Sunday

25th Jun 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).

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

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.

Focus

EU and China move to fill US void

At a summit in Brussels, EU and Chinese leaders will attempt to deepen ties on trade and climate as US president Trump plans to pull out of the Paris climate deal.

Italy reaches EU deal on failing bank

After months of negotiations, the European Commission and Italy agreed on the terms of rescue for Monte dei Paschi di Siena bank, including job cuts, salary caps and private sector involvement in the bailout.

News in Brief

  1. Merkel and Macron hold symbolic joint press conference
  2. Juncker has 'no' clear idea of kind of Brexit UK wants
  3. Belgian PM calls May's proposal on EU citizens 'vague'
  4. UK lacks support of EU countries in UN vote
  5. Spain to command anti-smuggler Mediterranean force
  6. Estonia confirms opposition to Nord Stream 2 pipeline
  7. Ireland and Denmark outside EU military plan
  8. EU leaders renew vows to uphold Paris climate deal

Stakeholders' Highlights

  1. EPSUOn Public Services Day, Stop Austerity! Workers Need a Pay Rise!
  2. EGBAOnline Gambling: The EU Court Rejects Closed Licensing Regimes In Member States
  3. World VisionFaces of Today, Leaders of Tomorrow: Join the Debate on Violence Against Girls - 29 June
  4. ECR GroupThe EU Must Better Protect Industry from Unfair Competition
  5. Malta EU 2017Better Protection for Workers From Cancer-Causing Substances
  6. EPSUAfter 9 Years of Austerity Europe's Public Sector Workers Deserve a Pay Rise!
  7. Dialogue PlatformGlobalised Religions and the Dialogue Imperative. Join the Debate!
  8. UNICEFEU Trust Fund Contribution to UNICEF's Syria Crisis Response Reaches Nearly €200 Million
  9. EUSEW17Bringing Buildings Into the Circular Economy. Discuss at EU Sustainable Energy Week
  10. European Healthy Lifestyle AllianceCan an Ideal Body Weight Lead to Premature Death?
  11. Malta EU 2017End of Roaming Charges: What Does It Entail?
  12. World VisionWorld Refugee Day, a Dark Reminder of the Reality of Children on the Move

Latest News

  1. Macron’s investment screening idea watered down by leaders
  2. Leaders unimpressed by May’s offer to EU citizens
  3. New Irish PM praises unscripted nature of EU summits
  4. EU extends sanctions on Russia
  5. UK's universities set 'Brexit wish list'
  6. Decision on post-Brexit home for EU agencies postponed
  7. May's offer on citizens’ rights dismissed as ‘pathetic’
  8. 'Historic' defence plan gets launch date at EU summit