Portugal attests austerity alone cannot reign in debt crisis


Little by little, the Portuguese state is going down in defeat. In April 2011, when the country got a loan of €78bn from the troika (EC, ECB and IMF) to avoid bankruptcy, it committed itself to privatisation. But under the leadership of Passos Coelho, a model student of the fiscal discipline demanded by the troika, the sell-off of the “crown jewels”–what’s left of them, that is–has sped up. The aim is to slash the public deficit. At the end of 2012, to the satisfaction of the troika, the country closed out its accounts with a deficit of 5.6 per cent of GDP, down from 6.7 per cent a year earlier. The goal is to get to 3 per cent by the end of 2014.

Like other Portuguese assets, plunged into recession and falling victim to savage budget cuts, the naval shipyards of Viana do Castelo have been put up for sale. Since 2012, Norwegian, Brazilian and Chinese parties have tried to take over the country’s leading shipyard. But negotiations with EMPORDEF, the state agency that owns the shipyard, have dragged on.

For the 80,000 or so inhabitants of Viana, like for the rest of the country, the powerful wave of privatisation is causing a lot of worry. “Some of these state enterprises are gems, others are junk buckets, but they’re all strategic assets. And we’re losing them forever,” worries Bernardo S Barbosa, head of the local weekly Aurora do Lima. The Socialist mayor, José Maria Costa, shares a growing national concern: the feeling that the country is losing its sovereignty. In a vast room at City Hall, this engineer by training reacts very angrily to the policy of the executive: “By taking away our public assets, which are so vital, to the benefit of foreign companies, and private interests at that, we’re losing control of our own destiny. I even fear that in the end it will affect our freedom and democracy.”

* Read more here.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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