Portugal's New Poor Struggle In Europe's Debt Crisis

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Go to France, Britain, Ireland or Portugal — you'll find the same sentiment on the streets of all these debt-ridden European nations: Europe's financial crisis was caused by rich and greedy bankers and politicians, yet it's the poor who're picking up the tab — people like Mariana Silva. Silva is paid 400 euros for the 40 hours she slogs away each week in a kitchen in a poor neighborhood of Lisbon. Tax hikes and public spending cuts have driven her over the edge. She and her two kids are being kicked out of their home after defaulting on the mortgage. The power and the water have been cut off. For food, she relies on the help of the local priest and concerned members of the public.

AUDIE CORNISH, host:

In Europe, things are just as bad and worse. Greece and Ireland needed bailouts in 2010 from the International Monetary Fund and the European Union. And now, Portugal is in trouble. That country's debt agency now says it will have to raise up to 20 billion euros on international markets in the coming year. If Portugal fails, that would be bad news for the euro.

And as NPR's Philip Reeves reports, it's already tough for many Portuguese.

PHILIP REEVES: Even the world's most stylish cities have blemishes. This is one of Lisbon's.

(Soundbite of car passing)

Santo Antonio dos Cavaleiros is a suburb on the city's northern edge. There are clumps of drab-looking apartment blocks, scarred by graffiti. Most people here don't care about bonds or spreads or yields - the highfalutin terminology of the euro crisis. They care about getting by.

Father Ricardo Rainho, the parish priest, is worried that, for some, that will soon be impossible.

Father RICARDO RAINHO (Parish Priest): (Through Translator) We have a lot of people that rely on welfare subsidies, and because of all the cuts that the government will put into place from next year onwards, these people will not have that money to be able to live and to make ends meet.

REEVES: Rainho's church runs the local social center. The neighborhood has hundreds of low-income families, many from ethnic minorities.

Social worker Carla Machado says the center hands out parcels from a local food bank.

Ms. CARLA MACHADO (Social Worker): Yoghurts, fruit juices, Jell-O.

REEVES: Some people come to collect these free supplies when no one's around. They're ashamed.

Father Rainho, again.

Father RAINHO: (Through Translator) You have people who are considered to be the new poor. Because of all these cutbacks from the government and the difficulty in finding jobs, you have these people that come into poverty and they are just not able to adapt.

(Soundbite of dishes clanking)

REEVES: One of the many who depend on these handouts works here, in the center's kitchens.

Mariama Silva is a single mother with two kids. Portugal has some of the lowest wages in Western Europe. Silva works a 40-hour week but earns the equivalent of just $550 a month.

Ms. MARIAMA SILVA: (Through Translator) Before I used to receive a subsidy from the government and it was hard then, but now I no longer receive that subsidy and I'm just finding it extremely, extremely hard.

REEVES: In fact, Silva is finding it impossible to get by. She can't afford to feed her kids and make payments on her apartment. Her home has been repossessed and sold.

Ms. SILVA: (Through Translator) My options are very, very limited. I will have to move out of the house. I will have no place to stay with my kids. Right now, I have no water. My electricity will be cut also.

(Soundbite of church bells)

REEVES: In downtown Lisbon, Silva's world seems very remote. It's hard to reconcile her poverty with this prosperous-looking capital, with its boutiques and Atlantic beaches. Lisbon's grandiose buildings and statues are a reminder this small country once had a booming global empire.

Not any more, says Ricardo Costa, deputy editor of Espresso newspaper.

Mr. RICARDO COSTA (Deputy Editor, Espresso): We don't grow. We don't grow. Our economy, we just go 0.5, 0.3, sometimes one, 0.8. We are getting apart from Central Europe. And when we came in to the European Union, the idea was to get in closer.

REEVES: Portugal's government has pledged rapidly to shrink its worryingly high budget deficit of more than 9 percent of GDP, but it's burdened by big debts. And now, the bond markets have Portugal in their crosshairs. They're driving up its cost of borrowing.

Political commentator Camilo Lourenco is convinced Portugal will need bailing out.

Mr. CAMILO LOURENCO (Political Commentator): We don't have a political establishment capable of addressing the basic issue in Portugal. That is government is spending too much money. We need to curb that expenditure. Everyone knows what the recipe is. The problem is if you implement them, you are going to lose elections.

(Soundbite of applause)

REEVES: Portugal's government is doing something enough to trigger a response from the trade unions. A few weeks back, the unions partially paralyzed the nation with a one-day general strike protesting cuts in welfare, pensions and public sector pay.

Lourenco says Portugal must also figure out how to make its traditional industries far more competitive and productive.

Mr. LOURENCO: We are facing our judgment day. So there's no way we can postpone this now.

REEVES: It's already too late for Mariama Silva. She's given up on trying to get by in Portugal.

Ms. SILVA: (Foreign language spoken)

REEVES: She's planning to move to England in the hope life there will be just a little easier.

Philip Reeves, NPR News.

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