Portugal has lost a one-year long battle to stave off a European bailout. As the world’s attention was diverted to the human tragedy in Libya, the disaster in Japan and protests around the world, everyone forgot about Portugal.
For a whole year, the government battled to implement round after round of austerity measures to prevent a bailout. On Wednesday, the government resigned as parliament voted against a government motion to introduce another round of measures.
The news came as European leaders began to make preparations to leave for Brussels, for the European Council meeting, which began yesterday. The agenda set for the council meeting was originally employment, economic growth and fiscal consolidation.
As ever, the rug has been pulled from underfoot. While it might have been plausible to believe that the summit meeting might have been taken over completely by the Libya issue, it now seems more likely to have a rerun of the Greece bailout summit.
The agenda was more or less the same as this summit’s, but all items were shelved for a later date as European leaders tried to reach a decision, late into the night, on whether or not to give a bailout, and how it would be implemented.
Portugal, or rather the former Portuguese government, had insisted all along that it would not need a bailout and that it had both the parliamentary backing and the right plan to avoid default.
It is clear now, that while the former government led by Jose Socrates made a good effort, it was always going to be too little, too late. Some months back, this newspaper had stated that Portugal was the last bulwark to guard against strife for Spain.
But as it became increasingly more obvious that Portugal cannot afford to borrow off the commercial markets, it is becoming increasingly clear that Spain will be next. The European Union, from the start, said it could afford to bail out Greece, Ireland and Portugal at a push. But the money simply does not exist to bail out Spain if it needs it in the future.
The Spanish nation is beset by rampant unemployment, a huge deficit and a massive public debt. Jobs are not being created and its economy is barely moving. Luckily though, there has been a reprieve in the banking sector as some ratings were recently upgraded.
While the attention of Europe should be focused on the potential human tragedy that might unfold in view of the Gaddafi crisis, it is sad that money will once again take centre stage. However, this is not all that surprising, considering that we do live and work in a Capitalist economy.
On a local level, the Prime Minister will more than likely focus on the need to stop scaremongering in the tourism sector. He will also be likely to dedicate a lot of his time to David Cameron, who sits next to him during all functions. With the ongoing issue of Libya, one is sure that the pair will have a lot to say to each other. One side will likely raise the issue of refugees and the other on the potential use of Malta for logistic support. What is surely of interest to both is oil. British Petroleum has made a massive investment in Libya while Malta has always been under Gaddafi’s shadow in its search for oil.