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Quit chasing votes and face bailout facts, EU tells Portugal

Portuguese politicians need to quit electioneering and agree radical changes to the country’s economy in exchange for an international bailout, top EU figures said Wednesday.

With talks underway in Lisbon on the debt rescue, European Commission head Jose Manuel Barroso said he hoped party leaders “will assume their responsibilities” to the public finances and their European Union partners.

Portugal goes to early polls on June 5 after the government fell last month when parliament rejected its latest austerity plan, forcing Lisbon to bow to market pressure and seek an EU-IMF bailout.

Luxembourg Prime Minister Jean-Claude Juncker, who chairs the Eurgroup of finance ministers from the 17 nations that share the euro currency, warned the rival parties to concentrate on what needs to be done to win EU and International Monetary Fund approval.

“The national honour of Portugal … should push the principal Portuguese parties to turn their focus away from the election campaign and back towards national and European demands,” he said in Luxembourg.

The talks on the debt bailout are supposed to agree a programme of tough austerity measures by mid-May for the political parties to agree on before the polls take place.

Campaigning is likely to test the parties’ commitment to the bailout terms which the new government will have to implement.

Barroso notably warned that “it is not possible to provide bridging loans,” as sought by Portuguese President Anibal Cavaco Silva and a number of domestic opposition figures wanting to get some leeway from Brussels.

A former Portuguese prime minister, Barroso insisted that EU and IMF aid, expected to total 80 billion euros ($116 billion), “will be a medium-term programme with strict conditions.”

Calls for a bridging loan were concerned with getting the Lisbon government through to June 15, when it must repay some 5.0 billion euros.

“We will do everything to guarantee that this programme is wrapped up so that the payment of the first tranche meets Portugal’s financing needs,” Barroso said.

However, he maintained there is no scope for short-term financing arrangements under rescue funding arrangements agreed among European partners — which he insisted were fully backed by the Lisbon government.

The EU and the IMF have each warned that Lisbon will have to implement more public spending cuts, tax rises and far-reaching privatisation to secure its bailout.

Experts are currently poring over the country’s books in Lisbon as Portugal battles a debt crisis that has already seen Greece and Ireland bailed out by the EU and IMf in deals costing nearly 200 billion euros.

With the cry for EU aid seen in Portugal as a painful humiliation, outgoing Prime Minister Jose Socrates’ is in talks with representatives of the country’s main political parties in parliament to discuss the debt rescue plan.

EU finance commissioner Olli Rehn has already shown signs of losing patience with domestic political electioneering.

“Let’s not have a public dialogue every day — let’s focus on the work preparing the programme,” Rehn said after EU finance ministers at the weekend mandated experts to negotiate a “cross-party” agreement.

Most analysts believe Lisbon must have the EU-IMF rescue loans agreed before the key June 15 debt redemption date if it is to avoid default.

Prime Minister Socrates had been trying to get his minority government’s fourth package of austerity measures in a year through parliament against a backdrop of mounting public disquiet.