Friday

22nd Sep 2017

Portuguese head breaks ranks, urges ECB bond-buying

Portugal's President Anibal Cavaco Silva has broken the government's tacit pro-German line and urged the European Central Bank (ECB) to start buying bonds from troubled eurozone countries.

"Why not have the ECB start applying now to public debt securities from Portugal and Ireland the orientation announced by its president," Cavaco Silva said in a message posted on his Facebook page on Thursday (9 August).

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

  • Silva's Facebook page - Lisbon has so far been a poster child for southern bailouts (Photo: facebook.com)

He was referring to statements made last week by ECB chief Mario Draghi that the bank could start buying distressed bond, but only in September, pending an internal review and a vote by the bank's board.

The German board member, central bank chief Jens Weidmann, so far opposes the move, which is a taboo in German politics.

Portugal signed up to €78 billion in aid from the eurozone bailout fund and the International Monetary Fund (IMF) in 2011, after Greece and Ireland.

EU and German politicians have constantly praised the government in Lisbon for its reforms in an attempt to show that not all southern countries are like Greece.

Popular resistance to austerity has been less visible in Portugal than in Greece and Spain, even though unemployment remains over 15 percent and the economy is still in recession.

The open Portuguese appeal comes after more veiled demands from the Spanish and Italian governments, as well as the IMF, for the ECB to play a new role.

Unacceptable in Germany's view, which wants the ECB to act on the model of the Bundesbank - which is completely independent from politics - and to stick to its original EU mandate on keeping down inflation.

The ECB has a problem in asking EU states which it helps with cheap loans or bond-buying to make political reforms and budget cuts because it does not have any democratic oversight.

"If the ECB will buy any more bonds, it would take up a distribution role for which it has no mandate or democratic legitimacy," Claudia Buch, one of the German economists on a recently-created panel of "wise men" on ECB reforms, told Der Spiegel in its latest print edition.

ECB in nuanced denial of yield cap plans

The European Central Bank has condemned media reports about a bold plan for the bank to bring down eurozone government borrowing costs but has not denied the idea outright.

Economic gloom poses problems for bailed-out countries

Recession-hit Portugal is likely to miss its deficit target this year, the troika of international lenders is expected to conclude in September. Meanwhile, lower growth in Ireland may also bring troubles further down the road.

Portugal in crisis after 1mn say No to austerity

Portugal is in political crisis as it struggles with a major popular backlash in the face of troika-approved austerity measures that would raise social contributions for employees.

ECB under pressure on bond-buying

Pressure is mounting on the ECB ahead of a key meeting on whether to buy Italian and Spanish bonds to help stabilise the euro.

Investigation

EU bank accused of muzzling watchdog

An ongoing review of the the European Investment Bank's "complaints mechanism" could make the oversight branch less independent and less effective.

Stakeholders' Highlights

  1. Mission of China to the EUGermany Stands Ready to Deepen Cooperation With China
  2. World VisionFirst Ever Young People Consultation to Discuss the Much Needed Peace in Europe
  3. European Jewish CongressGermany First Country to Adopt Working Definition of Antisemitism
  4. EU2017EEFour Tax Initiatives to Modernise the EU's Tax System
  5. Dialogue PlatformResponsibility in Practice: Gulen & Islamic Thought
  6. Counter BalanceHuman Rights Concerns Over EIB Loan to the Trans Anatolian Pipeline Project
  7. Mission of China to the EUChina Leads the Global Clean Energy Transition
  8. CES - Silicones EuropeFrom Baking Moulds to Oven Mitts, Silicones Are a Key Ingredient in Kitchens
  9. Martens CentreFor a New Europeanism: How to Put the Motto "Unity in Diversity" Into Practice
  10. Access MBAGet Ahead With an MBA Degree. Top MBA Event in Brussels
  11. Idealist QuarterlyIdealist Quarterly Event: Building Fearless Democracies With Gerald Hensel
  12. Mission of China to the EUPresident Xi Urges Bigger Global Role for Emerging Economies

Latest News

  1. Leave politics out of agencies debate, says Polish minister
  2. Facebook helping Germany to stop Russian meddling
  3. It's time to de-escalate the situation in Catalonia
  4. Barnier: UK risks undermining trust in Brexit talks
  5. EU 'embarrassed' by Catalan 'taboo'
  6. EU-funded lobbying is expensive and undemocratic
  7. EU takes time to ponder tech giant tax
  8. Dieselgate disappointed car-loving commissioner