Sun, Jul 21, 2013 - Page 6 News List

Portugal crisis talks fail as austerity cuts bite deep

AFP, LISBON

Portugal’s three main parties failed on Friday to reach a deal to end a political crisis shaking the country and threatening to derail the bailed-out government’s bid to overhaul its finances.

More than two weeks into a crisis sparked by the resignation of two key ministers, the leader of Portugal’s opposition Socialist Party blamed the two parties in the embattled center-right coalition government for sinking talks aimed at sealing a pact to pursue radical reforms and avoid a second rescue.

Antonio Jose Seguro, the party’s secretary-general, said the center-right coalition had “made it impossible” for his Socialists to join them in a deal to ensure the country meets its commitments under its bailout, as urged by conservative Portuguese President Anibal Cavaco Silva.

“Over the course of this week, we’ve fought for the government to put an end to its austerity policy,” Seguro said. “What’s going to happen now? That’s for the president to decide.”

He said Portuguese Prime Minister Pedro Passos Coelho’s center-right PSD and its coalition partner, the conservative CDS-PP, had refused the Socialists’ proposals to ease off harsh austerity cuts in favor of spending aimed at boosting economic growth and reducing unemployment.

Portugal is struggling with a three-year recession and record unemployment of more than 18 percent as it implements cuts in return for its 78 billion euro (US$102.4 billion) rescue from the EU and IMF.

Seguro said two irreconcilable positions had emerged during negotiations and that he had insisted on “turning a corner in Portugal because the Portuguese people can’t take any more sacrifices.”

He pledged to keep fighting to renegotiate the austerity cuts agreed under the terms of the May 2011 bailout and for “a strong Portuguese position” on finding a solution to the eurozone debt crisis.

The current crisis erupted when two key ministers in the ruling coalition tendered their resignations amid disagreements over spending cuts and tax increases.

The political emergency destabilized the ruling coalition and stoked fears that Portugal would veer into a new crisis, shaking world markets fearful of a new wave of instability in the eurozone’s debt-laden periphery.

Portugal’s doggedness in implementing reforms has won it praise from its creditors, and it has been hoping to exit the rescue program next year. However, the political uncertainty has pushed up the country’s borrowing rate, raising the specter of another bailout.

Portugal’s austerity measures are widely blamed for exacerbating the country’s recession, and the resulting hardship has sparked growing street protests.

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