LISBON: Furious protests greeted German Chancellor Angela Merkel as she arrived in bailed-out Portugal yesterday to defend Lisbon’s sweeping austerity cuts.
Merkel’s trip coincided with a review of Lisbon’s 78-billion-euro ($101-billion) international bailout and came at a time of growing opposition in the eurozone to the impact of austerity measures.
Police deployed in large numbers, blocking off some streets and holding at bay demonstrators who booed Merkel, accusing her of seeking to dominate Europe by demanding austerity policies to fix state finances.
As she arrived at the Portuguese presidential headquarters, Merkel was met by protesters waving banners reading: “She wants to kill the Portuguese, she wants supremacy in Europe!“; “Portugal is not Merkel’s country“; “Angela Merkel assassin“; and “A European Germany yes, a German Europe no.”
Demonstrators released black balloons in a sign of “mourning” and earlier in the day they covered several Lisbon monuments in black sheets to show their discontent.
On the eve of her visit, the German leader said there was no need for a renegotiation of Portugal’s stringent program, which has already been relaxed, and no need for a second bail-out.
“I think a lot of people will voice the difficulties they face because of the austerity measures,” Merkel said in an interview with Portugal’s RTP television.
“Of course a program of this kind sparks major debate but the government has shown great courage in taking these measures and I have the greatest respect for what this country is doing,” she added.
“At this stage there is no reason for a renegotiation. Portugal is respecting its commitments with courage.” Merkel met with President Anibal Cavco Silva before holding talks with Prime Minister Pedro Passos Coelho in an ancient fort at the mouth of the River Tagus.
At the same time, the European Commission, European Central Bank and International Monetary Fund began a quarterly review of Lisbon’s progress in meeting the terms of its bailout.
The one-week mission will decide whether to release the next 2.5-billion-euro payment from the program, agreed in May 2011. A member of the Portuguese government said “it should go well.”
At its last visit, the powers behind the bailout relaxed Portugal’s deficit targets in part because of damage the cut backs had wrought on the economy, which is now in recession with record unemployment.
Merkel’s visit comes at a pivotal time in the eurozone crisis.
On the eve of her trip, Greece’s parliament agreed to deeply unpopular 2013 budget cuts, including lowering salaries and pensions, to unlock a payment from its international bailout.
Spain, the eurozone’s fourth largest economy, is holding off seeking a rescue, which would also come with strict conditions.
For the moment, Spain is benefitting from lower borrowing costs after the European Central Bank expressed its willingness to buy Spanish bonds if Madrid triggers a bailout.
Portugal has already swallowed the budget pill. Its center right coalition last month adopted an austerity budget for 2013 that includes swinging public spending cuts and sharp tax increases.
The prime minister has undertaken to lower the public deficit to the equivalent of 4.5 percent of gross domestic product next year, from a target of 5.0 percent this year.
His government is seeking 5.3 billion euros in savings in the 2013 budget, 80 percent of which coming from tax hikes.