Mario Soares, who led Portugal to democracy in the 1970s after the Salazar dictatorship, has called on the government to default on its debts. The economic pressure on Portugal has been mounting in recent weeks, and the nation is losing patience with the EU imposed austerity. The Portuguese are looking at the death spiral in Greece, caused by their various rounds of bailouts and austerity.
Soares told Portuguese television channel Antena 1, “Portugal will never be able to pay its debts, however much it impoverishes itself. If you can’t pay, the only solution is not to pay. When Argentina was in crisis it didn’t pay. Did anything happen? No, nothing happened”.
Last week Portugal’s top court ruled that the government’s decision to slash pension payments and public sector wages was illegal. The ruling means the government is struggling to find the budget cuts required from elsewhere.
Portugal received an EU/IMF bailout in 2011, and as the crisis deepens again, many think it highly likely they will need another bailout very soon. If Portugal were to default, it would almost certainty mean their expulsion from the eurozone, and may lead other nations to follow their example.