27th Oct 2016

Merkel wants to 'bring hope' to Portugal

German Chancellor Angela Merkel has confronted the ire of exasperated Portuguese, but maintained that "painful reforms" are the only way out of the crisis and that the government in Lisbon is doing all the right things.

On her second trip to a bailed out country over the span of a few weeks, Merkel wanted to show her empathy with the Portuguese people suffering under the austerity programme prescribed by international lenders.

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  • Merkel is on a charm offensive in bailout countries (Photo: Bundesregierung/Bergmann)

"I know the effects of the adjustment are being felt very intensely here at the moment," Merkel said on Monday (12 November) during a joint press conference with Prime Minister Pedro Coelho.

"This is also a visit to find out more about the situation here and perhaps to give a little hope," she said, adding that she came along with investors and ministers wiling to help create more jobs.

Unemployment in Portugal stands at 16 percent and the economy is in its third year of recession.

Germany had shown "solidarity" as it was the largest contributor to the €78 billion bailout for Portugal and "will continue to do so," Merkel said. But she insisted that the public deficit (5% of GDP) and debt (108% of GDP) had to be cut back and structural reforms implemented to make the country more competitive and spare the next generations from an ever-bigger growing bill.

Of the protesters that portrayed her as a Nazi and chanted "Merkel raus" - similar to what happened during her visit to Greece last month - the German Chancellor said that in a democracy people have their right to express their opinion.

"I lived for 34 years in the former Democratic Republic of Germany and back then protests were not allowed. Protests belong to democracy. Perhaps we should visit each other more often in these times of crisis," Merkel said, in a veiled admission that her olive branch-reaching visits to bailed out countries should have happened earlier.

As for the wage cuts and other "competitiveness-boosting" measures adopted by the centre-right government in Lisbon, Merkel said they were "courageous" and they would eventually come to bear fruit.

"But it takes a while. Germany too went through a painful adjustment, we had 5 million unemployed and the rate went even higher after labour market reforms were introduced," she said.

For his part, the Portuguese Prime Minister said all the things Merkel wanted to hear - competitiveness is the key, people should understand that the austerity pill is needed to correct "mistakes of the past" and the German Chancellor is not to blame for the current hardships.

Even Greece, a fellow bailed out country, should strive not to disappoint lenders, he added. "Our partners in the eurozone are trying hard to keep Greece in, but it is also up to them to stay," he said.

The troika, consisting of experts from the European Commission, the European Central Bank and the International Monetary Fund, recently started its review of Portugal's efforts needed to disburse the next bailout tranche.

But popular support for the bailout is fading away. Last time around before a troika report, the government had to scrap a controversial cut in what employers had to pay for their workers' social rights after mass protests and strikes over the move.


Europe ready to tackle Greek debt relief

The Greek government has built and broadened alliances in EU institutions and member-states that acknowledge the need to restructure the debt and deliver another economic model for the eurozone.

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