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

HRW: Egypt's Trial of Morsi ‘Badly Flawed’

Human Rights Watch says former Egypt leader's detention without charge for more than three weeks after his removal from office violated Egyptian law; government rejects criticism More

Photogallery Lancet Report Calls for Major Investment in Surgery

In its report published by The Lancet, panel of experts says people are dying from conditions easily treated in the operating room such as hernia, appendicitis, obstructed labor, and serious fractures More

Music Industry Under Sway of Digital Revolution

Millions of people in every corner of the Earth now can enjoy a vast variety and quantity of music in a way that has never before been possible 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.
Study: Insecticide Damaging Wild Bee Populationsi
X
April 24, 2015 10:13 PM
A popular but controversial type of insecticide is damaging important wild bee populations, according to a new study. VOA’s Steve Baragona has more.
Video

Video Study: Insecticide Damaging Wild Bee Populations

A popular but controversial type of insecticide is damaging important wild bee populations, according to a new study. VOA’s Steve Baragona has more.
Video

Video Data Servers Could Heat Private Homes

As every computer owner knows, when their machines run a complex program they get pretty hot. In fact, cooling the processors can be expensive, especially when you're dealing with huge banks of computer servers. But what if that energy could heat private homes? VOA’s George Putic reports that a Dutch energy firm aims to do just that.
Video

Video Cinema That Crosses Borders Showcased at Tribeca Film Festival

Among the nearly 100 feature length films being shown at this year’s Tribeca Film Festival in New York City are more than 20 documentaries and features with international appeal, from a film about a Congolese businessman in China, to documentaries shot in Pakistan and diaspora communities in the U.S., to a poetic look at disaffected South African youth. VOA’s Carolyn Weaver has more.
Video

Video UN Confronts Threat of Young Radicals

The radicalization and recruitment of young people into Islamist extremist groups has become a growing challenge for governments worldwide. On Thursday, the U.N. Security Council heard from experts on the issue, which has become a potent threat to international peace and security. VOA’s Margaret Besheer reports.
Video

Video Growing Numbers of Turks Discover Armenian Ancestry

In a climate of improved tolerance, growing numbers of people in Turkey are discovering their grandmothers were Armenian. Hundreds of thousands of Armenians escaped the mass deportations and slaughter of the early 1900's by forced conversion to Islam. Or, Armenian children were taken in by Turkish families and assimilated. Now their stories are increasingly being heard. Dorian Jones reports from Istanbul that the revelations are viewed as an important step.
Video

Video Migrants Trek Through Western Balkans to Reach EU

Migrants from Africa and other places are finding different routes into the European Union in search of a better life. The Associated Press followed one clandestine group to document their trek through the western Balkans to Hungary. Zlatica Hoke reports that the migrants started using that route about four years ago. Since then, it has become the second-most popular path into Western Europe, after the option of sailing from North Africa to Italy.
Video

Video TIME Magazine Honors Activists, Pioneers Seen as Influential

TIME Magazine has released its list of celebrities, leaders and activists, whom it deems the world’s “most influential” in 2015. VOA's Ramon Taylor reports from New York.
Video

Video US Businesses See Cuba as New Frontier

The Obama administration's opening toward Cuba is giving U.S. companies hope they'll be able to do business in Cuba despite the continuation of the U.S. economic embargo against the communist nation. Some American companies have been able to export some products to Cuba, but the recent lifting of Cuba's terrorism designation could relax other restrictions. As VOA's Daniela Schrier reports, corporate heavy hitters are lining up to head across the Florida Straits - though experts urge caution.
Video

Video Kenya Launches Police Recruitment Drive After Terror Attacks

Kenya launched a major police recruitment drive this week as part of a large-scale effort to boost security following a recent spate of terror attacks. VOA’s Gabe Joselow reports that allegations of corruption in the process are raising old concerns about the integrity of Kenya’s security forces.
Video

Video Japan, China in Race for Asia High-Speed Rail Projects

A lucrative competition is underway in Asia for billions of dollars in high-speed rail projects. Cambodia, India, Indonesia, Malaysia Thailand and Vietnam are among the countries planning to move onto the fast track. They are negotiating with Japan and the upstart Chinese who are locked in a duel to revolutionize transportation across Asia. VOA Correspondent Steve Herman in Bangkok has details.
Video

Video Scientists: Mosquitoes Attracted By Our Genes

Some people always seem to get bitten by mosquitoes more than others. Now, scientists have proved that is really the case - and they say it’s all because of genes. It’s hoped the research might lead to new preventative treatments for diseases like malaria, as Henry Ridgwell reports from London.
Video

Video Bible Museum Coming to Washington DC

Washington is the center of American political power and also home to some of the nation’s most visited museums. A new one that will showcase the Bible has skeptics questioning the motives of its conservative Christian funders. VOA religion correspondent Jerome Socolovsky reports.
Video

Video Armenia and Politics of Word 'Genocide'

A century ago this April, hundreds of thousands of Armenians of the Turkish Ottoman empire were deported and massacred, and their culture erased from their traditional lands. While broadly accepted by the U.N. and at least 20 countries as “genocide”, the United States and Turkey have resisted using that word to describe the atrocities that stretched from 1915 to 1923. But Armenians have never forgotten.
Video

Video Afghan First Lady Pledges No Roll Back on Women's Rights

Afghan First Lady Rula Ghani, named one of Time's 100 Most Influential, says women should take part in talks with Taliban. VOA's Rokhsar Azamee has more from Kabul.
Video

Video New Brain Mapping Techniques Could Ease Chronic Pain

From Boulder, Colorado, Shelley Schlender reports that new methods for mapping pain in the brain are providing validation for chronic pain and might someday guide better treatment.

VOA Blogs