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Politics, Portugal, Spain

Portugal government survives to continue austerity course, President decides

Portugal’s President Anibal Cavaco Silva on Sunday ruled out a snap election and said he wanted the right wing coalition government to stay in place to end a weeks-old political crisis and to ensure the destructive austerity measures and debt payments under the EU/IMF bailout stayed unchanged.

The President had hoped for a ‘broader political deal’ between the two coalition parties and the opposition Socialists but this collapsed on Friday. The Socialists, which backed the bailout package in 2011, have called for the terms of the international loans to be changed now in order that they are more favourable to Portugal.

‘As the national salvation compromise was impossible to achieve, I consider that the best alternative solution is for the present government to remain in its functions, with reinforced guarantees of cohesion and solidity of the coalition, until the end of its term (in 2015),’ the president said.

In a televised address, he said the coalition, which reportedly overcome an internal rift earlier this month, had presented him ‘guarantees of a solid understanding’ on how the country would continue to be bled dry in order to complete the ‘Troika’ bailout programme.

Credibility crisis

Prime Minister Pedro Passos Coelho has proposed a cabinet reshuffle to resolve the rift in the coalition. On July 1, finance minister Vitor Gaspar resigned in part because of increasing public opposition to austerity. Gaspar’s credibility had been hit because economic targets had been missed as a result of lower than expected tax revenues and domestic demand – a sign of the failing austerity measures.

Bankers were pleased with the outcome Sunday. ‘I think it’s a positive decision to calm down investors that removes uncertainty and maintains the drive of meeting the bailout goals,” said Rui Barbara, an economist at Banco Carregosa. ‘In the eyes of investors, Portugal should return to the situation before the political crisis.’

The government has a solid majority in parliament and last week easily defeated a no-confidence motion.

The main ruling Social Democrats (PSD) has said the government will press on with meeting lethal fiscal goals for Lisbon to complete the terms of the rescue programme by mid-2014 as planned.

The austerity measures pursued under the bailout have led to the worst recession in Portugal since the 1970s. Real wages have fallen by 9.2%, household spending has fallen by 10%, unemployment has risen by half a million, more than 250,000 people, mostly the young, have emigrated, the public debt has increased by 48 billion euros, today totalling 202 billion euros and gross domestic product has fallen by 5.5%.

Political austerity ‘consensus’ lost

The President precipitated a political crisis on July 11, when he insisted that the PSD-led coalition – which by then had made a show of patching up its differences- do a deal with the opposition Socialists – to demonstrate support among the country’s largest parties for the punishing austerity measures. His failure to secure one weakens him and the credibility of the neo-liberal programme of labour reforms, pay and public spending cuts, that has provoked four general strikes and escalating protests since May 2011.

‘Today Cavaco Silva left the labyrinth, he created himself, in the worse fashion, protecting the PSD and CDS parties who elected him and maintaining an incapable, fumbling government that is doomed to failure through the results seen in the country of the policies pursued over the last two years,’ said João Semedo, coordinator of the radical opposition Left Bloc.

The Left Bloc accused Mr Cavaco Silva of being ‘more concerned throughout the political crisis in protecting parties who elected him and save the coalition government and the politics of austerity.’

And he recalled: ‘If three weeks ago ministers distrusted each other, said evil to one of another, I cannot understand how it is that three weeks later, when nothing has changed, that the political instability will end. If three weeks ago the austerity policy was recognized as a factor of social conflict, economic collapse and a violent growth of unemployment, it is not clear how the insistence on the same policy can have a different result. It will lead to further collapse of the economy and social disaster.’

No legitimacy

‘A government without legitimacy is a government that can justifiably and deservedly be fired,’ said Semedo, who insisted that ‘the resignation of the government should lead to early elections, so that the Portuguese could freely choose another path for the country.’ He concluded that only a government legitimised by elections could have power to renegotiate the debt with the creditors so that the economy can start growing again.

Communist leader Jerónimo de Sousa the President accused the President of ‘intervening to serve the interests of big capital (the so-called markets)’ and the Troika, ‘exploiting and extorting’ the nation’s wealth. ‘It has become clear that the so-called commitment to “national salvation” was nothing more than an exercise to try and imprison the country in right-wing policies’ and ‘submission to foreign interests’.

De Sousa, whose party also wants to see elections called, argued that the coalition split was ‘irreparable’ and appealed ‘to social and political forces, all democrats and patriots to unite and mobilise in order to break with current policies and ensure a path of development, sovereignty and social progress.’

It was time for an alternative, focussed on ‘the interests and aspirations of the workers and the people’, he concluded.

Reuters, Left Bloc and Portugal Communist Party 21.7.2013

About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or @revoltingeurope

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