TENTATIVE SIGNS of a fragile consensus over Portugal’s EU-IMF bailout emerged in Lisbon yesterday as the country’s main opposition party pledged to support a deal, but smaller parties were still resisting the push for external aid.
In Germany, meanwhile, a parliamentary committee is threatening to delay plans for the euro zone’s permanent bailout fund – the European Stability Mechanism (ESM) – by seeking the right to veto any supplementary contributions to it.
Portugal’s caretaker prime minister, José Sócrates, met opposition leaders to inform them about the rescue talks yesterday as EU commission chief and former premier of the country José Manuel Barroso entered the debate with a call for “responsibility” from the country’s politicians.
The negotiation comes as Portuguese parties campaign in a general election due on June 5th, almost three weeks after the deal deadline imposed by euro zone finance ministers.
The ministers want an all-party agreement because they fear repeating the experience in Ireland, when the new Government sought to unravel elements of a deal made only months previously.
The election greatly complicates the talks, but Mr Barroso said the situation was very difficult and urgent. “Recently the minister of finance said that Portugal could not come up with financing to meet its need for the coming month of June. This is known already,” he said.
He also dismissed pressure for a pre-election interim deal before striking a final agreement with the election winner and said it was not the European Commission that decided when the country would seek aid. “There is no way for intermediate financing. It will be a medium-term programme submitted to very strict conditions. That’s a must to ensure that financing is provided,” Mr Barroso said.
Mr Sócrates, leader of the country’s Socialists, is predicted to lose the poll to centre-right leader Pedro Passos Coelho of the Social Democrats (PSD), whose party voted down austerity measures last month.
Mr Passos Coelho has now changed his stance, saying it is clear that the country is in a worse financial state than feared.
“The PSD is interested in saving the country from a situation whereby there would be no agreement on obtaining aid,” he said yesterday.
“Conscious of the seriousness of the situation, the PSD will not hesitate in offering all the help it can so that the programme for assistance can be met.” He warned, however, against any “surprises” in the public finances and said he wanted to see every report from the bailout “troika”, which comprises the commission, the European Central Bank and the IMF.
The PSD’s conciliatory talk is in contrast to the barbed rhetoric of the election campaign, as politicians blame each other for the country’s troubles. This could disrupt any cross-party agreement on the rescue programme.
Mr Barroso said every decision- maker should “be responsible” but the third largest party, the right-wing People’s Party, argued against any agreement on long-term reforms before polling day.
Smaller left-wing parties have attacked the EU-IMF “foreign intervention” and the policies they say would destroy the Portuguese economy.
Separately, a warning from Germany’s Federal Court of Auditors that the country’s cash contributions to the future ESM may have to be speeded up if bailouts reach a certain level led to renewed pressure in the lower house. Amid disquiet about the three euro zone bailouts, leading members of the budget committee now want the right to vote on any additional contributions to the fund.
