Portugal will be asked to implement sweeping austerity measures and conduct a major privatisation programme when negotiations begin next week to hammer out a likely €80bn bailout package with the European Union and International Monetary Fund.
Another eurozone country has been humbled by its banks. Earlier this week, Portugal’s banks were threatening a bond-buyers’ go-slow unless the caretaker government sought financial help from other European Union countries. After being beaten up in Wednesday’s debt auction, Lisbon has waved the white flag. The country’s caretaker leaders have now admitted that Portugal will need outside help.
As the international community prepares for a gathering of political leaders in Qatar next week to discuss the crisis in Libya, it is worth watching the recent travels to Brussels and other European capitals of Jean Ping, head of the African Union commission.
It has been more than a week since European presidents and prime ministers signed off on a raft of measures to shore up the eurozone’s debt-ridden peripheral economies, but so far the markets haven’t responded the way most leaders hoped – particularly in Portugal, where the ongoing political turmoil has driven borrowing costs to euro-era records just as the country needs to dip back into the market.
There have also been some rather unusual public recriminations from top European Union leaders who feel the so-called “grand bargain” did not go far enough, including Jean-Claude Trichet, president of the European Central Bank, and José Manuel Barroso, the European Commission president.