Portugal: When things fall apart
Anna Sonny, 12 July 2013
Portugal’s two-party coalition government appears to be cracking under the strain of the austerity measures set out in the €78bn bailout package agreed in May 2011.The resignation of Portugal’s Finance Minister Vitor Gaspar early this month, shortly followed by the resignation of the Foreign Minister Paulo Portas, signalled the beginning of political meltdown for the debt-ridden country.
Both politicians cited a lack of social and political support for austerity measures as the main reasons for their decision. Paulo Portas was also leader of the centre-right Popular Party, the junior partner in the coalition; his resignation nudged the government even closer to the brink of collapse.
Prime Minister Pedro Passos Coelho attempted to defuse the situation and restore public faith in his government by promising a cabinet reshuffle, but President Aníbal Cavaco Silva doused fuel on the flames this week by calling for cross-party agreement between the coalition and the opposition Socialists on holding general elections in June 2014. This would be a year ahead of schedule, but after Portugal exits the bailout period. The President ruled out holding snap elections, saying they would be negative for Portugal’s credibility.
The President’s announcement did not leave anyone happy – he has thwarted Coelho’s plans to strengthen his own coalition with a reshuffle, and is now forcing the Socialists, who were originally calling for the renegotiation of the terms of the bailout agreement, to support measures they don’t agree with, such as €4.7bn in planned spending cuts and thousands of potential job losses in the state sector.
The turmoil in the government has raised concerns about whether Portugal will be able to fulfil the terms of its bailout and avoid having to request a second one. However, whichever party is in power, and whenever elections are held, it seems that a commitment to the restrictive route of austerity is the only option Portugal has; apart from defaulting on its debt, there are few other avenues to take.