Despite the government’s constant affirmations to the contrary, 2014 arrived under a cloud of uncertainty. Prices are rising across the board and public confidence that Portugal is truly “on the right path” is far from buoyant. With international economists placing Portugal for the first time among countries with a “high risk” of social unrest, the country’s military has stressed that it too is at a psychological breaking point, “humiliated” by cost-cutting policies and reforms, and ready to “intensify” its own calendar of protests. Meantime, opposition parties are pointing to 2014 being the year when the tide will turn “towards disobedience to the Europe of the troika”.
Perhaps the greatest shadow over the New Year in Portugal is the uncertainty as to how Passos Coelho’s coalition government will fill the €388 million ‘gap’ left by the Constitutional Court’s veto of plans for state pensions.
Many fear a hike in IVA (VAT) is the most likely ‘quick fix’ – and of course this will hit the cost of living even further. As a television report on the New Year’s price increases pointed out, any increase in IVA will “further aggravate the effect of all the expenses on the already empty pockets of the Portuguese”.
It is hardly surprising therefore that the Economist Intelligence Unit – an independent international think tank – has elevated Portugal’s risk classification for social unrest and disobedience from “moderate” to “high”.
The one saving factor appears to be that protests are being organised by unions, not extremists, and are therefore less violent than they could be, and more likely to remain controlled.
Speaking to Público newspaper, António Costa Pinto, an investigator with the institute for social sciences, explained: “The greater the involvement of trade unions, the lower the violence.”
The military too have kept their cool, this far. Despite extraordinary scenes in November when security forces stormed the steps of Parliament to express frustrations over the government’s relentless policies of austerity, demonstrations up until now have ended peacefully.
The picture may well continue into the New Year, but it is full of clouds, with reports in a number of newspapers pointing to an intensification of protests for 2014.
“The calendar is undefined but the socio-professional associations will not remain idle after the winding up of the military’s pension fund,” wrote Correio da Manhã over the weekend in an article entitled “Military ready for protest”.
Explaining the situation further, Lima Coelho of the national association of sergeants, promised a year of protest in commemoration not only of the 123 years since the 1891 Republican revolt, but the fact that it is now 40 years since the April 25 Revolution, and 25 since the association’s founding.
Discussing the state of the nation – and the role being played by President Cavaco Silva, Coelho said: “The mask is starting to fall. He is not the president of all the Portuguese, but of the majority that governs.”
Still both Lima and Pereira Cracel, the president of the officers’ association of the armed forces, refused to be drawn on what kind of protests 2014 would bring – simply stressing they would do “everything they could” to change the way the military was being treated.
As Left Bloc coordinator Catarina Martins declared, 2014 looks like being a year of “turning point and disobedience to the Europe of the troika”.
While these undercurrents play out – and the country awaits the coalition’s decision for the gap in the State Budget – Portuguese families and everyone else living here are faced, as of January 1, with price increases across the board – many of them percentage points over the government’s agreed 1% rate of inflation.
In a nutshell, electricity is up 2.8%, rents, public transport, car tax for diesel cars, hospital charges, cigarettes, alcohol, telecommunications and internet charges are all increasing at various levels, and gas too – which leapt by 3.9% last summer – is set to rise again by the middle of the year.
Prices in restaurants are also expected to increase, as those that remain open struggle to survive with 2012’s hike in IVA to 23% – 13% more than in neighbouring Spain, and the highest rate ever for Portugal.
Talking to Público newspaper, José Manuel Esteves of the restaurants and hoteliers association, AHRESP, said: “If establishments don’t increase their prices, they will have only one way ahead, which is to close”.
Another uncertainty – unlikely to be lined in silver – are water bills, which are already weighing heavily on households up and down the country, particularly in the Algarve where charges have skyrocketed in recent years.
Perhaps the only bit of ‘good news’ is that the cost of bread and milk is staying put, as well as that of generic medicines.
Toll charges too are unlikely to change – which will bring few smiles certainly in the Algarve where most drivers avoid the A22 toll-road on principle.
But as Economist Intelligence Unit analyst Laza Kekic points out, while economic problems are always a prerequisite for demonstrations, they do not explain the whole “explosion of protests” that have battered countries in recent years.
“The reduction of incomes and a high rate of unemployment do not always result in social unrest,” he said. “Only when economic problems are accompanied by other elements of vulnerability is there a high risk of instability. These factors include a large inequality in incomes, a weak government, low levels of social support, ethnic tensions and a history of violence and public disorder. Recently, the flashpoint for tumults has been the erosion of confidence in governments and institutions: the crisis of democracy.”
Certainly in Portugal, there is a large inequality in incomes and the very barest levels of social support. Whether the government is strong enough to weather the demonstrations and public anger that lie ahead in 2014 it remains to be seen.
Portuguese President approves 2014 State Budget
Portugal’s President Cavaco Silva has promulgated the 2014 State Budget, one that contemplates more cuts and more austerity – the news was published in the government’s official gazette Diário da República on Tuesday this week.
Although the President did not send the State Budget to the Constitutional Court for “preventative checking”, he may still decide to submit it for “successive checking” to ensure the “constitutionality” of some of the rulings, which was the case in 2013.
The budget was approved in Parliament by a PSD/CDS-PP majority on November 26, with all members of the opposition voting against it.
The document predicts economic growth of 0.8% in 2014, a deficit decrease to 4% and the public debt to fall to 126.6%, while the unemployment rate will continue to rise to 17.7%.
Public servant wages will also suffer cuts ranging between 2.5% and 12% for salaries above €675.
By NATASHA DONN [email protected]
