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Portugal: making workers pay for the crisis

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Despite scrambling to push through a severe austerity programme aimed at cutting its budget deficit, Portugal has been downgraded by credit ratings agency Fitch.

“A sizeable fiscal shock against a backdrop of relative macroeconomic and structural weaknesses has reduced Portugal’s credit worthiness,” said an analyst from Fitch.

In other words, Portugal is following Greece down the pan. The downgrade means that Portugal has to pay higher yields on government bonds to attract investors, making it more expensive for the country to borrow money. Today, it costs Greece twice as much to borrow as it does Germany; now Portugal faces the same.

And yet Portugal had already announced a series of new cuts to avoid a debt crisis like the one in Greece. It announced plans to cut its public deficit from 8.3 per cent to 2.8 per cent of gross domestic product (GDP) by 2013, in line with the 3 per cent rule set for the 16 eurozone nations that share the single currency.

Like the Labour Party in the UK, Portugal’s minority government of the Socialist Party (Partido Socialista) claims to stand for the workers but does the bosses’ work. It will cut welfare payments and block job creation in the public sector. The government also aims to raise 6 billion through “a number of privatisations” – a wholesale selling-off of public services.

Although the trade unions have threatened to strike over plans for a public sector wage freeze and pension cuts, they have not mobilised people against this rotten plan. What is needed is militant action, as seen in Greece, to force the bosses to pay for the crisis that they created.

Workers should not be soft on a “socialist” government that does not stand up for their interests, but need to organise, agitate and strike against cuts in wages and public services, and privatisation. Take up the slogan from Greece: we will not pay for this crisis!