 flights between Faro and Gatwick, Stansted, Liverpool, Dublin, Cork, Glasgow Prestwick, Frankfurt Hahn and Oporto.

Easyjet say they anticipate “some significant disruption” on flights to and from Portugal. “While the circumstances are outside of our control and are affecting all airlines, we do apologise in advance for any inconvenience caused and reassure you that we are doing everything possible to minimise the disruption,” say Easyjet.

If you booked through easyJet.com you will be able to rebook your flight free of charge. Normally this online service only takes a few minutes, but at very busy times it can take up to three hours.

Lisbon and Oporto are sure to be be affected too. Portugal's national airline, TAP, have advised passengers with reservations on any of their flights on Wednesday to re-book. British Airways of couse are all too familiar with cancelled flights.

The strike is likely to be felt right across the whole spectrum of public services.

What are the ethics of all this disruption and what is it likely to achieve? Your comments are welcome.

PORTUGAL TODAY

From Afghanistan to value-added tax

Portugal can today afford to pause for a moment of self-satisfaction having successfully hosted such a mighty gathering of world leaders and their momentous agreements on war and peace. Next week is going to be rather less glitzy and agreeable.

The NATO summit ended with all-round accord on an exit strategy in Afghanistan. NATO combat operations are to cease and the vast majority of the 138,000 international troops will have left Afghanistan by the end of 2014.

The other good news is that Russia has agreed in writing that it and the NATO nations pose no threat to each other. The old Cold War enemy has promised to co-operate on defence matters, particularly on the setting up of a ballistic missile shield.

Tomorrow is another day, of course, and fears have been expressed that a bailout in Ireland “may unleash market vigilantes on Portugal.” Unfortunately, even NATO could not cope with such an attack. In describing the dilemma on whether to seek an EU rescue plan, The Ecomomist quoted a Lisbon-based economist as saying: “Portugal does not want to ask for help, but it may have to.”

Tuesday will be a good day for us ordinary folk to get out and about and deal with normal daily chores because Wednesday could be problematic. Tens of thousands of public and private sector workers plan to stage a general strike in Lisbon and cities througout the country.

Organised by the biggest trade unions, the strike is in protest against the Government's austerity measures, which are designed to help solve the nation's economic woes. Many people doubt that cutting public sector wages by 5 percent, freezing pensions and raising value-added tax from 21 percent to 23 percent is the right way of going about it.