Portugal's Political Parties--A Block To Aid?

The head of the opposition in Portugal, Pedro Passos Coelho, wants a seat at the table when his country negotiates with the EU and IMF about a bailout which could total $114 billion. The current lame duck Premier, José Sócrates, had planned to head the negotiating team. He must believe that because he is still Prime Minister that his role as top negotiator is deserved.

The struggle over which party and which person should lead the conversations with the EU is another example of why countries can be their own worst enemies as they seek the capital to prevent their governments from defaulting on their financial obligations. One of the reasons that Sócrates did not have the support he needed to stay in office is that his version of an austerity budget was rejected by Parliament.

The situation in Ireland is similar to the one in Portugal. Former Irish Prime Minister Brian Cowen left as leader of Fianna Fail party in January after disputes over how Ireland should solve its debt problems broke into a war between the nation’s top politicians.

The blockades to real reform among Europe’s weakest economies and their ability to negotiate permanent bailouts with EU neighbors has become a test of political will. Voters in Greece, Ireland, and Portugal are naturally against provisions which will increase taxes and hurt their wages. The practicality of their national financial interests is a secondary matter for them at best. The financially strong nations of the alliance will lend them money or else all counties in the EU will suffer due to a collapse of the euro. The other possible resolution, which is default, hardly matters to the average citizen among the three nations which need aid. Capital markets investors took risks on the sovereign paper of these countries and may have made money on those risks. Why shouldn’t they now take part of the penalty for their investment decisions?

The challenge to financial reform in the region is a simple one. The voters refuse to acknowledge that they had any role in their countries’ financial woes. If they are not responsible, someone else is. That someone will have to pay the price of a collapse in confidence in the nations where they live.

Douglas A. McIntyre

Sponsored: Tips for Investing

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.