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Did Portugal Just Shoot Itself in the Foot?

Did Portugal Just Shoot Itself in the Foot?

So posits Teresa de Sousa, a columnist in the Portugese daily Público, anticipating yesterday’s announcement that Prime Minister José Sócrates is resigning after parliament rejected his austerity plan. De Sousa points out that the country was poised to receive favorable terms on accessing the Eurozone’s provisional rescue fund if it adopted the EU’s so-called competitiveness pact and enacted a host of austerity reforms.

With the rejection of these measures, however, Portugal will now not only have to get a bailout anyway, it will do so at more punitive rates, and may even have to call up the IMF.

But was parliament wrong to reject the plan? There is a sense that for all that’s been tried in the past two years to deal with the crisis, nothing’s been accomplished, according to the IHT. The country’s unemployment rate hovers above 11 percent, and it’s debt-to-GDP ratio is nearing 85 percent.

But de Sousa argues that Portugal has thrown the baby out with the bathwater. Yes, Socrates had perhaps lost the confidence of his electorate — just a year ago, the NYTimes quoted him, “emphatically”, no less, as saying, “We don’t need anything from Brussels.”

But the reforms are still necessary, she writes, and now the country will have to get a bailout anyway, at far less favorable terms:

“It doesn’t matter if the Social-Democrats [the opposition party]  is right to punish the way the Prime Minister has gone about things, abandoning his duty to inform and to bargain on the home front. We had a lifeline within reach. We have managed the truly historic feat of opting for a shipwreck. We wanted to avoid the fate of Greece. But that could now be the unavoidable fate that awaits us.”