To paraphrase Oscar Wilde, to lose one looks like misfortune, to lose two smacks of carelessness.
Portugal’s government has been plunged into crisis with the foreign minister resigning a day after the finance minister did, the latter complaining that the public would not tolerate his austerity drive.
Prime Minister Passos Coelho has refused to accept the second departure, essentially putting the government’s survival in the gift of Foreign Minister Paulo Portas, who objected to Treasury Secretary Maria Luis Albuquerque replacing Finance Minister Vitor Gaspar. Portas could pull his rightist CDS-PP party out of the coalition government, which would rob it of a majority. The opposition is calling for early elections, the premier says not.
All this is happening with the next review of Portugal’s bailout progress by its EU and IMF lenders just two weeks away and with euro zone borrowing costs already firmly on the rise again. Portuguese yields lurched higher after Portas’ resignation and doubtless will continue in that direction today.
If Gaspar is right and public opinion turns more hostile, given a deep recession looks unrelenting, things will get even more difficult. Passos Coelho has already said he may seek a further easing of debt-cutting goals for next year. The betting is firming on another bailout being required.
EU officials are increasingly concerned that the crisis is back after 10 months of calm. The markets are reflecting that very concern. German Bund futures have jumped almost half a point at the open and Italian bond futures have fallen by three quarters of a point.