13th May 2021

Portugal has 'no time' to settle democratic mandate concerns

The European Commission has rubbished concerns that the caretaker administration in Portugal does not have a democratic mandate to negotiate a bail-out package and its attendant stringent austerity and economic restructuring, saying Lisbon does not have time for such concerns.

"Democratic legitimacy? It's not necessary. Apparently they had some mandate when they made the request last night. So if they were empowered last night to make the request, they are empowered to progress with negotiations," commission economy spokesman Amadeu Altafaj told EUobserver. "They simply cannot wait."

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  • Lisbon: The government can negotiate a short-term assistance package but nothing longer (Photo: fnkftw)

Analysts have worried that after the government resigned on 23 March, a caretaker administration would not have the legitimacy to negotiate the terms of what in the case of Greek and Irish bail-outs have turned out to be a thorough re-organisation of the economy. In both cases, virtually all economic decision-making has in effect been outsourced to EU, IMF and ECB experts for years to come.

Prime Minister Jose Socrates battled for months pressure to apply for the bail-out frightened of the loss of sovereignty he saw Athens and Dublin experience.

"We have spoken to the opposition and they have backed the request, so there is agreement on this across the parties," Altafaj added.

He said that the financial assistance will not be a bridging loan to keep the lights on until after the 6 June general election, but a full bail-out package. According to sources close to the discussions, the sum could amount to as much as €90 billion.

He added that the memorandum of understanding with the caretaker government would not be provisional pending the vote and the endorsement of the agreement by the parliament, but that the future government would be bound by its terms.

The new government cannot make changes to the agreement, he said.

"It's not their programme any more. It's ours," he said. "It's being negotiated with the EU. Now we're negotiating it together. It's our programme as well. It's not the same as Socrates' programme of a few weeks ago," he said, referring to the austerity measures that were defeated by the parliament resulting in the resignation of the government.

The commission did however hold out the possibility of tweaking any agreed structural adjustment programme under a new administration in six months' time, but that is it.

"What is possible is that every six months, after the election for example, the commission along with the ECB re-examines the situation and discusses with the Portuguese authorities possible changes to the programme," he continued, referring to the rules governing the eurozone's bail-out mechanism.

According to the bail-out rules, a qualified majority in the Council of Ministers of the EU, representing the member states, then would decide whether to allow any lightening of conditions.

"We're not tying the hands of the government for years," he said.

European Commission experts are to head to the Portuguese capital on Monday along with their counterparts from the European Central Bank to make an assessment of the country's finances. IMF figures are also ready to travel to Lisbon should a similar request for assistance be made to the Washington-based lender.

Negotiations are expected to proceed rapidly, from one to three weeks from the initial request.

"It's just one single negotiation between their ministers and us. It can go very quickly," said an EU official.

Andre Freire, a political scientist with Lisbon University Institute, told EUobserver that the caretaker administration has emergency powers to sign a temporary agreement, but not for any long-term programme of adjustment.

"The problem the caretaker government has is not a constitutional one. It's a transitory government and they have transitory powers," he said. "It is an extreme situation because of the downgrades and so on, so they certainly have the power to take action in this emergency."

"The problem is that they have no political support to sign an agreement for more than one month or three months or something like that," he continued.

"Any long-term agreement should be left open for the incoming government to change."

Indeed, on Thursday, Portuguese government spokesman Pedro Silva Pereira said the caretaker government "clearly can't commit to long-term goals."

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