When they talk about the “MoU” in Portugal they are not referring to their famous compatriot, the coach of Real Madrid. The MoU (“Memorandum of Understanding on specific economic policy conditionality”) is the final word over the economic lifeblood of this country of 10.6 million people, who when the calendar leafs over to April have a tendency towards radical changes.

In April 1974, the Carnation Revolution ushered in democracy. And in April 2011, following in the footsteps of Ireland and Greece, the Socialist government of Prime Minister Jose Socrates was forced to go to the European Union with a dramatic plea for help.

A month later, that help took the form of a bailout worth 78 billion euros – capital at an interest rate of about four percent, handed over in instalments and accompanied by a whole litany of deep and painful reforms. The fine print for sorting out the finances of Portugal, to let the country return to the markets by September 2013, lies in the hands of the troika made up of the International Monetary Fund, the European Commission and European Central Bank, whose representatives periodically descend on Lisbon to audit the books.

“We’ve gone from the scissors to the saw”

One of those check-ups came just this week. It’s the fourth in the year that the Portuguese have been living “under the troika.” This type of audit of the commitments that have been met is carried out over two weeks by a squad of young technicians with laptops looking for figures, deadlines and documents. Meanwhile, three senior officials are in charge of contacts at the political level: Abebe Selassie (IMF), Jürgen Kröger (European Commission) and Rasmus Rüffer (ECB).

“In other countries they would have been greeted with protests at the airport, but our character is not like that; we’re not like you Spaniards” says sociologist Jorge de Sá, who for years has been taking monthly surveys of the changing views of the Portuguese public.

Nicolau Santos, economic journalist and deputy director of the prestigious weekly Expresso, speaks of a “quiet desperation” in the restrained protests in Portugal in a year that has seen the bailout, elections, a change of government and the forced adjustment. João Cantiga Esteves, one of the most informative economists on the Portuguese crisis, argues that there is a tacit social consensus that the troika is “a necessary aid, an opportunity” to push ahead with all the reforms that successive governments have failed to pull off.

This conformity does not mean that Portugal has not build up abundant reasons over the last year to sing the saddest of fados. Everyday life has been hit directly by “austeridade” and cuts dictated by the troika to lower the general government deficit, which had climbed above 9 percent of Portuguese GDP in 2010 and this year should get down to 4.5 percent. “We’ve gone from the scissors to the saw,” says an enviably polyglot young woman in Rossio Square in central Lisbon.

“More troikista than the troika”

Despite having the lowest levels of pay– the “mileuristas” of Spain are, with any luck, “560 euristas” on this side of the border – the sacrifices have only been piling up since the government decided last year to apply a 50 percent excise tax on the Christmas bonus of all those Portuguese with incomes above 485 euros per month, which is equivalent to the minimum wage.

From that moment on the crisis and the adjustment stopped being merely theoretical. Cuts hit home everywhere else too: in health, education, public transport... There also came a painful hike in taxation, with a VAT of 23 percent at the higher end.

Although the terms of the bailout were negotiated with the troika by the outgoing Socialist government, implementing them is the job of the new cabinet, headed by Prime Minister Pedro Passos Coelho. This is the youngest and smallest Portuguese government since the Carnation Revolution.

Four of the eleven ministers belong to no party, starting with the Minister of Finance, Vitor Gaspar, who confirmed this spring that senior citizens and officials will have to wait until at least 2018 to fully recover their bonus pay for Christmas and summer, which is currently being withheld.

Critics of the government insist that in trying to speed up the pace and the timing of the necessary adjustment they are being “more troikista than the troika”. For now, the only demand from the troika that the Portuguese government has rejected has been a cut in the Tasa Única Social, the flat-rate social tax that businesses pay into the coffers of Portugal’s social security for every worker.

Unsustainable debt

Moreover, Passos Coelho’s cabinet has earned the highest scores in the periodic reviews of the implementation of the MoU. Portugal’s status as a model patient, however, is part of the great ongoing debate in Europe about the limits of austerity.

Despite having done everything it was asked to do, Portugal’s economy remains in critical condition. This year GDP is expected to fall between 3.1 to 3.5 percent, with an unprecedented unemployment rate that is already above 15 percent, and for youth at over 36 percent. At the start of the bailout the ratio of debt to GDP was 107 percent. At this rate, however, that will climb to 118 when the bailout ends in September 2013.

Professor Cantiga Esteves argues that Portugal’s problems have little in common with the banking crisis of Ireland or the lies Greece told about its deficits. In Portugal’s case, the key is that “our economy grew at an annual average of 0.7 percent over the last decade, and all our public and private consumption has been leveraged on an unsustainable debt.”

Given the controversy around the model patient and the need for a second bailout, the sociologist Jorge de Sá insists with the characteristic irony of his countrymen: “Tell me, please, when the IMF has ever cured something in a democracy.” Nicola Santos, deputy director of Expresso, is among those who believe that a second operation will be very difficult to avoid: “We need more time, more money and better conditions.”