As
Portugal’s right-wing government announced the harshest austerity cuts
in the country’s history, economic forecasts were revised down and the
main trade union confederations CGTP and UGT announced the calling of a
general strike.
As
Portugal’s right-wing government announced the harshest austerity cuts
in the country’s history, economic forecasts were revised down and the
main trade union confederations CGTP and UGT announced the calling of a
general strike.
October 15. Photo: BlocoAmong
the measures proposed in the 2012 budget which was presented to
Parliament on Monday, October 17, is the cutting of Summer and Christmas
bonuses worth a month’s wages each for civil servants earning over 650
euro a month (which will mean a 20% cut in income), increases in VAT for
certain goods (in some cases from 6% to 23%), an extension of the 5%
salary cut for civil servants into 2012, cuts in pensions, a 50% cut in
pay for overtime and a proposal to allow businesses to lengthen the
working day by 30 minutes without any additional pay.
The
government expects to achieve spending cuts to the tune of 4.4% of GDP
and revenue increases equal to 1.7% of GDP. The budget also includes a
massive privatisation plan for 2012 to raise 4 billion euros. This
includes the sale of the national airline TAP, airport managing company
ANA, the freight transport branch of the railways CP, and the postal
service CTT, next year, as well as selling off stakes in the power and
electricity companies EDP and REN, this year.
Even if all these
measures are passed and implemented, Portugal’s debt will still reach
100.8% of GDP this year (up from 93.3% in 2010) and increase to 106.8%
in 2013, before it starts to be reduced. The government intends to cut
the budget deficit from 9.8% of GDP in 2010, to 5.9% in 2011 and 4.5% in
2012, before reaching the EU limit of 3% in 2013.
However, as the
first news of these massive austerity cuts were being announced, the
economic forecasts were already revised down, both for 2011 and for
2012. Portugal’s GDP is now expected to contract by 1.9% in 2011 and a
by 2.8% in 2012 (up from an earlier estimate of 2% in May at the time
when Portugal agreed a bailout plan with the European Union). This would
be Portugal’s worst recession since 1975. These measures come on top of
already savage austerity cuts implemented in the 2011 budget by the
former Social-democratic government and which were agreed as part of the
78 billion euro EU bailout plan.
Even as the government presented
its budget proposals, EU Economic and Monetary Affairs Commissioner
Olli Rehn warned that these cuts might not be enough, pointing out how
Portugal was on course to a 2011 budget deficit equal to 8.3% of GDP,
instead of the 5.9% which had been agreed as part of the bailout. This
means a further 3.4 billion euros’ worth of cuts or additional revenue
were needed.
The government is heavily relying on increasing the
country’s exports in order to meet its targets, forecasting a 4.8%
increase in exports for 2012. However, the bleaker economic prospects
for the rest of Europe and the world economy as a whole make this a very
optimistic target. Unemployment, which was 8.3% in 2006, is expected to
reach 13.4% next year.
Furthermore, families are being asked to
pay the bulk of this savage adjustment plan (6.2 billion euro or a 5%
across the board cut in living standards), followed by the state (3.2
billion euro worth of cuts) and with the capitalists only contributing
650 million euros in increased taxes and cuts in subsidies. Overall,
state expenditure in social subsidies will be cut by 4.3% and the state
wage bill will be reduced by nearly 15% through wage reductions,
redundancies and cuts in bonuses. Most of the increased revenue from
taxation will also come from increases in VAT which hit working people
hardest.
The problem is that, like in Greece, these massive cuts
will have the effect of contracting internal demand and therefore
further aggravating the recession. The Finance Ministry itself foresees a
steep contraction of private consumption of 3.5% this year and 4.8%
next year.
Rui Barbara, an economist at Banco Carregosa was quoted
by Reuters warning that these measures can have the effect of making
the recession worse: “On the one hand one can understand the
government’s plan to try to highlight that we are different to Greece
but on the other hand there is the risk of a snowball effect with more
recession, lower revenues and a tougher downturn.” The “markets” share
this pessimistic view and already in July Moody’s downgraded the rating
of the Portuguese debt to the level of junk bonds.
Prime Minister Pedro Passos Coelho is confident that this budget will
be passed by parliament where his ruling coalition won a comfortable
majority after the June 5th elections. Between the “Social
Democratic” (right wing) and the Peoples’ Party he controls over 56% of
the seats in Parliament. The election results, where the Socialist Party
(Social Democrats) of former prime minister José Socrates were heavily
defeated, created a mood of confidence in the ruling class that the
right-wing government had a clear mandate to implement these austerity
policies.
This is a complete misreading of the situation. As a
matter of fact, the defeat of the Socialist Party whose votes went down
from 36 to 28%, losing about 1/3 of its votes, was precisely the result
of its implementation of austerity policies which had been met with
fierce resistance in the streets, including a general strike in November
2010 (The general strike and the tasks of the left).
The left parties were unable to capitalize on this opposition. The
Communist Party only narrowly held on to its vote at 7.9%, while the
Bloco de Esquerda, BE, lost nearly half of its votes (from 9.8% to
5.1%). Unfortunately, the leadership of neither of these two parties
offered a clear alternative to the serious economic situation that
Portugal is facing. The most radical measure that they advocated was an
“auditing” of the debt and its “renegotiation.” In reality, faced with
an extreme economic crisis, the only alternative to massive austerity is
a clear socialist programme, starting with the repudiation of the debt
and the nationalisation of the banks and key sectors of the economy.
Anything short of that was seen as not realistic. After all, Greece is
“renegotiating” its debt with the troika and all it has meant is even further austerity cuts.
In
the case of the BE, which had achieved an excellent result in 2009 on
the basis of appearing as a clear alternative to the left of
social-democracy, its leadership and elected members of parliament and
members of the European Parliament have come under strong pressure from
bourgeois public opinion which led them to vote in favour of the Greek bailout (Bloco de Esquerda votes for Greek bailout loan)
(which means nothing else but massive austerity cuts), in favour of the
bombing of Libya, etc. Its support for the Socialist Party presidential
candidate in January this year, the same SP which in government was
implementing austerity cuts, did not do them any favours. The BE does
not have the same social roots in the working class as the Communist
Party, and therefore a large part of the radical protest votes it
attracted in 2009 were now lost.
Some sections of the population,
faced with the realization of how deep the economic crisis really is,
and with the lack of any serious alternative to the left, decided to
vote for the right-wing Socialdemocratic Party of Passos Coelho, as a
“strong” option to deal with the crisis. However, it would be completely
wrong to interpret the election results (with a historically low
turnout) as an indication of solid and lasting support among the
majority of the population for an onslaught against the working class.
On the contrary!
Already ahead of the budget proposals, the
powerful Communist Party led CGTP trade union confederation called
rallies against the austerity measures on October 1st. On
that day, 130,000 marched in Lisbon and another 60,000 in Porto, the
country’s second largest city. One of the demonstrators, quoted by AFP,
summed up the mood: “The people are quite disheartened. They no longer
believe in anything and have given up… but they are starting to see the
need to demonstrate against the policies of the government.”
that day, the unions announced a series of strikes to take place
between October 20 and 27. After seeing the details of the budget, the
unions (CGTP and UGT) have announced a general strike, possibly for
November 24, although a definite date has not yet been set. Revealing
the mood of anger which has been created by the accumulation of cuts and
austerity, in explaining the call for the general strike, CGTP leader
Armenio Carlos made an appeal to use article 21 of the Constitution
which says that “Everyone has the right to resist any order that
infringes his rights, freedoms, or safeguards and to repel by force any
form of aggression when recourse to public authority is impossible.” The
fact that both unions are united in this action is also significant, as
for two decades prior to the general strike last year there had been no
unity of action.
On the October 15 global day of action, 40,000
people marched in Lisbon, as part of the movement known as “Geração à
Rasca” (Generation in a tight spot). As a matter of fact, the Spanish
movement of the indignados was preceded by a massive mobilization of the Portuguese youth on March 12, when, called by the Geração à Rasca initiative,
hundreds of thousands of youth came out onto the streets all over the
country (300,000 in Lisbon alone). This protest was an indication of the
enormous accumulation of anger that was building up, but also of the
fact that the traditional left parties and organizations were not really
offering a channel to express it.
As an indication of how
widespread opposition to these measures is, on September 28 there was a
demonstration of off duty police officers protesting against pay cuts,
but when on duty police tried to prevent them from reaching the Finance
Ministry, they ended up joining their colleagues and marching together (video). The protest was part of a “week of indignation” called by the police officers’ union and professional associations.
Even
more worrying from the point of view of the government is the protest
movement in the ranks of the Army. In a press conference on October 14,
the National Association of Sergeants (ANS) openly criticized the
government’s austerity measures, particularly the cuts in Summer and
Christmas bonus pay, which they said meant a “worsening of what was
already a very difficult situation”. The president of the ANS, Antonio
Lima Coelho warned that they are “at the service of the Portuguese
people and not of any specific institutions,” and that “no one should
think that the Armed Forces can be used in repression against social
conflict that these measures might provoke”.
involving the Sergeants Association, the Armed Forces Officers’
Association (AOFA) and the Association of Non Commissioned Officers
(AP), on October 22 to discuss what protest measures they will take.
When asked about a possible escalation of the protests on the part of
the military, Lima Coelho replied that “revolutions are not forewarned,
when they take place, they do because they have to,” although he added
that he hoped “that, for the good of the State of Law, that such a
scenario will not come into being”. These warnings are not to be taken
lightly, particularly in view of the role played by the Armed Forces in
the Portuguese revolution in 1974.
Both the Communist Party and
the Bloco de Esquerda have announced their full support for the general
strike called by the unions. Looking at the experience of Greece and the
severity of the economic crisis in Portugal, a 24-hour general strike
in and of itself would probably not be enough to force the government to
back off, but would have to be part of a plan to take the struggle to a
higher level.
The left parties also have the responsibility of
offering a clear alternative to the austerity measures and the crisis of
capitalism. Unfortunately, up until now, the response of the leadership
of both the Communist Party and the Bloco de Esquerda has not gone
beyond the limits of capitalism. The PCP leadership correctly identifies
the austerity package as an assault on workers’ rights and living
standards and a massive transfer of wealth towards Capital (Sobre a reunião do Comité Central do PCP). However, in a continuation of the failed two-stage theory, it insists on the fact that the measures imposed by the troika
represent the economic colonization of the country and a loss of
national sovereignty, and, following on from this analysis, propose a
“patriotic struggle”, including not only the workers but also the
“anti-monopolistic layers” in order to fight for a “patriotic and
left-wing policy” for a “Portugal with a future”. The concrete measures
proposed are in fact very vague (renegotiation of the debt, “economic
development”, defence of “national sovereignty”, and a “fairer, more
developed and sovereign Portugal”). None of this offers a concrete way
out of the crisis of capitalism.
The leadership of the Bloco de
Esquerda on its part is also correct in its criticism of the measures of
the government, but when it comes to offering an alternative its
proposals are very limited. These are centred around five points: 1) the
implication of private creditors in the renegotiation of the public
debt and its auditing; 2) the setting up of a “national rescue fund”,
financed through the struggle against tax evasion, taxing the rich and a
tax on speculative transactions; 3) the recapitalization of the state
banks; 4) opposition to privatization and defence of public services; 5)
rejection of cuts in wages and pensions. These measures are in fact are
so moderate and limited in their scope, that many of them have already
been adopted by the European Parliament, including a tax on speculative
capital.
The crucial point that is lacking in the policies of the
leadership of both the PCP and the BE is a clear explanation that this
is a crisis of the capitalist system and that in order to struggle
against it one must pose a socialist answer. Proposing the renegotiation
of the debt (and its auditing, as proposed by the BE) is not really
revolutionary, nor even progressive. In Greece, the debt is being
renegotiated (through a series of “haircuts”) because of the growing
realization even on the part of the EU, ECB and German finance capital
that it cannot be paid. The proposal of the BE of involving private
creditors in talks about the debt is what the troika is already doing in Greece. All of these proposals stay within the limits of the capitalist system. The problem is that the capitalist system is in crisis, and in Portugal we have an extremely serious crisis.
The
task of left-wing organizations is to raise demands in defence of jobs,
services and living standards, and against the austerity packages as part of a general programme of struggle against the capitalist system.
This can only be a socialist programme, starting with the repudiation
of the debt, the nationalization of the banks and key sectors of the
economy and an appeal to the working class of Europe for a united
struggle against the capitalist system as such. In the process of the
bitter struggles that will take place in the next few months and years,
the most advanced elements of the Portuguese working class and youth
activists must be rallied to this perspective.
