Portugal's President rescrambles Portugal's political egg as he rejects a Cabinet reshuffle and instead calls for a Unity / National Salvation Coalition and Early Elections !

http://www.guardian.co.uk/business/2013/jul/11/eurozone-crisis-ben-bernanke-markets-ftse

Portuguese president's cross-party deal call causes alarm

Portugal's president Anibal Cavaco Silva speaking last night at Belem Palace in Lisbon. Photograph: RAFAEL MARCHANTE/REUTERS

Portugal appears to be gripped by political instability, after the country's president called for all parties to work together to guide it out of its bailout programme.

Last night, Aníbal Cavaco Silva said a “national salvation” deal between the coalition government and the opposition socialist party was needed.

The time has come for politicians to assume their responsibilities. The decisions taken in the next few days will affect Portugal’s future in the year ahead.

Cavaco Silva added that a deal was needed to guarantee Portugal's governability and debt sustainability.

This has caused surprise in Portugal, as the president was expected to simply endorse the reshuffled government hammered out between prime minister Pedro Passos Coelho and coalition partner Paulo Portas.

Sony Kapoor @SonyKapoor

We've had governments of 'national unity' and 'technocratic governments' now #Portugal trying to pioneer 'salvation government'?

6:30 AM - 11 Jul 2013

Portuguese media are alarmed. The daily Publico wrote in an editorial that:

The president of the republic decided to overcome the political stalemate between the parties in the ruling coalition by adding another problem to the one that already existed. He decided to take power.

A former socialist minister, Pedro Silva Pereira, has warned that Cavaco Silva has put the government's future in doubt.

Here's Reuters take: Portugal political crisis deepens:

Portugal's political crisis deepened on Thursday after the president rejected a plan to heal a government rift and critics accused him of igniting a "time bomb" by calling for early elections next year.

http://www.zerohedge.com/news/2013-07-11/portuguese-president-re-ignites-time-bomb-threatens-early-elections

Portuguese President Re-Ignites "Time-Bomb"; Threatens Early Elections

Submitted by Tyler Durden on 07/11/2013 08:27 -0400

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Despite being told last week of the successful solution that the politicians of Portugal had procured - and thusly seeing Portuguese bonds and stocks surge in a renewed bluster of hope and faith that all is well again; it seems that, shocker, nothing is fixed. As Reuters reports,Portugal's political crisis re-deepened today after the President rejected a plan to heal a government rift and critics accused him of igniting a "time-bomb' by calling for early elections. Anibal Cavaco Silva rejected a cabinet re-shuffle, and proposed a coalition to guarantee support for the Troika-imposed austerity measures (which theoretically means Portugal will exit its bailout next year) to be followed by elections - implicitly showing little faith that any party can rule effectively through the middle of next year. "The announcement... comes as a surprise, ... adding another problem to the one that already existed," noted one analyst.

Via Reuters,

Portugal's political crisis deepened on Thursday after the president rejected a plan to heal a government rift and critics accused him of igniting a "time bomb" by calling for early elections next year.

President Anibal Cavaco Silva proposed a cross-party agreement between the ruling coalition and opposition Socialists to guarantee wide support for the austerity measures needed for Portugal to exit its bailout next year, followed by elections.

The decision was a warning shotto all the leading parties and it indicates that the president does not think any of them is capable of ruling effectively until the bailout is due to finish in June 2014.

...

"The president of the republic decided to overcome the political stalemate between the parties in the ruling coalition by adding another problem to the one that already existed," wrote daily Publico in an editorial. "He decided to take power."

Such accusations are not made lightly in the country that hadwestern Europe's longest dictatorship under Antonio Salazar.

Under Portugal's constitution, the president has the power to dissolve parliament and call elections.

Cavaco Silva said the coalition government remained in office buthe rejected a proposed cabinet reshuffle by the ruling Social Democrats and their junior coalition partner, the rightist CDS-PP party.

...

A senior cabinet minister in the former Socialist government, Pedro Silva Pereira, said the president's intervention had thrown the future into doubt.

...

"After the turmoil of last week when it seemed a solution had been found, the announcement of the president comes as a surprise," said analysts at Espirito Santo Research in a note.