Portugal wins German support for bailout changes
A woman walks by a graffiti calling for a past general strike in Portugal Thursday, Feb. 9, 2012 in Lisbon. Workers unions are organizing a national protest against the government's austerity measures for Saturday, Feb. 11. Portugal government is enacting an austerity economic program that includes salary cuts and tax hikes in exchange of a 78 billion euro ($103 billion) bailout needed to stop a bankruptcy in 2011. The graffiti reads in Portuguese "General Strike November 24". (AP Photo/ Francisco Seco)
LISBON, Portugal (AP) — Portugal’s attempts to get some breathing space in its austerity and reform program appears to have won the support of Germany’s finance minister.
Portugal’s promises to introduce a raft of tax hikes, pay cuts and other debt-reduction measures in return for the €78 billion ($103 billion) rescue package have been widely blamed for the country’s deepening recession and record unemployment.
The government has said it wants more flexible bailout terms, which it hasn’t identified, though it insists Portugal doesn’t need more money nor more time to restore its fiscal health.
German Finance Minister Wolfgang Schaeuble was caught on tape late Thursday telling his Portuguese counterpart that Berlin is ready to support possible changes to Portugal’s bailout program.
In comments captured by Portuguese television channel TVI ahead of a European finance ministers’ meeting in Brussels, Schaeuble tells Vitor Gaspar that “the key” for new steps to be taken is first finding a solution for Greece’s ongoing debt woes.
“If then, there would be a necessity for the adjustment of the Portugal program, we would be ready to do it,” Schaeuble said in apparently unguarded comments during a conversation in English between the two.
“That’s much appreciated,” Gaspar replies.
It wasn’t clear whether their entire conversation was recorded.
Schaeuble also cautions Gaspar that members of the German Parliament and German public opinion may be hard to win over because they “don’t believe that our decisions are serious” and remain skeptical about European measures to tackle Greece’s woes.
Portuguese Prime Minister Pedro Passos Coelho has in recent months repeated that his country is keen to soften the bailout terms, though he hasn’t provided details of what exactly Portugal wants.
The possibility of altering the Portuguese bailout program has not been broached publicly by European officials who fear adding more uncertainty to the continent’s two-year-old sovereign debt crisis.
Gaspar told Portuguese media after the meeting ended that Portugal has not made a formal request for a revision of the bailout terms and that it will honor the agreement it signed last May.
A German government official, who described the surreptitious recording as “outrageous,” said Portugal’s efforts “not only fulfill, but even go beyond, the difficult (bailout) program that has been agreed,” making it potentially easier for the country to persuade lenders to accommodate any future needs. The official spoke on condition of anonymity in line with departmental rules.
Many analysts anticipate Portugal will need more help because the Bank of Portugal predicts an economic contraction of 3.1 percent this year. The jobless rate has climbed to 13.6 percent.
Gaspar noted that the international lenders — the International Monetary Fund, the European Central Bank and the European Commission — have already said they will provide further support if Portugal, after enacting its bailout program, is still unable to return to markets next year as planned because of external factors.
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AP writer Gabrielle Steinhauser in Brussels contributed to this report.
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