EU fiscal compact would limit the options of governments “forever”, says Portugal’s radical left.

The Left Bloc and Portuguese Communist Party said Thursday that the change to the Portuguese constitution implementing the new EU Fiscal Compact imposed ‘a rule of lead’ on the Portuguese economy and would limit the options of governments ‘forever’.

In the debate in parliament ahead of a vote, the Left Bloc’s Ana Drago accused the prime minister of ‘a pure negation of truth’ in his opening remarks and rejected the claim that there was a general consensus on the Pact.

After criticizing the right-wing PSD / CDS-PP government’s support for the treaty, which she described as ‘a contract to kill the European social model’, the Left Bloc MP recalled the position of foreign minister, Paulo Portas, when a few years ago he called for a referendum on Treaty of Lisbon.

‘What do you fear? If [the treaty] is so important, puts it to the Portuguese people?’

‘Attack on national sovereignty’

The parliamentary leader of the Portuguese Communist Party, Bernardino Soares, stated  that the Treaty was ‘a violent attack on national sovereignty and independence’ condemning Portugal to the ‘prior approval of Germany’. He accused the government of rushing through the law for ‘fear that the Portuguese become aware of what is at issue and spoil the little arrangement. ‘

‘At stake is a huge counterfeiting operation.’

There were reports this evening that the Socialist Party, which is to back the balanced budget law, to reverse an earlier decision to allow a free vote after a number of MPs – Pedro Nuno Santos, Isabel Moreira, Pedro Alves (leader of the Young Socialists), Rui Duarte, Duarte Cordeiro e João Galamba indicated they would vote against.

The law will transpose into national law the EU Fiscal Compact agreed by Heads of state and government of 25 EU countries, minus Britain and the Czech Republic, on 2 March 2012.

Officially known as Treaty on Stability, Coordination and Governance (SCG), it requires the budget of a country to be in balance or in surplus, which means that in structural terms – that is excluding one-off items and business cycle variations – the deficit is capped at 0.5 percent of gross domestic product (GDP)

Only countries which have debt to GDP ratios significantly below 60% can have a bigger structural deficit, but not more than 1% of GDP. A country with public debt higher than the EU limit of 60% of GDP has to reduce it by one twentieth a year as a benchmark.

Transgressors face penalties of 0.1% of GDP.

The SCG, described by critics as the Permanent Austerity treaty, is set to come into force once it has been passed by the parliaments of at least 12 countries that use the euro currency or at least by 1 January 2013.