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Monday, Nov 12, 2012 11:15 AM UTC

Merkel risks protests in visit to Portugal

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Topics: From the Wires,

LISBON, Portugal (AP) — German Chancellor Angela Merkel was on Monday making another trip to a bailed-out eurozone country where many people blame her government for the harsh austerity measures they are enduring.

Merkel was due to pay a brief visit to Portugal, which needed a €78 billion ($99 billion) rescue last year, in what was widely seen as a display of support for the Portuguese government’s efforts to restore the country’s fiscal health in the teeth of broad public and political opposition.

Portugal has won Germany’s praise for enacting the economic reforms and spending cuts it promised in return for the bailout. Germany and other bailout lenders — the other eurozone countries, the International Monetary Fund and the European Central Bank — are keen for Portugal to stay the course, sparing the continent more difficulties like those in bailed-out Greece, which Merkel visited last month.

Merkel complimented Portugal for abiding by its bailout promises and said the hardship would pay dividends in the long run. “People can’t see the results yet, but the results will come,” she told Portuguese public broadcaster Radiotelevisao Portuguesa in an interview broadcast on the eve of her visit.

Protest marches were planned during Merkel’s six-hour stay when she was to hold talks with Prime Minister Pedro Passos Coelho and President Anibal Cavaco Silva and speak at a business conference attended by leading German and Portuguese companies.

Though Portugal has witnessed none of the violent street protests seen in Athens, many Portuguese are angry about the loss of workers’ rights and falling living standards. The Portuguese government predicts a third straight year of recession in 2013, and the jobless rate has risen to almost 16 percent.

The visit came at a tense moment for the government, which is steering another austerity budget through Parliament. The 2013 state budget includes what Finance Minister Vitor Gaspar has called “enormous” income tax hikes that many observers say will choke growth and make it harder for the country to pay off debt. The government has an overall parliamentary majority, allowing it to force through the measures in a vote scheduled for the end of the month.

Merkel’s visit coincided with the start of the sixth regular assessment by international inspectors of Portugal’s progress in implementing the bailout agreement. The assessment is expected to last about two weeks.

More Barry Hatton.

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