Cooking Up A Storm

Reproduzo abaixo a parte final de um artigo publicado hoje no The Wall Street Journal intitulado “Portugal Could Be Cooking Up a Storm” (destaques meus):

Mr. Coelho has won international respect for his determined efforts to implement the Portugal_Manifestacao
troika program and address Portugal’s long-term structural problems. But those problems remain considerable—and an obstacle to much-needed investment. The public sector is still too large, too well paid relative to the private sector, too inefficient and prone to cronyism.

Root and branch reform of processes and structures is needed. Currently 40,000 budget lines require parliamentary approval; the civil justice system is a mess. The government has made it easy to start a company, but it is still very hard to close one. The labor market remains too rigid, leading companies to shed jobs rather than cut wages. Meanwhile educational standards are among the lowest in the euro zone and university attendance has recently fallen.

But is the Portuguese political establishment capable of rising to these challenges? Mr. Portas’s self-serving antics this summer may have secured him promotion to deputy prime minister, but only at massive cost to Portugal’s credibility. The Socialist Party incites populist opposition to policies it must know it will have to adopt in government. The Constitutional Court’s egregious rulings suggest it is more interested in protecting civil-service privileges than exercising responsibility to the wider economy or fairness toward younger generations.

The risk is that the crisis is causing Portugal’s elites retreat to familiar comfort zones just when they need to be embracing radical change. Viewed this way, the multidimensional chess game is the least of Portugal’s problems. No doubt a way will be found to finesse the immediate financing challenge, most likely involving some official-sector debt rescheduling and a precautionary credit line. But that will only buy Portugal some more time. The question is, for what?

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