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Portugal: Adrift, With a Bailout in the Works

The same week that Portugal celebrated the 25 of April (the day on which in 1974 it put an end to the 41 year dictatorship to make way for neoliberal democracy) and the 1 of May – Worker’s Day - an appeal is made to the ideals of liberty, justice and equality with the backdrop of prolonged economic crisis which contaminates social and political life.

The fall of the Government in mid March and the opening to th­e doors of the “troika” formed by the International Monetary Fund (IMF), European Central Bank and the European Commission (EC) for a international financial bailout, have triggered an even greater state of alert by Portuguese people to issues that will determine living conditions for years to come.

Blogs and social networks mete out judgement on a poorly-governed and adrift Portugal, a country that is not able to satisfy the complex macro-economic model [pt] it committed to, under the protection of the idea of an open Europe, one of solidarity [pt].

"Proposal to update the Portuguese flag, together with the increase of the length of the national anthem to two times, reducing the speed to half, institutionalizing in video with a loop editing, first backwards and then forwards. This intention in keeping with the reality of our country." Photograph by Miguel Januário from the site maismenos.net, used with permission

"Proposal to update the Portuguese flag, together with the increase of the length of the national anthem to two times, reducing the speed to half, institutionalizing in video with a loop editing, first backwards and then forwards. This intention in keeping with the reality of our country." Photograph by Miguel Januário from the site maismenos.net, used with permission

More or less development

Even though since Portugal’s joining the then “European Economic Community” (EEC, today the European Union, EU) in 1986, hundreds of millions of Euros have been injected in structural and membership funds for the development of the country, recent studies have concluded that “economic growth in Portugal was adversely affected by joining the Economic and Monetary Union” [pdf, pt].

On Quintus’ blog, a post signed with the pseudonym Clavis Prophetarum, explains [pt]:

pagaram para que destruíssemos o nosso tecido produtivo: a frota abatida em troca de subsídios de “modernização da frota” que não exigiam que as embarcações abatidas fossem substituídas por novas (…), com o abandono dos mares e a abertura escancarada dos nossos mares às frotas europeias e com idênticas acções na agricultura e na indústria, tornamo-nos num estéril “país de serviços”.

They paid for us to destroy our productive fabric: one fleet decommissioned in exchange for subsidies for a “modernization of the fleet” that did not require that the old ships were substituted by new ones (…), with the abandonment of the seas and the blatant opening of our seas to European fleets with identical interests in agriculture and industry, we turned ourselves into a sterile “country of services”.
Two Euro coins of Portugal, Italy, Ireland, Greece and Spain (the “PIGS” of Europe), before those of Germany. Photo by Flickr user Landahlauts (Creative Commons 2.0 BY-NC-SA).

Two Euro coins of Portugal, Italy, Ireland, Greece and Spain (the “PIGS” of Europe), before those of Germany. Photo by Flickr user Landahlauts (Creative Commons 2.0 BY-NC-SA).

With the adoption of the Euro since 1999 and its entry into sole circulation in 2002, Portugal committed itself to the “Euro Convergence Criteria” established by the countries of the Euro Zone, that require responsible fiscal policies, with public debt below 60% of GDP and a budget deficit of less than 3%. According to data released by the Instituto Nacional de Estatística (National Statistics Institute) [pt], in March 2011 the value of the Portuguese deficit rose 0.6% from 2010, to 9.1%, and public debt rose from 92.4 to 93% of GDP.

Austerity with ostentation

From since the end of 2007 the words “crisis”, “deficit” and public “debt” [pt] have been staples of Portuguese conversation. In power for six years, the government of José Socrates has looked for solutions to balance out the deficit, and since March 2010 it presented four proposals for “Pacto de Estabilidade e Crescimento” (Stability and Growth Pacts), or PEC, with austerity measures on public spending that caused controversy in cutting various social services.

The year 2011 started with cuts in salaries to public servants, which led to widespread discontentment [pt] given the government’s inability to find constitutional means to contain spending in a more “just” way.

Another austerity measure with immediate impact on Portuguese pockets since the beginning of the year was the increase in the EU VAT tax [called the IVA in Portugal], applied by the EU on consumption. With a 2% increase in the VAT, a 23% tax is levied on all economic transactions in Portugal. When the government announced that golf (with a contribution of 500 million euros to the GDP) would only be taxed at 6% maximum, the wave of indignation was immediate. The goal would be to promote the economic recovery of the country through tourism, but as it is considered by most a “sport of the rich” [pt], the reduction of the tax on golf sparked a huge controversy in the face of new proposals to cut social services.

The Protest of the Scraping-By Generation on March 12 brought at least 200,000 people to the streets who demonstrated their discontent with increasing unemployment and precarious work. In response to the strong adhesion to the protest, a coalition of blogs formed called Já Basta! (Enough Already!) [pt], demanding the fall of the government.

On March 23, when the Parliament rejected the fourth “Stability and Growth Pact” proposed by Prime Minister Socrates, he presented his resignation to President Cavaco Silva. On the same day, a creative intervention by artist and activist Miguel Januário on the steps of Parliament, marked the day with a golf swing and with ostentation:

“± EGO SUM PANIS VIVUS ±” (I am live bread) by ± on Vimeo

Contradicting what Socrates had claimed [pt] would not happen earlier in the year, in April a request was sent to the troika of the IMF, EC, and ECB to bailout the country from its debts. The conditions for an “inevitable” loan of 80 billion euros [pt] are being assessed.

Is the inevitable viable?

There are a number of “online social movements” that question, and cause one to question, if that which the Government and its bailout agents propose is in fact the best solution.

"The inevitable is unviable" by Gui Castro Felga of "O Blog ou a Vida" (The blog or a life). Image used with permission

"The inevitable is unviable" by Gui Castro Felga of "O Blog ou a Vida" (The blog or a life). Image used with permission

The anti-austerity collective Portugal Uncut takes actions daily against the announcements of cuts of public services around the country.

A manifesto signed by 74 citizens born after 1974 [pt] appeals for a rethink of the changes that are seen in labor markets – with the “regression of labor rights together with a growing precariousness that invades all aspects of life” — as well as changes to the State – highlighting increasing privatization of health and education. They go on to criticize the “new vocabulary” that has implanted itself in the country:

transformando em «credores» aqueles que lucram com a dívida, em «resgate financeiro» a imposição ainda mais acentuada de políticas de austeridade e em «consenso alargado» a vontade de ditar a priori as soluções governativas.

transforming into “creditors” those who profited from the debt, in a “financial bailout”, the imposition of even more accentuated policies of austerity and in “broad consensus” the will to dictate a priori solutions by government.

Launched on April 15, the transparency portal Despesa Pública (Public Spending) [pt] promises to make Portuguese citizens understand how their government spends public monies. The site allows users to search contract documents between state and public and private entities, responding to the lack of information accessible on how and where tax monies are spend, and by whom.

Legislative elections are scheduled for June 5. But before this, let’s see what May brings.

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