"Her Majesty Merkel" inspires hope and fear in Portugal (News Feature)

By Emilio Rappold Mar 1, 2011, 14:48 GMT

Lisbon - When Portuguese Prime Minister Jose Socrates meets German Chancellor Angela Merkel this Wednesday, nothing less than Portugal's economic future is at stake.

That, at least, appears to be the opinion of many people in Western Europe's poorest country, who will watch the meeting in Berlin - called by Merkel - with a mixture of concern, scepticism and hope.

Many see Merkel as a strict school teacher who 'wants to pull the ears of the disobedient pupil,' in the words of Mario David, a European Parliament legislator from the main opposition conservative Social Democratic Party (PSD).

The meeting is to focus on the economic situation of Portugal, whose structural problems are seen as being among the most serious in Europe.

The government has taken unprecedented austerity measures to cut the budget deficit from 7.3 per cent to 4.6 per cent this year.

The austerity has contributed to the country slipping into a recession, and has sparked a strike wave by unions protesting public sector wage cuts of 5 per cent as well as a reduction in social spending.

Unemployment has meanwhile soared to the record level of nearly 11 per cent, while the yield for Portuguese 10-year-bonds has surpassed the costly 7-per-cent level several times.

The government could eventually even face parliamentary no-confidence votes and early elections, while the unions are threatening to step up their protests to the same level 'as in the Arab world.'

In such a situation, 'Merkel wants to save Socrates,' the weekly Expresso wrote.

The Portuguese government is confident that the German chancellor will give her backing to Socrates' policies, but few people in Lisbon expect that to happen.

'Mrs Merkel will force Portugal' to seek a bailout from the European Union and the International Monetary Fund, Mario David told the economic newspaper Diario Economico in an interview published Tuesday.

Socrates has countered such concerns, reiterating that Portugal is not in need of a financial rescue. 'But the people pay the bill, because Socrates is too proud' to admit a failure in solving the country's economic problems, David complained.

Others fear that Merkel will pressure Socrates to adopt even more budget cuts - something the prime minister himself did not exclude in comments he made on Monday.

Yet while Socrates is slammed by critics, Merkel does not cut a sympathetic figure either.

'Does Merkel want to finish with the south?', asked Expresso director Nicolau Santos, who has often criticized what he regards as the chancellor's rigid policies.

Santos urged Germany to 'consume more and save less.'

Far-left leader Francisco Louca ironically called Merkel 'Her Majesty,' while Diario Economico accused Berlin of 'handing Portugal over to speculators.'

Even Socrates himself took an indirect swipe at Germany and other big EU countries, stressing that the 27-nation-bloc must give a more consistent response to the economic crisis.

At the same time, however, Portugal would do its utmost to put its finances in order, the premier pledged.

'Socrates needs to tell Merkel that a Europe with growth and employment is essential to preserve (social) peace,' said European MP Ana Gomes from Socrates' own Socialist Party.

Read more about Germany

Read more about Portugal Diplomacy