News / Europe

Portugal's President Calls Crisis Talks as Government Teeters

Commuters arrive at Lisbon's Terreiro do Paco ferry station, July 3, 2013. Portugal's financial markets went into a steep nosedive Wednesday as the government teetered on the verge of collapse.
Commuters arrive at Lisbon's Terreiro do Paco ferry station, July 3, 2013. Portugal's financial markets went into a steep nosedive Wednesday as the government teetered on the verge of collapse.
Reuters
Portugal's president summoned main political parties for crisis talks over the government's future with markets reeling on fears that a snap election could derail Lisbon's exit from an international bailout.

President Anibal Cavaco Silva's office said he would meet the leader of the main opposition Socialists later on Wednesday, the premier on Thursday and other parties after that. Under the constitution, he has the power to dissolve parliament and can act to mediate in political crises.

His decision came after several media reports said two more ministers from the junior ruling coalition party were ready to quit and follow their CDS-PP party leader Paulo Portas who tendered his resignation as foreign minister on Tuesday.

A day earlier, Finance Minister Vitor Gaspar, the architect of spending cuts and tax hikes required by lenders as a condition of their support, stepped down citing an erosion in support for the bailout.

Portas resigned because he objected to the appointment of Treasury Secretary Maria Luis Albuquerque to replace Gaspar. He must now decide whether to pull his party out of the coalition, thereby robbing it of its majority.

European Commission President Jose Manuel Barroso, a former Portuguese premier, said Portugal risked damaging its hard-earned financial credibility after two years of closely following its bailout program.

“This delicate situation requires a great sense of responsibility from all political forces and leaders,” he said.

Portugal's Prime Minister Pedro Passos Coelho addresses a news conference in Berlin, July 3, 2013.Portugal's Prime Minister Pedro Passos Coelho addresses a news conference in Berlin, July 3, 2013.
x
Portugal's Prime Minister Pedro Passos Coelho addresses a news conference in Berlin, July 3, 2013.
Portugal's Prime Minister Pedro Passos Coelho addresses a news conference in Berlin, July 3, 2013.
Prime Minister Pedro Passos Coelho told the nation late on Tuesday that he did not accept Portas' resignation and would continue to head the government to ensure political stability and work to overcome the stalemate.

Many commentators called the situation “absurd”.

Passos Coelho has fought tooth and nail to keep his country on a trajectory to exit its 78 billion euro ($102 billion) bailout next year as scheduled, but the measures have pushed Portugal deeper into its worst economic crisis since the 1970s.

The president has the power to dissolve parliament and call new elections but he has indicated that if political parties want to unseat the government they would have to put a motion of no-confidence through parliament.

With no solution imminent, Portugal's bond and stock prices slumped. The returns investors demand to hold 10-year bonds surged to above 8.1 percent for the first time since November and the PSI 20 stock index tanked by six percent, led by sharp losses of over 10 percent in bank shares.

The crisis hit shortly before inspectors from Lisbon's creditors - the European Union and International Monetary Fund - arrive to start their next review of the economy on July 15. That might well now be delayed.

Agriculture Minister Assuncao Cristas and Social Security Minister Pedro Mota Soares are likely to be the next to leave the center-right coalition government. Party officials were not available to comment as the CDS-PP executive commission was in a meeting.

The responsibility for the government's survival is now squarely on the shoulders of Portas.

“One thing is certain, the prime minister is going to do everything to stay on, giving all possible concessions to Portas,” said political scientist Antonio Costa Pinto. “Failing that, however, we can hardly avoid an early election.”

Portugal is subject to strict budget conditions imposed by an EU/IMF bailout. It had been hoping to return to normal debt market funding but rows over continued austerity have now thrown this into doubt.

“We see early elections as the most likely outcome at this stage, even if we cannot fully rule out support from some CDS MPs and the continuation of the government,” Barclays' economist Antonio Garcia Pascual said in a note.

Bank of America Merrill Lynch analysts said the combination of surging yields and political uncertainty “reduces the prospects of Portugal regaining full market access in the next year”, leading to expectations of a new bailout being required.

That, in turn, could send Portuguese bond yields even higher as a second bailout could involve Greece-style losses forced upon debt holders, the analysts said.

The president is expected to promote a grand coalition government, analysts do not expect the largest opposition party, the moderate center-left Socialists who lead in opinion polls, to play ball.

Still, while opinion polls indicate Socialists will win a snap election, they would fall short of a majority, which would also require CDS support. The only two remaining parties in parliament, the Communists and the Left Bloc have never entered any coalition and are unlikely to do so.

You May Like

Brutality Eroding IS Financial Support

Director of National Intelligence James Clapper says IS's penchant for publicizing beheadings, other brutal forms of punishment hurts group’s bottom line More

Studies: Climate Change a Factor in Disasters in Syria, California

The studies point to the possibility of clear and present dangers from a threat often considered to be far in the future More

Video Afghan Refugees Complain of Harassment in Pakistan

Afghan officials and human rights organizations assert that Pakistani authorities are using deadly attack at school in Peshawar as pretext to push out Afghan refugees More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Kerry Seeks Assurances of Russian Non-Interference in Ukrainei
X
March 03, 2015 3:11 AM
U.S. Secretary of State John Kerry has told his Russian counterpart, Sergei Lavrov, that his country could face further consequences to what he called its “already strained economy” if Moscow does not fully comply with a cease-fire in Ukraine. The two met, on Monday, on the sidelines of a U.N. Human Rights Council meeting in Geneva, where Kerry outlined human rights violations in Russian-annexed Crimea and eastern Ukraine. VOA State Department correspondent Pam Dockins reports from Geneva.
Video

Video Kerry Seeks Assurances of Russian Non-Interference in Ukraine

U.S. Secretary of State John Kerry has told his Russian counterpart, Sergei Lavrov, that his country could face further consequences to what he called its “already strained economy” if Moscow does not fully comply with a cease-fire in Ukraine. The two met, on Monday, on the sidelines of a U.N. Human Rights Council meeting in Geneva, where Kerry outlined human rights violations in Russian-annexed Crimea and eastern Ukraine. VOA State Department correspondent Pam Dockins reports from Geneva.
Video

Video Smartphones May Help in Diagnosing HIV

Diagnosing infections such as HIV requires expensive clinical tests, making the procedure too costly for many poor patients or those living in remote areas. But a new technology called lab-on-a-chip may make the tests more accessible to many. VOA’s George Putic reports.
Video

Video Afghan Refugees Complain of Harassment in Pakistan

Afghan officials have expressed concern over reports of a crackdown on Afghan refugees in Pakistan following the Peshawar school attack in December. Reports of mass arrests and police harassment coupled with fear of an uncertain future are making life difficult for a population that fled its homeland to escape war. VOA’s Ayesha Tanzeem reports from Islamabad.
Video

Video Ukrainian Volunteers Prepare to Defend Mariupol

Despite the ongoing ceasefire in Ukraine, soldiers in the city of Mariupol fear that pro-Russian separatists may be getting ready to attack. The separatists must take or encircle the city if they wish to gain land access to Crimea, which was annexed by Russia early last year. But Ukrainian forces, many of them volunteers, say they are determined to defend it. Patrick Wells reports from Mariupol.
Video

Video Moscow Restaurants Suffer in Bad Economy, Look for Opportunity

As low oil prices and Western sanctions force Russia's economy into recession, thousands of Moscow restaurants are expected to close their doors. Restaurant owners face rents tied to foreign currency, while rising food prices mean Russians are spending less when they dine out. One entrepreneur in Moscow has started a dinner kit delivery service for those who want to cook at home to save money but not skimp on quality. VOA's Daniel Schearf reports.
Video

Video US, Cuba Report Progress in Latest Talks to Restore Ties

The United States and Cuba say they have made progress in the second round of talks on restoring diplomatic relations more than 50 years after breaking off ties. Delegations from both sides met in Washington on Friday to work on opening embassies in Havana and Washington and iron out key obstacles to historic change. VOA’s Mary Alice Salinas reports from the State Department.
Video

Video Presidential Hopefuls Battle for Conservative Hearts and Minds

One after another, presumptive Republican presidential contenders auditioned for conservative support this week at the Conservative Political Action Conference held outside Washington. The rhetoric was tough as a large field of potential candidates tried to woo conservative support with red-meat attacks on President Barack Obama and Democrats in Congress. VOA Political Columnist Jim Malone takes a look.
Video

Video NYC's Restaurant Week: An Economic Boom in Fine Dining

New Yorkers take pride in setting world trends — in fashion, the arts and fine dining. The city’s famous biannual Restaurant Week plays a significant role in a booming tourism industry that sustains 359,000 jobs and generates $61 billion in yearly revenue. VOA's Ramon Taylor reports.
Video

Video Brookhaven at Cutting Edge of US Energy Research

Issues like the Keystone XL pipeline, fracking and instability in the Middle East are driving debate in the U.S. about making America energy independent. Recently, the American Energy Innovation Council urged Congress and the White House to make expanded energy research a priority. One beneficiary of increased energy spending would be the Brookhaven National Lab, where clean, renewable, efficient energy is the goal. VOA's Bernard Shusman reports.
Video

Video Southern US Cities Preserve Civil Rights Heritage to Boost Tourism

There has been a surge of interest in the American civil rights movement of the 1950s and '60s, thanks in part to the Hollywood motion picture "Selma." Five decades later, communities in the South are embracing the dark chapters of their past with hopes of luring tourism dollars. VOA's Chris Simkins reports.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.
Video

Video Lao Dam Project Runs Into Opposition

A Lao dam project on a section of the Mekong River is drawing opposition from local fishermen, international environmental groups and neighboring countries. VOA's Say Mony visited the region to investigate the concerns. Colin Lovett narrates.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More