THE WEEK THAT WAS... (Apr. 8, 2013)

After the Portuguese Constitutional Court rejected key parts of the government’s 2013 austerity budget (including civil servants’ pay and pensions, reductions in sickness leave and unemployment benefits) , the European Commission didn’t need much time to urge Portugal to stick to its bail-out plan and to decline in a statement to give Lisbon any extra leeway. The Commission was quickly followed by the German finance minister Wolfgang Schauble who warned that Portugal ‘needs to take austerity measures after the court decision’. We knew already that Democracy is not a real priority in ‘Brussels’ (no referendums allowed, parachuting in technocrats for prime-minister, selective subsidy of election campaigns of Europhile parties) and now even the position of the juridical pillar of democracy is under threat…

After the Cyprus debacle a Portuguese one seems to be the next. It is horrible, or if you prefer, terrifying to see that European leaders have no common idea and/or approach to the crisis. Cyprus: one bad idea after another. In the meantime the current restrictions in Cyprus are damaging the domestic economy. The people in Cyprus (and not only on this island) have lost their confidence in the banking system. Capital controls in Cyprus apply to daily transactions for locals and businesses, but you can’t have a modern economy where businesses and depositors cannot freely use their money. On top of that, these controls are completely contrary to EU principles. De facto: Cyprus is not, at the moment, a fully-fledged member of the EU. With tough years ahead and no possibility to devalue its currency, Cyprus may have been better off outside the Eurozone.

But don’t worry; ‘Cyprus is no template for countries in crisis’, Eurogroup chief Jeroen Dijsselbloem told us; and ECB chief Mario Draghi agreed with that. Let’s cross our fingers for the Portuguese people.