Portuguese President Aníbal Cavaco Silva has dismissed ideas that Portugal would be better off without the Euro.
He said last week that the country’s political class and Government had to act like a unified football team and not have some players “kicking the ball on one side of the pitch and another set of players doing the same on the opposite side”.
The metaphor was used by the President during a visit to Cascais in response to a child who asked him what would be the best way to run the country during the present difficult times of crisis.
The President replied: “This country is not an easy country to govern. It’s difficult to run. We need to play together towards the same goals.”
He has also expressed concern that Portugal’s political climate is “far from calm and coordinated” with fragile agreements between the PS and PSD parties over the SCUT virtual toll roads, the Portugal Telecom ‘Golden Share’ issue and Stability & Growth Pact economic austerity measures dividing parties and creating an “untenable situation”.
The President is also said to be worried by a growing conviction that the present Government will not reach the end of its mandate with the resulting political instability having a disastrous effect on Portugal’s image as a financially and politically stable country.
He also disagreed with the analysis from Noble Prize winning economist Paul Krugman who, in an interview with Spanish daily El Pais, suggested that there was a “plausible possibility” that Greece would be forced to leave the Euro and that Portugal would be seriously damaged from the resulting contagion.
“It is totally improbable that Portugal or Greece should leave the Euro. I have studied the Euro Zone widely and have books published on the subject. I do not believe that Portugal will leave the Euro. I think there is a certain lack of understanding about what the Euro Zone is and I think it would be disastrous for Europe,” he said.
João Rodrigues, an economist at Manchester University, called the idea “relatively improbable” but said that the fact that famous economists like Krugman were even suggesting it was “worrying”.
“The problem is that there are even signals that this could happen,” while João Cantiga Esteves, an economist at ISEG told newspaper i that Portugal leaving the Euro would make it “difficult for the Republic to sell sovereign debt on the international markets”.
“There might be some benefits such as devaluing the currency and making exports cheaper and more competitive but this scenario could lead to the State and private entities defaulting on loans and the nationalisation of the banks.”
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