Portugal's PM quits amid debt crisis

2011-03-24 08:05

Lisbon - Portugal's prime minister has quit after opposition parties overwhelmingly rejected his last-ditch round of austerity measures aimed at preventing the eurozone's weakest economy from plunging into chaos. The move turned the debt-plagued nation into the prime candidate for the continent's next bailout package.

All opposition parties united to defeat Prime Minister Jose Socrates' proposals in a parliamentary vote, saying the belt-tightening went too far on the eve of a summit of European leaders.

But their decision means that Portugal is much more likely to be forced to seek a bailout like those accepted by Greece and Ireland last year, and puts Spain squarely into the crosshairs of nervous investors concerned about which European nation might be next.

Socrates followed through on Wednesday on a pledge that he would resign if the measures were not approved, saying the opposition parties "took away the government's ability to continue running the country".

"As a consequence, I have tendered my resignation," Socrates said in an announcement carried live on television.

In keeping with Portugal's constitution, Socrates formally submitted his resignation to Portugal's president, a ceremonial figurehead who has no executive powers. The prime minister's resignation ended the centre-left Socialist government's six-year period in power.

Socrates' latest austerity package was its fourth set of measures introduced over 11 months as Portugal scrambled to avoid the embarrassment and financial consequences of asking for outside help to prop up its shaky economy. The nation has already introduced tax hikes and pay cuts that have angered trade unions and prompted a wave of successive street demonstrations and strikes.

  • jds - 2011-03-24 08:49

    What a good example for leaders who don't perform...quit if you screw up! I know it is not that simple...but that's what it comes down to! Some people(like the Japanese) have so much pride that they would rather quit if they find that they are incompetent(with regards to the job position). On the other hand, some choose to ride the incompetency wave without taking responsibility!!

      vladimir.lenin1981 - 2011-03-24 09:00

      I think it is unfair to put all he blame on the Prime Minister. The whole of Europe was knocked badly in recent years. Socrates was trying to get Portugal to stand up on its' own feet. This may have been a tricky venture seeing as it always hits the man in the street even harder, but surely you can see the merit in not wanting to take a bailout. This is very thin ice the EU is skating on at the moment. It could possibly lead to the dissolution of the EU in 3-4yrs.

      Redwine - 2011-03-24 11:00

      VL`81 you are an idiot this is a remark aimed at our incompetant bunch here hanging on for dear life after screwing up!

  • Catarina - 2011-03-24 11:18

    Call me a perfectionist but, these paragraphs are mistaken: 1 - " (...) at preventing the euro zone's weakest economy from plunging into chaos (...)" Portugal is not the weakest economy in the euro zone, it's the less flexible. It does do have some capital value when compared to Greece or Ireland. In the stress tests that were performed by European authorities, Portugal's banking sector proved to be stronger than the sector of the two other struggling countries. Portugal does belong in fact to the group they call pigs. Portugal, Ireland and Greece (that's how they got the name anyway) but both Greece and Ireland are facing higher interest rates from the ESFS - meaning European Rescue fund - than Portugal, as well as their deficit is higher then Portugal's. The problem in Portugal is that instead of decreasing the level of expenses to be able to handle the debt, the Portuguese government as tried to increase money inputs with taxes. Of course that if the cost of living and unemployment are increasing, the Portuguese people just don't have a way to support the economy just with taxes. Portugal is now facing two crises - financial and political. But as we say we, there as been crises since 1143 when Portugal was founded as a kingdom. We can now expect the austerity measures to be observed even if the opposition parties didn't approve it simply because Portugal was already committed in doing so with the EU. The problem is going to be finding a consensus between the parties in the Parliament in how to apply the austerity measures. As elections are expected to take place now once the government collapsed it's a matter of days until the IMF to intervene in the Portuguese economy. The second mistake in the article: 2 - "In keeping with Portugal's constitution, Socrates formally submitted his resignation to Portugal's president, a ceremonial figurehead who has no executive powers. The prime minister's resignation ended the centre-left Socialist government's six-year period in power. " Portugal's president is not a ceremonial figurehead. In fact, under Portuguese Constitution (1976) both Parliament and President are the heads of state and the government is responsible towards them. It is what in political science is called semi-presidential republic. The executive power belongs in fact to the government, but legislative power belongs to the Parliament. The President is in fact the figure of state that approves or denies a Law or legislative initiatives, and is also responsible for the regular operation of democratic institutions. That's why the resigned Prime-Minister shall present is resignation to the Republic president.

  • Catarina - 2011-03-24 11:38

    Ah and for those who think that only the Prime Minister is to blame, is important to say that every single government in Portugal since the Revolution of April 1974 is to blame. There was a period of substancial economic growth when Portugal entered to the EU, there was incredible loads of money coming in for developing agriculture, industry, service sectors ,technology,etc etc, but the money was spent. No-one wants to admit that Portugal has been living a lie for the last years. Everyone thought that economy would eventually recover, but only now they are starting to admit that the economic system can't work if there are no production sector and if both sovereign ordinary and extraordinary expense rely on international funding. Tough stuff... if we are going to point the finger at someone - we have to point the finger to the portuguese people that was watching what was going on and still didn't do anything to change the situation. Voting in corrupt parties has this effect on a country :) Sounds familiar, doesn't it?

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