Jardim threatens to sever links with PSD and start own party

According to Filipe Malheiro, one of the senior militants of the PSD Madeira, should the Portuguese Government not be forthcoming with a quick financial solution to Madeira's debt problem, one of the options open to Jardim is to promote 'the mass resignation of militants from the national PSD and initiate immediate procedures to form a new regionalist party structure'.

This radical stance aims to obtain more bargaining power for 'Madeira', namely to extend the debt repayment period to twenty-five years, rather than the three years the 'troika' is conceding to Portugal. To further pressure the Portuguese Government, Jardim is also drafting a memorandum to send to all EU embassies to counteract the 'distorted and even manipulated' information disseminated by the Portuguese Government.

Madeira's Problem: no democracy, no free-market

The problem behind the Madeira debt is lack of democracy. The Regional Parliament is powerless to check and control the executive since it has as much power as the German Reichstag after Hitler's 1933 Enabling Act. Jardim's unending program of building infrastructures, the main source of the Madeira debt, is used to finance his election campaigns, providing his main means of propaganda, the daily inauguration ceremonies held in the run up to elections.

The problem behind the Madeira economy is lack of free-market. Tourism is the only sector which does not depend on the Government and where the Government finds it hard to interfere. All the other sectors are heavily dependent of the Government, if not for custom and financing, then for getting past red tape and for 'favours'. The ports monopoly, for instance, was handed to the Sousa Group in a very strange arrangement. It costs many times over to unload a container in Madeira than in the Azores and this is one of the reasons why cost of living is high in Madeira, despite the EU susbsidies to keep it low.

Building construction was one of the dodgiest sectors. Many promotors had difficulty in getting building approval; they would sell their land only to find that someone 'connected', after a simple phone call, could build twice as much on it than they would be allowed. This has since subsided, partly because of the real estate market crash and partly because hundreds of people, fed up with this situation, resorted to the courts, moving proceedings against illegaly approved buildings.

The Government has hundreds of ways of favouring some and harassing others, be it through inspections, red tape or economic persecution.

Guilherme Silva threatens a revolt in Madeira

Guilherme Silva, Vice-President of the National Parliament, threatened that if the budget alterations tabled by the Madeira PSD are not approved in the national parliament ‘we will revolt once more. Madeira has revolted against continental oppression in the past and can do so again’.

Such rhetoric is typical of the PSD Madeira, which never assumes any responsibilities for its mistakes and blames everything on Madeira’s external and internal ‘enemies’. Jardim often incites the population to violence and insinuates that the Madeira separatist movement may resurge.

Silva was one of the four national MPs elected for the PSD in Madeira and is widely seen as Jardim’s ‘fixer’ in the mainland. He forgets, however, that the oppression in Madeira comes from the Jardim Government and not from the mainland and that any revolt is likely to be against the party he represents.

Christmas lighting controversy

Jardim has anulled a public tender for Christmas lighting, adjudicating the decorative lighting project to Luzosfera, a company owned by the SIRAM group, led by a PSD ex parliamentarian, Silvio Santos. The public tender was anulled when a number of companies impugned the Government decision. According to the Secretary of Tourism, none of the applicants had fulfilled the terms of the tender.

SIRAM's tender had been the lowest, 1,4 million per year, but the Government is now upping it by 500 million, bringing the yearly spending up to about two million Euros.

The prices for the Xmas illuminations were reduced as of 2006, when the Court Auditors made the public tender obligatory. In its report of that year the Court Auditors detected irregularities in the adjudicating process, acusing the Regional Government of having favoured the same company since 1996 - SIRAM - the company which also ran the logistics for the PSD election campaigns.

SIRAM is best known for the controversial mega project, 'Columbus Resort', in Porto Santo, which has since gone bust.

President Jardim asks for 1.2 billion

In a meeting with Prime Minister, Passos Coelho, held last week, Jardim asked for immediate financial help of 1.2 billion Euro. The Prime Minister was apparently quite put out by the fact that Jardim proposed no measures for debt repayment. Prior to the elections Jaridm stated that he would accept no measures imposed by the mainland Government and the Prime Minister retorted that Jardim would have to come up with his own proposals for debt reduction.

Following an article on Jardim's meeting with the PM, published in the DIário, the Madeira Presidency issued a communiqué stating that the positions this newspaper coninues to take 'personally against the President of the Government and the PSD in general, reveal to the population the perfectly idiotic guerrila the Blandy group and its lacqueys will maintain for the next four years of the new mandate.' It is signed by Paulo Pereira, not the world's brightes spark.

Faced with Jardim's silence, the Lisbon Government has mooted the idea of creating introducing motorway tolls, raising taxes and the reduction of civil servants (by about 600).

Whale Museum Cost 730% more than initial budget

The museum construction was adjudicated in 2004 to the builders AFA and Arlindo Correia e Filhos, for the sum of 1.6 million Euros. The follow year, the budget had risen to 2.083 million. After several delays, the costs, according to the PIDDAR 2010, were set at 10,083 million. The costs climbed even higher with the inclusion of equipment which should have been covered by the original tender.

The Museum was finally inaugurated just prior to the October 2011 regional elections. Immediately after the elections, the Government passed a resolution to pay compensation to the builder, to the tune of 621.350 Euros. The total cost of the project is now 11.723 million Euro: seven times the initial cost. The EU contributed circa 1 million towards the project. AFA is the company that tops the public works contracts in the region and is also the builder that has been directly contracted to do most of the 20th of February reconstruction works, without public tenders.

Source: Publico

Financial Times following the Madeira debt crisis

The Financial Times Lisbon correspondent has also been following the Madeira debt crisis.

'Overall, public debt-per-capita for Madeira’s 267,000 inhabitants is estimated at three times that of mainland Portugal', he wrote on an article published on the 10th of October.

Read more on the FT site:
http://www.ft.com/intl/cms/s/0/7daa67a8-f329-11e0-8383-00144feab49a.html#axzz1e3tnG1Y9

Wall Street Journal on the Madeira Debt

By PATRICIA KOWSMANN, 07/10/2011

Portugal is trying to prove to creditors that it can cut its budget to the bone, but the governor of this tiny island has plans to keep spending.

Despite Lisbon's calls for austerity, Alberto João Jardim, Madeira's governor since it gained autonomy in 1976, vowed more building when he spoke late last month at the opening of a €1.1 million ($1.5 million) road linking a small neighborhood to a new church in the rural district of Calheta.

Madeira Gov. Alberto João Jardim has defended the autonomous region's public spending. "We can't stop economic activity, and we need to continue to address the needs of the population. Construction continues," the 68-year-old Mr. Jardim said, drawing applause from an audience of locals.

Such public-works projects—a hallmark of the populist Mr. Jardim—have come under scrutiny since Madeira acknowledged on Sept. 22, just two days before his speech, that it had failed to report debts of €1.1 billion.

The revelation, bringing the island's total debt to an estimated €5.8 billion, comes as Portugal's new prime minister, Pedro Passos Coelho, has been trying to show his euro-zone peers that he is firmly in control of the country's efforts to cut spending after getting a €78 billion bailout package this year.

The news prompted Moody's to downgrade the island's bond ratings and is forcing Portugal to revise its overall budget-deficit figures for 2008 to 2010, underlining the difficulties countries in the euro zone's struggling periphery face as they try to meet budget requirements set by the European Union and the International Monetary Fund.

"It is a problem," Mr. Passos Coelho said of Madeira's debt, noting that it raises a "credibility" issue. He added that Portugal doesn't have any other debt surprises like that of Madeira.

Late last month, Portuguese Finance Minister Vitor Gaspar said the government is drawing up an austerity plan for the island; Mr. Jardim has said he will consider it if, as expected, he wins a new term in Madeira's elections Sunday.

Mr. Jardim is a controversial figure, known for his tight control over the island as owner of Madeira's main newspaper and for his defiant attitude toward Portugal's leaders. His regional government employs more than 10% of the island's 250,000 residents. He has publicly disagreed with the austerity measures set out by the IMF and EU, saying they will choke off economic growth.

Through a spokesman, Mr. Jardim declined requests for an interview. His spokesman didn't respond to questions for this article.

Asked in an interview on local television in Madeira last month about the added €1.1 billion in debt, Mr. Jardim blamed the previous government—of a rival party to his own— for cutting Madeira's funding. To make up for those cuts, he said, he created third-party companies to borrow money directly from banks and enter into deals with construction companies to continue financing the projects.

"What I did was decide to increase our debt so I could continue with construction. That is why I made arrangements with construction companies and banks," Mr. Jardim said. He said he didn't "hide anything—once projects were done, the accounts were sent to the national statistical institute."

Critics point to wasted projects like a shut marina in Ponta do Sol.
.The National Statistics Institute referred questions about Mr. Jardim's statement to a Sept. 16 announcement, in which the institute said Madeira had failed to register the debt in the list of expenditures it provided to the agency. The statistics institute and Portugal's central bank uncovered the additional debt after a report published in April by the country's Court of Auditors said the island's government had incurred charges in 2009 that it hadn't paid to creditors including banks and construction companies.

Madeira and Portugal's other autonomous region, the Azores, run independent budgets and have lower tax rates than continental Portugal. They get funding transfers from the Portuguese government and EU subsidies for economic development. The Azores hasn't had any problems related to unreported spending, the central government said.

The EU subsidy funds, which often require national governments to put up part of the costs, have played a part in driving overspending on Madeira's public-works projects and in expanding the region's debt, Prime Minister Passos Coelho said. "The whole country has too much of this construction, it's not just Madeira," he added. In Portugal, major public-works projects have been put on hold for re-evaluation, and the next Madeira government will be required to do the same, he said.

On Madeira, known for its namesake wine and its tourist resorts, an extensive highway system with more than 120 tunnels crisscrosses the island. Mr. Jardim has defended such development as necessary to draw tourism, which brings in about half of the island's €5.3 billion annual gross domestic product; the island's GDP as a whole accounts for about 3% of Portugal's economy.

Critics, however, say much of Madeira's publicly funded building is a waste. Among the projects that have drawn fire are a marina in Ponta do Sol in the southwest that opened in 2005 and was later rebuilt after wave damage—at a total cost to the government that opposition parties have put at around €100 million. Now the marina is shut, its 290 boat slots empty.

In an industrial park in the northern region of São Vicente, built by the government-owned Madeira Industrial Parks SA and opened in 2004, only 1,700 square meters (18,299 square feet) of its 47,505 square meters are occupied—by the offices of electric company Empresa de Electricidade da Madeira and storage space for Leonardo Gomes & Brazao Ltd., a seller of construction materials.

"There are examples of insane spending all over the island that have done little to improve people's lives," said Socialist Party candidate Maximiano Martins, Mr. Jardim's main rival in next month's elections.

A spokesman for Mr. Jardim didn't respond to questions about the projects.

As Madeira's debt woes have fanned tensions between the mainland and the island, Medina Carreira, a former finance minister and respected economist, in a television interview last month warned the Portuguese people to keep the situation in perspective.

"We are looking at Madeira like the Germans look at Portugal," he said

The Rubber-Stamp Parliament

Jardim’s party is proposing to alter the rules of Parliament once again, reducing the quorum from one half to one third of MPs; i.e. to 16 MPs. The reduction in numbers of MPs elected by the PSD made absenteeism more of an issue. The PSD also proposes to move all voting to the last session of each week, basically so that its MPs would not have to sit through the debates. But the debates themselves have long ceased to be debates: parties with a single MP have only 2 minutes to intervene on each issue.
The PSD privileges ‘efficiency’ over debate in the functioning of the Parliament. An example of this efficiency is the occasion when all opposition members abandoned parliament in protest at a PSD proposal to submit the then opposition leader, João Carlos Gouveia, to a sanity exam. The PSD took advantage of the absence of the opposition parties to debate and vote through 17 motions in 15 minutes.
The CDS has proposed an alternative, more democratic version, which also obliges the President of the Government to go to Parliament for a monthly debate – Jardim has always refused to answer to Parliament and only sets foot in the building once a year to get the budget approved.

Development Society executives resign

The executive heads of the Northern Development Society, Rui Adriano, and the Metropolitan Development Society, Pedro Ferreira, have handed in their resignations. Eduardo Jesus, an economist, member of the board of the Metropolitan Society, has also resigned. The heads of the Western and Porto Santo Development Societies have also manifested their willingness to step down. The idea of making a holding that congregates all the Development Societies is being mooted. A proposal for consolidating all these companies into one had been made by the Socialist Party some time ago, but was rejected by Jardim’s government.

Jardim’s new mandate: official ceremony speech

The newly elected President began his TENTH mandate with a soporific, vacuous, diatribe that lasted over an hour. He warned he would resist any measures that the prime minister might want to ‘colonially’ impose on Madeira to deal with the Madeira debt. ‘Madeira has not surrendered, nor will it surrender to Lisbon, despite the intentional and illegal attempts of those in Lisbon who tried, brazenly and with infantile strategies, to interfere in the last election results.’(i.e.mentioning the debt)

Jardim refuses to admit that the Madeira debt is of his own making and that the Madeiran people will have to bear the consequences of his misgovernment. Everything continues to be blamed on internal and external 'enemies of the people'. Miguel Mendonça, the chair of the Regional Parliament, also resorted to the same idiotic posturing, condemning ‘the violent and virulent internal and external attacks against [Madeira’s] autonomy’.

The new Democracy Party did not attend the ceremony since it does not recognize the legitimacy of a government elected due to blatant violations of the election laws.