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

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    City could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters

    Turkey Aims New Crackdown at Journalists, Academics, Airline Workers

    Ankara continues targeting people allegedly linked to exiled cleric, who it says led the failed military coup

    Pakistan Ready to Inaugurate Rebuilt Afghan Border Crossing

    Construction of Torkham Gate triggered deadly clashes between Pakistani and Afghan military forces

    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.
    London’s Financial Crown at Risk as Rivals Eye Brexit Opportunitiesi
    X
    VOA News
    July 25, 2016 5:09 PM
    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Calm the Waters: US Doubles Down Diplomatic Efforts in ASEAN Meetings

    The United States is redoubling diplomatic efforts and looking to upcoming regional meetings to calm the waters after an international tribunal invalidated the legal basis of Beijing's extensive claims in the South China Sea. VOA State Department correspondent Nike Ching has the story.
    Video

    Video Four Brother Goats Arrive in Brooklyn on a Mission

    While it's unusual to see farm animals in cities, it's become familiar for residents of Brooklyn, New York, to see a little herd of goats. Unlike gas-powered mowing equipment, goats remove invasive weeds quietly and without adding more pollution to the air. As Faiza Elmasry tells us, this is a pilot program and if it proves to be successful, the goat gardener program will be extended to other areas of New York. Faith Lapidus narrates.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.
    Video

    Video Wall Already Runs Along Parts of US-Mexico Border

    The Republican Party’s presidential nominee, Donald Trump, gained the support of many voters by saying he would build a wall to keep undocumented immigrants and drugs from coming across the border from Mexico. Critics have called his idea impractical and offensive to Mexico, while supporters say such a bold approach is needed to control the border. VOA’s Greg Flakus has more from the border town of Nogales, Arizona.
    Video

    Video New HIV Tests Emphasize Rapid Results

    As the global fight against AIDS intensifies, activists have placed increasing importance on getting people to know their HIV status. Some companies are developing new HIV testing methods designed to be quick, easy and accurate. Thuso Khumalo looks at the latest methods, presented at the International AIDS conference in Durban, South Africa.
    Video

    Video African Youth with HIV Urge More Support

    HIV, the virus that causes AIDS, is the top killer of teens in sub-Saharan Africa. But many youths say their experience with the virus is unique and needs to be addressed differently than the adult epidemic. VOA South African Correspondent Anita Powell reports.
    Video

    Video Pop-Up Art Comes to Your Living Room, Backyard and Elsewhere

    Around the world, independent artists and musicians wrestle with a common problem: where to exhibit or perform? Traditional spaces such as museums and galleries are reserved for bigger names, and renting a space is not feasible for many. Enter ArtsUp, which connects artists with venue owners. Whether it’s a living room, restaurant, office or even a boat, pop-up events are bringing music and art to unexpected places. Tina Trinh has more.
    Video

    Video Scotland’s Booming Whisky Industry Fears Brexit Hangover

    After Britain’s vote to leave the European Union, Scotland’s government wants to break away from the United Kingdom – fearing the nation’s exports are at risk. Among the biggest of these is whisky. Henry Ridgwell reports on a time of turmoil for those involved in the ancient art of distilling Scotland’s most famous product.

    Special Report

    Adrift The Invisible African Diaspora