Portugal PM names new deputy to save coalition

AFP/DPA Lisbon

Portugal’s prime minister has announced a deal aimed at preventing his coalition government from falling apart in a political crisis sparked by the resignation of foreign minister Paulo Portas.Under the agreement, Portas would stay on in government and take on a bigger role – as “deputy prime minister with the responsibility of co-ordinating economic policies and relations with the “troika” of Portugal’s creditors”, said Pedro Passos Coelho in a press conference alongside Portas.The shock resignations of finance minister Vitor Gaspar and Portas had raised the spectre of a fresh wave of instability in the eurozone’s debt-laden periphery, where public anger was rising against painful reforms imposed by international creditors.As Portuguese stocks plunged and country’s 10-year borrowing rates soared to critical levels, Passos Coelho held frantic talks to save his shaky coalition.Late on Friday, he announced that he had reached an agreement with Portas – who is also leader of the junior partner in the ruling coalition, to save the government from collapse.However, any political deal would have to have the support of President Anibal Cavaco Silva, who has the power to dissolve parliament and call for elections.Unions are piling on the pressure by calling a demonstration in front of the presidential palace to demand the government’s resignation.“The government does not want new elections because they know that they would be punished at the polls for their policies to impoverish the country,” union chief Armenio Carlos said at the demonstration, in which politicians of the leftist opposition also took part.A rupture between Passos Coelho’s centre-right Social Democratic Party and its smaller coalition partner, the conservative-nationalist CDS-PP, would have left Passos Coelho without a parliamentary majority.In the meantime, the opposition and unions demanded that President Silva dissolve parliament. They urged new elections against the background of record unemployment and recession.At the heart of the crisis are the painful economic reforms pushed by Passos Coelho’s coalition in exchange for desperately needed loans from the “troika” of international creditors – the European Union, the European Central Bank (ECB) and the International Monetary Fund (IMF).The austerity measures including layoffs and higher social security contributions have thrown Portugal into a deeper recession with higher unemployment than had been expected, sparking protests.The government expects the economy to contract by 2.3% by the end of the year, while the unemployment rate has soared to a record 18.2%.According to a survey published yesterday by the bi-weekly Expresso, 37.2% of those surveyed said they favour early elections, while 45.1% wanted the status quo or a new government headed by the president.