Athens domino effect hits Lisbon

The leader of the main centre-right opposition party, Pedro Passos Coelho, and Prime Minister José Socrates will shortly hold a crisis meeting to discuss measures to be adopted in response to the "speculative attack" on Portugal in the financial markets. The Standard & Poor's downgrade has highlighted fears inspired by the country's budget deficit and the risk of contagion from the Greek crisis in the eurozone. Público voices its alarm, and points to the fact that Portugal's rating is now on a par with the rating for Greek debt at the time when Athens requested assistance.

"The country is rapidly heading for the worst economic crisis since the government was forced to pursue IMF stabilization programmes 27 years ago […] What we need is a pragmatic response: we are caught in a hurricane and now is not the time for discussion as to its causes. We are expected to present a fiscal austerity package or to accept an even more draconian austerity package imposed by the IMF or Germany. Those who thought that we could adopt a moderate plan to restore confidence and buy time have been proved wrong. The dramatic cut in the rating of our sovereign debt is clear evidence of what will happen if we fail to respond: financial collapse followed by the surrender of control over our economy. It is at times such as these that the government, the President and the opposition must take into account the very real dangers that we are facing."

The fact that José Sócrates' government does not benefit from the support of a clearly defined majority is "one of the major risk factors," notes another Portuguese daily Diário de Notícias, insisting that "a growth and stability programme approved in Lisbon and Brussels is not enough." To avoid serious consequences, "Portugal must apply the necessary measures as soon as possible, and with the broadest possible consensus in parliament." In short, now is the time for everyone "to demonstrate a sense of statesmanship."

From Greece

Recovery plan to be even stricter

In the wake of Standard & Poor's latest downgrade of its debt, the turmoil in Greece is set to continue. For the first time ever, a eurozone government's sovereign bonds have been marked down to "junk bond" status. According to the Greek press, the country woke up in a state of shock and, as To Vimasuggests, the race is on to administer "shock therapy." The daily reports on today's "emergency meeting" between the IMF and the ECB with a view to "iron out details of European aid as soon as possible, so as to defuse tension on the markets and reduce pressure on the European currency. In the meantime," continues the daily, "the Greek government will have to finalise a further package of austerity measures to be included in the new stability programme, which will require a reduction in pension payments, and cuts in public sector bonuses and salaries." In the columns of To Vima, celebrated composer Mikis Theodorakis deplores what he terms "the loss of our national independence" and the "international humiliation" that has been suffered by Greece.