Wednesday, March 23, 2011

PM's resignation heightens tension ahead of meeting

"EU SUMMIT: THE RESIGNATION last night of Portuguese prime minister Jose Socrates heightened anxiety on the eve of crucial European summit that the country would soon have to follow Ireland and Greece into an EU-IMF bailout.ARTHUR BEESLEY, European Correspondent

As parliament in Lisbon rejected a new austerity plan amid huge pressure on the country’s borrowing costs, there was open speculation in Brussels that Portugal’s hopes of averting an international intervention were fading rapidly.

The likelihood of a new euro zone bailout could have implications for Ireland’s dialogue with the EU authorities over the bank and interest rate on Ireland’s rescue loans.

A senior European diplomat said the development of a rescue programme for Portugal could provide scope to revisit the Irish deal, particularly the elements related to the banks.

Dublin wants to slow down the pace of bank deleveraging set out in its rescue programme and to persuade the European Central Bank (ECB) to move from the provision of emergency short-term liquidity support to medium-term support.

Mr Socrates met President Anibal Cavaco Silva late last night and offered him his resignation. “This political crisis has very grave consequences for the confidence Portugal needs from institutions and the financial markets,” Mr Socrates warned.

The president said in a statement that he would hold meetings with all parties on Friday and that the government would retain full powers at least until then.

The political drama in Lisbon has added huge pressure on EU leaders as they gather for a two-day summit in Brussels at which they were to sign off on a big overhaul of the euro zone bailout scheme...." LINK

Germany has turned the idea of a unified European Union foreign policy into a farce.”

Germany Steps Away From European Unity

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