- ‘Just 24 hours before Europe’s presidents and prime ministers are due to gather in Brussels to finalise a deal intended to shore up the eurozone’s debt-ridden peripheral economies, one of the countries they are trying hardest to save could collapse before their eyes.
Officials and diplomats in Brussels fear the Portuguese government’s likely failure on Wednesday to win parliamentary approval of European Union-backed austerity measures could leave Lisbon rudderless for months – particularly if José Sócrates, the prime minister, follows through with his threat to resign.
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The problems would become even more acute if elections are called, which would likely not be held until May. Portugal must refinance €4.5bn ($6.4bn) in debt in April and another €5bn in June, and analysts remain unsure whether Lisbon has the financial wherewithal to meet those obligations. Without a government, political uncertainty could make the markets even more wary to lend.
Even if Portugal were to ride out the storm with its government in limbo, European officials worry that failure to pass the EU-backed measures on Wednesday and Mr Sócrates’ resignation could overshadow the upcoming summit.
“If there is a fall of the Portuguese government, we’re in trouble,” said one senior European diplomat involved in economic negotiations. “How do you sell this as a credible collective response?”’
‘This week may be important for eurozone debt markets.A vote on the Portuguese minority government’s austerity package is expected on Wednesday. The main opposition says it won’t back the measures and this could lead to prime minister José Sócrates’s resignation.
- in: CC
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