Portugal's Socrates to lead party in new election

Sun Mar 27, 2011 2:11pm EDT

Related Topics

* Socialists re-elect Socrates with 93 pct of vote

* Political crisis after PM resigned worsened debt woes

* Says will stand in general election, to resist bailout

By Andrei Khalip

LISBON, March 27 (Reuters) - Jose Socrates was re-elected leader of Portugal's Socialist party on Sunday, four days after resigning as prime minister, and vowed to run in a parliamentary election on a platform opposing a financial bailout.

Socrates, who won 93 percent of the leadership votes despite the country's political crisis, spared no criticism of the opposition whose rejection of his minority government's austerity measures last week led to his resignation.

"I am here to face the judgment of the Portuguese. I am not afraid and I will fight for victory," he told a party meeting after being re-elected as general secretary.

"It is the moment for the Portuguese to choose between those who want a foreign aid programme, those who want the IMF to come, and those who will give everything, their best for Portugal to not have to ask for foreign aid."

Economic analysts say the crisis could force Portugal to request an international bailout from the European Union and the International Monetary Fund because the uncertainty could make it more difficult to finance itself in the debt markets. Euro zone members Greece and Ireland have already sought aid.

Socrates, who is expected to stay on as caretaker prime minister until the election, says a bailout would undermine a weak economy and demand too many sacrifices from the nation.

He accused the main opposition Social Democrats (PSD), who lead in opinion polls, of provoking the political crisis without presenting any alternatives and accused them of having "already surrendered to aid from the IMF".

On Saturday, PSD leader Pedro Passos Coelho told Reuters that his party was committed to meeting budget goals agreed with Brussels, saying of any bailout: "I think we must avoid a situation like that." [ID:nLDE72P0DF]

He also said a caretaker government could seek a bridging loan if the country's financial crisis escalates.

On Friday, the leaders of main political parties urged the president to call a snap election in late May or early June, rejecting the option of a coalition cabinet. [ID:nLDE72O21B]

President Cavaco Silva is expected to summon his Council of State advisory body this week, after which he should dissolve parliament and call an election.

The political crisis prompted Standard & Poor's and Fitch to downgrade Portugal's credit ratings and pushed Portuguese debt yields to record highs of over 8 percent last week -- a cost of funding that is widely viewed as unsustainable.

Portugal has a large volume of debt maturing in the next few months. Most economists agree Lisbon should be able to repay around 4.3 billion euros ($6.05 billion) of bonds falling due in April, but 4.9 billion euros due in June may trigger a request for aid. (editing by Elizabeth Piper)

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