German Chancellor Angela Merkel acclaimed Portugal’s austerity cuts during a visit to Lisbon yesterday but was met by furious protesters who draped city monuments in black sheets.
The German leader’s praise for the government’s spending cuts and sharp tax increases fell on deaf ears among demonstrators, who booed and brandished banners accusing her of seeking European domination.
Merkel’s trip coincided with the latest review of Lisbon’s €78 billion international bailout programme, extended on condition the country make vast budget savings to plug a bulging public deficit.
“The programme is being applied by Portugal in an excellent manner. It is a great exploit,” Merkel said at a joint news conference with Prime Minister Pedro Passos Coelho.
“My visit is a chance to get to know the country better and to bring hope. I sense a great determination to overcome a difficult situation. Germany wants to support Portugal.”
The Portuguese Premier, who spoke with Merkel in an ancient fort at the mouth of the River Tagus, vowed not to be deterred from a steep cost-cutting drive.
“Hesitating in our programme, doubting our capacity to respect it, would ill serve the Portuguese and Europe, too,” he warned.
Such doubts led Fitch to keep Portugal’s BB+ speculative-grade rating on negative outlook. While it affirmed the rating and noted progress Portugal has made in implementing its austerity programme, Fitch warned “cross-party commitment to its implementation and social cohesion are being tested by the 2013 budget”.
In the first major rift on economic policy, the main opposition Socialist party refused last month to support the 2013 budget.
Those hit by tight-fisted fiscal policies, which are whipping up a crescendo of popular opposition in a string of stricken eurozone states, have voiced deep opposition.
Police deployed in large numbers in Lisbon, blocking off some streets and keeping at bay demonstrators who booed Merkel as she arrived at the presidential headquarters.
Activists brandished 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 covered several Lisbon monuments in black sheets to show their discontent.
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 payment from the programme, agreed in May 2011. Merkel said she was “convinced” it would be disbursed.