Weary Portuguese blame 'irresponsible' leaders for crisis

Reuters News
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Posted: Jul 18, 2013 10:22 AM
Weary Portuguese blame 'irresponsible' leaders for crisis

By Shrikesh Laxmidas

LISBON (Reuters) - Struggling under unrelenting austerity, Portuguese have put the blame squarely on the country's politicians for stirring an unnecessary crisis they say serves party interests to the detriment of the people.

An internal rift in the ruling coalition first broke out in early July with two senior ministerial resignations. It was followed by a U-turn that appeared to have healed the split, only to be shot down by the president who rejected a proposed cabinet reshuffle and called for a "national salvation" deal.

The three main parties have given themselves until Sunday to reach the pact requested by the president. In the meantime, borrowing costs have climbed, raising fears Lisbon will not be able to exit its bailout in mid-2014 as planned and may instead have to seek more help, with more austerity attached.

"It's just a game for the politicians, and we are secondary in all this," said Vitor Marques a 67-year-old pensioner in Lisbon's Alges suburb. "The crisis shows their lack of decency. No one is held responsible and we have to pay."

Deep spending cuts applied under Portugal's 78-billion-euro bailout have pushed the economy into the biggest slump since the 1970s, driving unemployment to record levels around 18 percent.

For all the main political parties, this is a moment of danger.

An opinion poll in weekly paper Expresso on Saturday showed the crisis has already punished the president and three main party leaders, at least in terms of popularity ratings.

"After so much austerity, politicians should have had more respect for the Portuguese. The country deserved another political class, more adult, less given to spats and ready to put Portugal's interests above their own," business daily Diario Economico said in a recent editorial.

Although general austerity fatigue in Portugal was cited by some politicians as a key cause of the crisis, protests have been tame compared to other struggling euro zone nations like Greece and hardly justified a political upheaval.

While the coalition's junior partner - the rightist CDS-PP party - has taken the heaviest blow in opinion polls for provoking the crisis, analysts say it is too early to say whether left-wing parties that have gained some ground recently could take advantage.

The opposition Socialists, who have opposed austerity measures, are perhaps in the trickiest position.

This is no time to try and topple the government and inherit the crisis, yet if they back the painful measures needed to meet Lisbon's bailout targets they have aligned themselves with the ruling coalition.

Antonio Costa Pinto, a political scientist at the University of Lisbon said that public perception of the possible deal would depend on whether the Socialists, who lead in opinion polls, can obtain concessions on austerity, especially plans to cut spending by 4.7 billion euros until the end of next year.

Analysts say there is no choice for the country but to stay the general austerity course and any concessions will not alleviate the people's plight any time soon.

"Even if there's a deal, austerity will not stop. From the point of view of people's wallets and sentiment, their expectations will only improve when there are signs of new jobs and growth," said Filipe Garcia, head of Informacao de Mercados Financeiros consultants in Porto.

There is unlikely to be much appetite within the EU and International Monetary Fund for sweeping changes to the terms of their bailout loans, but analysts say they may be more flexible to avoid excessive austerity hammering the economy further.

"SOAP OPERA"

The rift erupted when Foreign Minister Paulo Portas, who also leads the junior coalition partner CDS-PP, tendered his resignation on July 2.

Despite saying his exit was "irrevocable", Portas just days later agreed to stay in Prime Minister Pedro Passos Coelho's reshuffled cabinet as deputy premier and in charge of economic policy coordination and talks with Lisbon's lenders.

"The consequence is the chaos we are in. The coalition tries to show everything is fine, but seems to change position by the hour," said Ines Cardoso, a school teacher from north Portugal.

The crisis, which some commentators have dubbed "a soap opera", took a dramatic twist when President Anibal Cavaco Silva unexpectedly rejected the premier's plan. Instead, he called for a broad political agreement between the coalition and the Socialists to keep the bailout on track until it ends in mid-2014, to be followed by early elections.

While strife has been on the rise since the middle of last year, peaceful dissent has lately been increasingly directed at specific ministers, mainly through heckling at public events.

Coinciding with a scorching heat wave, the crisis has not sparked major rallies but disenchantment seems widespread.

"We have no real leaders, there's a lack of responsibility. I'm in favor of political criminalization. If politicians, bankers or others make a mess, if they harm the country, they should be punished," said Andre Sousa, a management student in Lisbon, adding that he voted for the ruling Social Democrats.

A major union and business lobbies have urged the parties to reach a realistic agreement quickly, warning that otherwise Portugal would face serious social and economic risks.

(Additional reporting by Sergio Goncalves, Editing by Andrei Khalip/Mike Peacock)