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The Daily Wildcat

The Daily Wildcat

 

Portuguese government teeters on the brink of downfall

 

Portugal’s governing Socialists made a last-ditch attempt Tuesday to stave off a government collapse as parliament prepared to vote on an austerity package ahead of a key European Union summit.

Most analysts expect parliament to reject the package, which would likely lead to Prime Minister Jose Socrates’ resignation, early elections and a possible request for international help by Portugal.

Socialist floor leader Francisco Assis defied the conservative opposition to “”assume its responsibilities”” and to give alternatives to the government’s policies.

“”This is a decisive moment in our political life,”” Assis said during Wednesday’s parliamentary debate.

Socialist former president Mario Soares asked to President Anibal Cavaco Silva to intervene to prevent a crisis which would threaten the “”national interest.””

The government is seeking parliamentary approval for its latest austerity package — the fourth in 11 months — which includes a pension freeze.

The package forms part of Socrates’ attempts to trim the budget deficit from 7.3 percent to 4.6 percent this year. A vote is expected Wednesday.

The main conservative opposition Social Democratic Party (PSD), which supported Socrates’ earlier austerity measures, has said it will oppose the package. PSD leader Pedro Passos Coelho said he regarded early elections as inevitable.

Other opposition parties have also criticized the spending cuts. Austerity produced recession, Communist leader Bernardino Soares stressed on Tuesday.

He was referring to the government downgrading its economic forecast for 2011 from a 0.2 per cent growth to a 0.9 per cent contraction when presenting the austerity package to parliament on Monday.

Another far-left party, the Left Bloc (BE), said Socrates’ “”liberal radicalism”” was impoverishing the country. BE parliamentary leader Jose Manuel Pureza said the proposed pension cuts hit elderly people “”who worked all their lives.””

If the measures fail to gain parliamentary approval, Socrates has pledged to step down.

He might announce his resignation just before attending a European Union summit on Thursday and Friday, the daily Publico quoted sources close to the premier as saying.

The summit was expected to approve beefing up the eurozone’s financial rescue fund.

Portugal has said it will not follow Greece and Ireland in seeking EU aid, but a possible government crisis is expected to make it more difficult for Lisbon to avert a bailout.

A political crisis would push Portugal towards a financial rescue, Finance Minister Fernando Teixeira dos Santos said Monday.

The fall of the Portuguese government would lead to months of political uncertainty, eroding investor confidence in all of the eurozone’s weaker members, analysts said.

The European Union executive on Tuesday called on Portugal’s opposition “”to take their responsibilities.””

Amadeu Altafaj, spokesman for EU economy commissioner Olli Rehn, stressed that the package would “”restore the currently weak confidence in the Portuguese economy,”” and added that it had been endorsed last week by a eurozone summit.

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