The capitalist politicians, together with the mass media, continually work to present the so-called sovereign debt crisis as akin to the fate of an individual who, having gotten into financial difficulties, must now make sacrifices in return for financial assistance. The bailout of Portugal is the latest case in point. Announcing the decision of his caretaker government to seek emergency assistance from the European Union, Prime Minister Jose Socrates declared that he was seeking financial assistance for “our country” in the “national interest.”

Like those of Greece and Ireland before it, the aim of the Portuguese bailout, expected to total at least €80 billion, is to prop up the European banks by imposing deepening cuts in the living standards and social conditions of the working class.

The lead-up to Wednesday night’s announcement followed the now familiar pattern. First austerity measures were implemented which, it was said, would avert the need to seek a bailout. But the relentless pressure of the markets, rating agencies and the banks continued, culminating in the downgrading of Portuguese debt to near junk status and the announcement by the country’s banks that they could no longer take more government debt on their books.

One of the most profound scientific discoveries of Karl Marx was to show how the operations of the “free market” made it appear that systematic looting and robbery, and the accompanying impoverishment of masses of people, were the outcome of “natural events” for which there was no alternative. And so it was in this case. The steadily deepening crisis of Portugal’s finances over the past months, which appeared as the outcome of inevitable market forces, was an operation aimed at forcing the government to seek a bailout, and to ensure that losses incurred by the major European banks would be guaranteed by the state.

Immediately the bailout decision was announced, Portuguese banks celebrated as the price of their stocks rose by between 4 and 6 percent in Thursday’s trading.

Massive amounts of money are at stake, together with the solvency of the entire European banking and financial system. According to data from the Bank for International Settlements—sometimes referred to as the central bank of the central banks—the total exposure of foreign banks to Greece, Ireland, Portugal and the next potential target, Spain, is $2.5 trillion. Of this, German banks have an exposure of $569 billion, French banks $380 billion and British banks $431 billion.

The importance of the bailout for the banks is indicated by figures produced by the Japanese financial firm Nomura Securities. It has calculated that if the debt of Ireland, Greece and Portugal were “restructured”—either by write-offs or extending the time for repayment—the direct and indirect losses for the eurozone banks would total $240 billion. This figure would rise to $480 billion if Spain were included. German banks were among the most heavily exposed and would take a loss of $185 billion, equivalent to around one-third of their total capital, if debts to the four so-called “peripherals” were restructured.

One of the main reasons the European Central Bank, together with the German government of Angela Merkel, have opposed debt restructuring is the fear that any weakening of the European banks would be to the advantage of American banks that have been strengthened by the provision of massive funds and virtually zero interest loans by the US Federal Reserve.

The Portugal bailout has been accompanied by comments in the financial press that this should mark the end of the financial contagion that began in April-May 2010. In an editorial headlined “Drawing a line in the Iberian sand,” the Financial Times insisted that the bailout had to be the last and that “getting the Portuguese rescue right matters for all of Europe, and most of all for Spain.”

But there is no objective reason why the crisis will not extend. As the economics editor of theGuardian, Larry Elliott, noted: “When it comes to economic fundamentals there is not an awful lot to choose between Portugal and Spain.” Elliott concluded: “So while it may be comforting for policymakers in Brussels and Frankfurt to believe that the sovereign debt crisis comes to an end with the Portuguese bailout, it is far more likely that Wednesday night’s call for help from Lisbon marks the start of a new and more dangerous phase of the crisis.”

This “new and more dangerous phase” will be accompanied by even deeper attacks on the working class than have been carried out so far.

Here it is necessary to draw a political balance sheet of the events of the past year since the emergence of the “sovereign debt crisis.” The announcement of the Portuguese bailout request did not produce a disturbance on financial markets. In fact, stock markets generally rose and the euro strengthened against the dollar.

This response was not a sign of a strengthening of the European financial system. It was the result of political, not economic, factors. The relative calm which accompanied the bailout announcement was an expression of the fact that the financial markets have concluded that even though the economic situation may be worsening, the entire official political apparatus will work to ensure that their demands are enforced. In Portugal, the two main parliamentary parties, the Socialist Party and the opposition right-wing Social Democratic Party, are both committed to imposing austerity measures on behalf of the banks, whatever the outcome of the country’s June 5 election.

As for the so-called Left Bloc, it has issued a statement declaring that it will present a “plan in response to the debt situation.” But the financial markets have taken the measure of the “left” parties and the trade union leaderships on the basis of the experiences of the past 12 months in Greece, Ireland and Portugal itself. They have already “factored in” to their calculations that in every country these apparatuses are vehemently opposed to the development of an independent political struggle by the working class to bring down the governments of finance capital.

The forces for such a struggle are emerging, however. The demonstrations of thousands of young workers and families on March 12, organised independently of the official apparatuses, point the way ahead. This movement must be armed with an international socialist program, for the establishment of workers’ governments in the fight for the United Socialist States of Europe. This is the perspective of the International Committee of the Fourth International.

Nick Beams