Portugal fiddles around with political stability and austerity
Caracas, 7 July 2013. It has been a manic month in Portugal. Last 10th June, the Portuguese celebrated another National Day (Dia de Portugal, de Camões e das Comunidades Portuguesas) from Elvas, Alentejo (the south-central region). During his official speech, President Aníbal Cavaco Silva called for political stability and the urgent design of a post-troika-austerity policy to boost economic growth and employment. Cavaco Silva also applauded the effects of European Agricultural Policy on the modernization of the Portuguese economy and its primary sector; he called for a further modernization during the coming years.
However, the austerity policy followed by the governing right wing coalition (PSD and CDS-PP) of Premier Pedro Passos Coelho has produced little hope. The two-year-old administration of the leader of the Social Democratic Party (PSD) Passos Coelho has fiddled around with political stability and austerity.
In Portugal, there is growing unemployment, cuts in social security programmes, plummeting birth rates and a fall in economic growth expectations. Young Portuguese now face a dim future in their own country. Jobless graduates have decided to emigrate to Germany and Brazil to further their careers. The less educated youth who stayed behind confronts unemployment that stands at 17.5% and increasing tax impositions. The retired are receiving less money. No wonder, there was another call for a general strike this year; on 27 June 2013, it literally halted the public transport service around the country. For the forth time in democratic Portuguese history, major trade unions (UGT e a CGTP) agreed on a single strike call. It was also the forth strike called during Passos Coelho tenure in power. He is now the Prime Minister with the most number of strikes during a single term.
And, last week major concerns were raised as Portugal governing coalition nearly collapsed. Both its Finance and Foreign Affairs Ministers resigned. Even though the crisis was ignited by the resignation of these two powerful ministers (Vítor Gaspar and Paulo Portas), it was all about a single issue: how to carry out a Portuguese neo-liberal agenda in the middle of an economic crisis and its three-year €78bn bailout programme designed by the Troika (IMF, European Commission and European Central Bank).
As the uncertainty of this political crisis developed, negotiations between the Social Democratic Party (PSD) and the Democratic and Social Cetre-People´s Party (CDS-PP) ensued and prompted a new governing formula: If President Cavaco Silva (PSD) approves it later this week, junior alliance member Paulo Portas (CDS-PP) will become Vice or Deputy Prime Minister and overseer of all economic decisions and plans. Portas who has opposed unpopular cuts of public spending and benefits will have come out of the crisis with a more leading position in the government.
But, it is certainly a fragile governing arrangement the one that emerges as Portugal intends to comply with current Troika designs and avoid a future bailout. Spanish newspaper El Pais has today disclosed there will be a European Commission only accord to supply Portugal with `preemptive´ financial assistance. This would be a non-IMF-conditioned loan. Thus, it is becoming rather difficult to design and implement a post-Troika-austerity policy now.
On the other hand, the Portuguese opposition has a single stand on the crisis: call for parliamentary elections now. Even if the Passos Coelho administration survives the coming days, it will face an electoral challenge soon at the regional elections (autarquicas). Such elections will inevitably become a referendum over the popularity and performance of the right wing governing coalition.