Portugal crisis talks break down

20 July 2013 Last updated at 01:54 GMT Socialist leader Antonio Jose Seguro said his party's proposals were rejected A week of talks by Portugal's three main parties on how to end a political crisis has broken down, leaving the country's bailout programme in doubt.

President Anibal Cavaco Silva is seeking a "national salvation" deal to back austerity policies demanded by EU and IMF lenders.

But opposition leader Antonio Jose Seguro said the governing coalition had rejected most of his party's proposals.

He said it was now up to the president to decide how to end the crisis.

It began nearly three weeks ago with the resignation of the finance and foreign ministers.

Foreign Minister Paulo Portas was unhappy with the extent of the austerity measures needed to comply with the conditions set in the 78bn euros ($102bn; £67bn) bailout received in May 2011.

Finance Minister Vitor Gaspar - seen as the architect of austerity - quit because of a lack of support for his approach.

Lisbon has had to request a delay in the eighth review of the bailout by its creditors. The review was due to start last Monday but has been put back until the end of August or early September.

Coalition parties made no comment in the immediate aftermath of the talks on Friday.

However, socialist leader Mr Seguro told reporters: "There were two different visions to exit the crisis. That being clear, it made no sense to continue negotiating for the sake of negotiating."

Analysts say the president could still avoid an escalation of the crisis by keeping the governing coalition in place rather than calling a snap election.

The austerity cuts are widely blamed for keeping Portugal in recession over the past two years, angering trade unions and left-wing parties and causing a wave of street protests.

On Friday, Portuguese government bonds had outperformed others in Europe on hopes of a deal.

The BBC's Alison Roberts in Lisbon says there are now fears that the markets will take a tumble on Monday.

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Portugal profile

4 July 2013 Last updated at 09:41 GMT Portugal, a country with a rich history of seafaring and discovery, looks out from the Iberian peninsula into the Atlantic Ocean.

When it handed over its last overseas territory, Macau, to Chinese administration in 1999, it brought to an end a long and sometimes turbulent era as a colonial power.

The roots of that era stretch back to the 15th century when Portuguese explorers such as Vasco da Gama put to sea in search of a passage to India. By the 16th century these sailors had helped build a huge empire embracing Brazil as well as swathes of Africa and Asia. There are still some 200 million Portuguese speakers around the world today.

Portugal's history has had a lasting impact on the culture of the country with Moorish and Oriental influences in architecture and the arts. Traditional folk dance and music, particularly the melancholy fado, remain vibrant.

Portugal includes several offshore islands, including Madeira and the Azores, pictured Continue reading the main story Politics: Prime Minister Pedro Passos Coelho from the Social Democrats heads a coalition with the Popular Party Economy: Eurozone member Portugal was bailed out by the EU and IMF in 2011 with a 78bn-euro package. The loan came in exchange for a pledge to reduce the public deficitInternational: Portugal is a founding member of Nato and joined the EEC (later EU) in 1986

Country profiles compiled by BBC Monitoring

For almost half of the 20th century Portugal was a dictatorship in which for decades Antonio de Oliveira Salazar was the key figure. The dictatorship's stubborn refusal to relinquish its grip on the former colonies as demands for independence gained momentum there resulted in expensive wars in Africa.

This period was brought to an end in 1974 in a bloodless coup, picturesquely known as the Revolution of the Carnations, which ushered in a new democracy.

By the end of 1975 all of Portugal's former colonies in Africa were independent of Lisbon.

Since becoming a member of the then European Community in 1986, Portugal's traditionally largely agricultural economy became increasingly diversified and orientated towards the service sector.

It experienced solid growth in the 1990s, but GDP per head remains well under the EU average. The 2008 financial crisis left Portugal with a ballooning budget deficit, and in 2011 it became the third EU country after Greece and Ireland to ask international lenders for emergency assistance.

A 78bn-euro EU/IMF bailout was awarded on condition that Portugal reduces its deficit to bring it closer to the official EU target of 3% of GDP, leaving the government with little choice but to pass a series of austerity budgets. By mid-2013 this was putting severe pressure on the coalition government.

Portugal's Porto region has for long been a source of fine wines

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