FRANKFURT (MNI) – Portuguese Prime Minister Jose Socrates
reiterated Friday that his country does not need outside aid, saying it
was “childish” to suggest that it would help Europe if Portugal were to
apply for assistance.

The Portuguese premier, who submitted his resignation Wednesday
night after the country’s parliament rejected his minority government’s
new austerity package, told reporters in Brussels that he would continue
to fight for the interests of Portugal despite the stinging political
defeat.

Socrates, speaking through an interpreter in a webcast press
conference following the EU Summit, pulled no punches in condemning the
defeat of his Stability and Growth Program.

“The parliament threw into the rubbish bin the support from the
European Central Bank, which is absolutely essential to Portugal being
able to resolve its problems,” he said.

“I very much regret what has happened, but I am going to continue
to fight for my country,” he pledged.

“Let me repeat once again: Portugal does not need rescuing, does
not need a rescue fund, and I will continue defending my country to
ensure that this does not have to happen,” he promised.

Socrates stressed that he did not want to see what happened to
Greece and Ireland transpire in his country.

“What happened in the [Portuguese] parliament did us harm, that’s
how I see it,” he asserted.

“I have to say I didn’t actually realize that the opposition was so
far away from my position and had no respect for the country, to the
extent that they just refused any negotiation, any possibility for any
compromise at all,” he lamented. “That was something that I did not
imagine would happen.”

He added: “I think it is rather childish to say that Portugal would
be doing Europe more of a favor by asking for things from it. That would
actually harm Europe, wouldn’t it? That would harm Europe’s prestige. it
would harm the single currency.”

Socrates also suggested that other countries would be imperiled
should Portugal have to turn to the European bailout fund, warning of a
domino effect.

Socrates was very quick to answer a question about whether Portugal
could finance upcoming bond redemptions in April: “Portugal has the
financial means to cover itself,” he insisted.

The head of the country’s debt agency, Alberto Soares, made the
same point earlier Friday in an exclusive interview with Market News
International (see MainWire 10:04 GMT).

Socrates called for responsibility and clear-headedness as the
country faces the grave challenge of moving forward in the face of
rising international pressure to accept outside aid. Both Fitch and S&P
have downgraded the country’s sovereign debt ratings following the
rejection of the additional austerity measures. LCH.Clearnet today said
that on the basis of Thursday’s downgrade by S&P to BBB, it was
excluding Portuguese sovereign paper from its “repo clear” baskets,
effective Monday.

Socrates, clearly aware of the pressures mounting on his country,
said Portuguese politicians must lead the way, not pander to popular
sentiment.

“Politicians must provide guarantees that they are not thinking
about votes, that they won’t be guided by the voice of populism and
react to the street. We need responsibility, not populism,” he argued.

“Our economy does not need outside help, but rather confidence,” he
stressed.

Desite Portugal’s mounting problems, Socrates said, “my message is
first and foremost. The goals for 2011 will be met.”

“Portugal is committed to the European project and the single
currency and we will do our utmost not to cause any problems for the
euro and to protect it at the same time,” he said.

Portugal’s president, Anibal Cavaco Silva, is meeting Friday with
political leaders to decide what to do following Socrates’s resignation.
Many analysts believe he will call a new election.

Elections cannot not be immediate under Portuguese law, but must
take place no sooner than 55 days after they are called. That means the
president would also have to name an interim government or a “technical”
cabinet to guide the country through perhaps its biggest challenge since
democracy was restored in the mid-1970s following a military coup that
ousted dictator Antonio Salazar.

–Frankfurt bureau, +49-69-720142, tbuell@marketnews.com

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