Portugal High Court Says Some Austerity Elements In 2013 Budget Are Unconstitutional

Tyler Durden's picture

It appears the Portuguese PM's threats last week that he would resign if the constitutional court rules against the various austerity measures in the proposed 2013 budget (subsequently recanted because he may have just sensed which way the winds are blowing), were not enough to pressure the court into voting the way the German rulers of the Eurozone demanded, because moments ago the high court said that some budget elements are unconstitutional.Specifically it said that:

  • Article 29 and
  • Article 77

are not constitutional. Of course, trampling the constitution in Europe's insolvent vassal fiefdoms is nothing new. Recall that its the Central Bank of Cyprus that said deposit confiscation is just that: unconstitutional. Too bad that didn't stop anyone from trampling all over the laws and rules of the land in the namd of what? Lots and lots of political capital of course, that nobody, NOBODY, should underestimate.

And remember: No Plan B.

From Reuters: 

Portugal's constitutional court on Friday rejected four out of nine contested austerity measures from this year's budget in a ruling that deals a blow to government finances, but is unlikely to derail the bailed-out country's adjustment effort.


The measures rejected by the court should deprive the state of some 900 million euros ($1.17 billion) in revenues and savings, according to preliminary estimates based on budget calculations.


The whole package of new austerity measures introduced by the 2013 budget is worth about 5 billion euros.


The 13 constitutional court judges scrutinized articles of the 2013 budget, which imposed the largest tax increase in living memory and imposed pay cuts for civil servants and pensioners, rejecting some of them.


The government has called an extraordinary cabinet meeting on Saturday.

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SeverinSlade's picture

Austerity to be included as part of "Portugese bank restructuring?"

Bearwagon's picture

"Austerity" to be included as part of every bank restructuring, yes!

Vashta Nerada's picture

I'm guessing that Articles 29 and 77 were the spending cuts.

thisandthat's picture

It's actually articles 29º, 31º, 77º and 117º and it refers to the cut of the vacation subsidy for public servants (364 mil.), unemployed (352 mil.) and uni teachers and researchers (which was paid by EU), and cuts on unemployment and sickness subsidies (150 mil.). The ruling applies retroactively from 1st January (date the budget was in effect). Articles are said to break 16 constitutional rules.


Vashta Nerada's picture

Holy crap.  I was trying to be funny.  That is ridiculous.

thisandthat's picture

The culprit was no equal treatment between public and private employees (private didn't got the cuts), and the teachers'/researchers' cuts refer to EU funded graduation/post graduation grants (1850 total, at 980 and 1495/month, respectively), which the goverment decided were fair game (just imagine something like a gov cutting foreign embassies' payroll workers' wages!).

Vashta Nerada's picture

But do private employees even get vacation subsidies? And if so, why?

thisandthat's picture

Everyone - Summer and Christmas - it's part of tri-party labor agreements between unions, employers and gov (http://www.ces.pt/9).

Some Eu countries have them - even more, sometimes (eg: even in the 60s, Banco Bilbao (BBVA), offered one also for Easter, so 15 months pay/year) - others just don't. Incidentally, gov intends to dilute them into monthly salaries (and has been doing it, already).

But in the end what really matters is yearly income, and that's very low; many people just use that extra income to pay bills. Current minimum wage is 485/month (x14) and although unions and employers recently agreed to raise it to 500 €, government (which had committed to raise it by Jan 2012) just opposed it.

rbg81's picture

Not spending $$ you don't have is unconstitutional?  Yeah, that makes sense.  [/s]

Seriously, these endless bailouts need to stop.  Just let these cannibals sort it all out by eating each other.

lolmao500's picture

Meh. No problem. Since they speak portuguese, nobody can understand what they are saying anyway... so no contagion risk... well maybe in Brazil but who cares about Brazil?

Urban Redneck's picture

Brasileiros entenda italiano e espanhol...

seems like another one-sided shitty deal from Carl Levin's favorite banksters

thisandthat's picture

Romanian is very distinct from western latin languages and very hard to get, if at all. Catalan isn't so easy either, although not even comparable.

Another-Ex-RPI-Man's picture

I see! That is for sure the SuperMario rational. Since no one speaks Greek or Turk there's no danger of contagion risk. So, No Plan B is the new norm.

So, let us know which are the languages you consider risky. Since no one speaks Italian besides the Italians, French besides the French (and some small parts of Canada as well some very small Atlantic Islands) I think we basically are completely safe (oh yeah, I forgot those small parts of switzerland)

thisandthat's picture

I don't speak english (go to Britain and you'll get it) - what's the problem with the world, again?

rockraider3's picture

That's okay, the preferred plan was to just take the cash from the bank accounts anyway.  This was just an necessary "attempt" to save face before all the Portugese banks have their assets frozen and depositors get a little trim. 

lolmao500's picture

Latest numbers, they say E1.7b in cuts are unconstitutional. Troika is gonna be mad.

Bearwagon's picture

Troika is gonna give jack shit about it.

Bunga Bunga's picture

Effects are 1% of GDP or 20% on deficit.

thisandthat's picture

Pretty sure they'll find a way to recover that income, while still missing deficit goals...

Just as long as they don't cut on parliament, presidency or govenment budgets, including their car fleet, or in utilities profits, public/private partnerships, etc. (because (those) contracts are sacred, unlike apparently those with workers and pensioners), everything will be fine, by them...

css1971's picture

This means no more ECB money, which means more bank failures, which means deposit impairments which is Bullish!

Bearwagon's picture

Sure it is bullish. What else could it probably be?

Bunga Bunga's picture

For BTC that's very correct.

Bobportlandor's picture

It's 9:25 PM Portugal local time Friday do you know where your money is?


Pool Shark's picture



Hope they remembered to fill all the ATM's for the weekend...


Bunga Bunga's picture

Better check in at the bank Monday morning.

Panafrican Funktron Robot's picture

Portugal holds about 90% of it's reserves in gold bars.  Not that anyone would be interested in their barb relics.  

smacker's picture



I find it difficult to find sympathy for Portugal when it's state owned national airline TAP Portugal (often referred to by those who've been cheated by them as "Take Another Plane") is run by liars and criminals who wilfully ignore any EU aviation regulation they care to and carries on cheating customers regardless.

Perhaps the Troika were told to get even for disobedience...

thisandthat's picture

I'm calling you out on this, because you do know TAP is frequently rated top international airline (by travellers themselves, btw), don't you? Also, doubt they are any more liars or thieves than any other company, btw.

smacker's picture

ROTFL. I know nothing of the sort.

You'll have to produce solid evidence of that because I know you are wrong wrong wrong.

I have never known anybody - Portuguese or Brazilian (two main passenger nationalities) - who has a single good word to say about TAP. Flight delays, surly, unhelpful ground staff and 'things' not working in flight etc.

And my charge against them is 100% valid and evidenced. EVEN AFTER being ordered by a Portuguese consumer judicial court to settle a claim from a customer under "EU Regulation (EC) No 261-2004", they still have never produced payment and don't respond to e-mails etc. And that was after stalling, prevaricating and doing everything possible to obfuscate and delay for 2 years.

Please ...give me a break...one satisfied passenger does not make a good airline.

Oh and btw - TAP are losing so much business that they're essentially bankrupt. It is now under negotiation with a group of Brazilian businessmen to buy them out.

Mototard at Large's picture

...and this makes TAP different from any other airline operating in Europe or North America?

Asian airlines at least try to be useful when things go wrong.

smacker's picture

Yeah it does. Kind of.

The claim that I referred to arose after the volcanic ash cloud hit UK/European airspace several years ago.

This gave rise to a lot of claims against Euro airlines but as far as I know, all airlines have complied with that EU-EC Directive which demands full reimbursement to passengers for cancelled flights and accomodation etc. Even Ryan Air have complied, after initially saying it wouldn't. But TAP Portugal remains the only Euro airline that simply doesn't pay up even after a consumer court ordered it to comply with EU regulations.

All that said, I am aware that experiences of any airline varies from one person to another. The acid test for me is how any airline handles customer claims. I give TAP 0 out of 10 on this and for that reason, they have lost my business on the Brazil routes forever. I now fly Lan-TAM and so far have zero complaints.

btw - TAP were one of the last Euro airlines to fit pitot tube upgrades on their Airbus A330/A340 fleet after the Air France disaster in the South Atlantic, probably due to cut backs in aircraft maintenance.

Acet's picture

TAP used to own some of the best airplane maintence shops in Europe and it regularly provided maintenace work for other airlines. This was actually a profitable part of the business.

Then a decade ago Portuguese politicians decided they weren't getting enough "jobs for the boys" from it. They got some brasilian guy to run it and he started by closing the maintenance shops and having TAP's planes maintained in Brasil.

The airline uses to be a bloated public airline that had tons of technical expertise and a reasonably good name but barelly made money. Now its a bloated public airline with mediocre expertise and weakened brand and it's loosing money.

smacker's picture


Thanks for that info. Yes, now you mention it, I recall something about TAP plane maintenance being switched to Brasil, in São Paulo or Recife methinks. I'm not at home right now (I'm actually in Brasil), so I don't have access to my files, but IIRC the CEO brought in was a Brasilian named Pinto. As you say, it's become an even bigger money loser and Pinto has failed to drive up customer service standards. <sigh>

Another-Ex-RPI-Man's picture

You really do not know anything about aviation, nor you have the facts.

Do not confuse passanger satisfaction or quality of service with security!


Last major TAP incident: 1980.

What about AA, Continental or any other major US carrier: oooops, 2012, 2008, etc...


Keep your discussions on economics and you might be better off.

smacker's picture



Try reading what I wrote and you'll see I never mentioned security. There's a good fellow.

Another-Ex-RPI-Man's picture

Fair enough.  But "ignore any EU aviation regulation" could be economics or safety. Fair enough. But if look carefully into EU aviation, the main problem is not actually the management and much more the socialist unions of pilots, flight attendants and so on.

Unfortunately, TAP is only one of the many airlines receiving funds from Govs.

A better solution would be just actually give those airlines to pilots and company, both with assets and liabilities and stop injecting money into those cash burners.


thisandthat's picture

Just look up which airlines won customers' awards, and how many of these and others TAP has won throughout the years, and don't feed the trolls.

smacker's picture


You're defeated by facts and evidence. tch tch.

smacker's picture


The EU Regulation I quoted is a major Regulation. TAP wilfully ignore it, despite judicial orders to comply with it.

If TAP ignore major EU Regulations on that issue, why wouldn't they ignore regs on other issues? We all know the airline is state owned and the govt is bankrupt. TAP is short of money. 1+1=2 etc. I have read reports about passenger vid/aud devices not working and lavatory locks malfunctioning, so summat is clearly bad about their aircraft maintenance.

But I see our friend "thisandthat" keeps going on about their good safety record etc. I guess he must fly TAP or works (or worked) for them. <shrug>

Acet's picture

See my post above about them closing their maintenance shops and having the planes maintained in Brasil.

All the result of a political decision to bring some Brasilian guy to manage it.

thisandthat's picture

You can do it yourself, if you're really interested - it's online, and I'm not on their (or your's) pay roll to bother with it, but like you say, give me a break, "one dissatisfied passenger does not make a bad airline".

And you need to update your sources - way outdated, just saying - the privatization was called off. Idiot.

smacker's picture


Well doncha know, since you made the claim, you should provide the evidence to back it up. I wasn't given legs to run around after you :-)

On your "one dissatisfied passenger"...I know quite a few of them. And I've also personally had several incidents with TAP: lost luggage, slashed-open luggage, flight delays and very unhelpful ground staff. I recall a near riot broke out at Lisbon when my inbound flight was delayed to 09:00 hrs causing a bunch of passengers - including myself - to miss connections all over Europe. TAP were incapable of dealing with it. They wanted me to waste the whole day till 18:00 hrs in a scruffy hotel even though there were 3-4 flights to London much earlier in the day with empty seats.

Regarding the sale of TAP...let's not forget that the TAP CEO (Pinto ?) was brought in way back ~2000 to prepare TAP for privatisation. After 8 years he still had not got there and then the govt went bankrupt and the economy crashed. That's when the Brazilian businessmen offer came in. I was not aware that too had fallen thru. Why do you think that was???

You know why I have an axe to grind over TAP Portugal. Maybe you should come clean and tell us why you are so supportive of them. They're a crap airline.

thisandthat's picture

LOL you want the info, you go after it - fact I won't handle it to you on a platter, should be proof enough I have no beef on this subject. Deal with it. Fly Ryan Air or something, instead - plenty of customer satisfaction to be had for you, there, I've heard... :P