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Portuguese president appeals for interim debt deal

Published on 09/04/2011

Portugal's president pleaded for mercy from the EU and IMF Saturday after they set tough conditions for an 80-billion-euro ($115 billion) bailout weeks ahead of snap general elections.

Anibal Cavaco Silva said that with new elections due on June 5 “what we need now is an interim programme so that the next government can take part in the final negotiations, because it is the next government that will implement” the deal that emerges.

“It’s understandable (and) we need, let’s say, a little imagination on the part of European institutions to come up with a suitable interim programme,” he added.

Socialist Prime Minister Jose Socrates asked for the bailout after parliament last month rejected austerity measures proposed by his minority government, prompting his resignation.

Lisbon had earlier raised the possibility of an emergency loan, but the European Commission turned it down, saying such an arrangement was not possible under European rules for aiding member countries in difficulty.

“All parties have already admitted that the next government must be able to count on majority support from parliament,” Cavaco Silva said, speaking on the sidelines of a meeting of European Union finance ministers near Budapest.

But his remarks drew a sharp rebuke from EU officials, with Finance Commissioner Ollie Rehn saying he did not want a daily debate with Portuguese leaders, “for the sake of Portugal and the sake of Europe.”

Everyone involved had to “now define a strategy which will ensure there can be a swift, cross-party agreement on a programme of fiscal adjustment and structural reforms by mid-May,” he said.

Stressing cooperation with the government, the opposition and the presidency, Rehn said, “That’s the plan so let’s now calmly and swiftly start to work.

“Let’s not have a public dialogue every day — let’s focus on the work preparing the programme.”

European Central Bank president Jean-Claude Trichet echoed Rehn’s call, saying the “hard work” needed was “certainly not for public” debate, given the “sensibilities” posed by the general election campaign.

On Friday Rehn had told Portugal’s politicians to show “responsibility” and agree economic reforms, after Finance Minister Teixeira dos Santos said: “It’s not for the government to negotiate with the opposition (or) promote this negotiation” to the Portuguese people.”

As Socrates’s Socialists and the centre-right Social Democrats — tipped to win the election — squabbled over whose fault it was, nearly 50 prominent Portuguese called for compromise to overcome the country’s debt crisis and restore credibility.

A statement published by the weekly Expresso deplored “the difficulty for politicians to talk to each other and the hardening of the public debate,” which “threatens the achievement of lasting solutions to national problems.”

The joint EU-IMF loans, following bailout rescues of Greece and Ireland last year, will be conditional on more public spending cuts, tax rises and far-reaching privatisations.

They will have to be negotiated with Portuguese politicians facing an angry, fearful electorate in the polls.

Under the terms, a “cross-party agreement” is to be “adopted by mid-May and implemented swiftly after the formation of a new government.”

Saturday’s petition, signed by figures including former presidents Ramalho Eanes, Mario Soares and Jorge Sampaio, former ministers of both right and left, veteran film director Manoel de Olivieira and writer Antonio Lobo Antunes, also called for calm.

They said there must be fundamental compromises between the presidency and the main political parties to ensure the government that emerges from the June election can implement the necessary policies.

These should ensure Portugal’s credibility abroad and the proper functioning of the economy, as well as support the process of budgetary consolidation and adjustment, the petition added.