Portugal’s caretaker government said it will make sure that all the country’s opposition parties and the president are informed about the EU bailout talks while it assumes responsibility for leading the negotiations. “We just want this to work out well for Portugal,” Prime Minister Jose Socrates said on the Socialist Party’s annual congress WSJ informs. “The government will assume the responsibility in leading negotiations with European institutions over a financial assistance program so that the country won’t run any risk in terms of state financing, the banking system, and the economy,” he added. A delegation from the European Commission, the European Central Bank and the International Monetary Fund are due to descend upon Lisbon today to begin negotiations on a financial bailout package to help Portugal cope with its spiraling borrowing costs. The bailout, however, won’t be an exact replica of the austerity package and will likely involve an ambitious privatization of state assets to help raise money to offset part of the aid, Olli Rehn, the EU’s economy commissioner, said last week.
To secure a bailout worth about EUR 80 bln, Portugal may have to agree to international creditors’ demands that it impose tougher austerity measures than those its own lawmakers rejected less than a month ago CNN considers. This paradoxical situation is fueling divisions in Lisbon before a June 5 general election that was itself called because of a parliamentary standoff over how to clean up the public finances. In fact, Portuguese politicians may be more concerned about not getting blamed by voters for seeking outside help than about negotiating favorable terms for that rescue, valued at USD 116 billion.