ANALYSIS:Even as EU-IMF talks in Lisbon culminated last night, attention was turning back to Athens

PORTUGAL’S €78 billion rescue deal brings the running total of the three sovereign rescues in the euro zone to some €273 billion, an amount big enough to demonstrate the seriousness of EU leaders’ intent to prop up the single currency at all costs.

However, anxiety is mounting that an even greater effort will be required to keep the debt crisis at bay.

Portugal will receive aid under its deal for three years, with the EU’s 3 per cent budget target to be reached by 2013.

Although a massive dose of fiscal pain is inevitable, caretaker prime minister Jose Socrates said the plan does not embrace any further cuts in the public sector wage or in the minimum wage. Indeed, workers will still receive the 13th and 14th months of salary.

He went on to say that state jobs will not be eliminated as part of the agreement and the government will not have sell shares in state-owned savings bank Caixa Geral de Depositos.

The rescue package still falls to be approved by the opposition parties, most likely today. This is crucial given their lead in opinion polls before next month’s general election.

Still, euro zone officials are confident that the opposition will back the main thrust of the rescue plan.

Their confidence here is in marked contrast to current attitudes towards Greece. Even as EU-IMF talks in Lisbon culminated last night, attention was already turning back to Athens.

Scene of Europe’s first bailout one year and two days ago, the country is still struggling to headway. In official circles, there are growing doubts that the country will be able to return next year to private markets as foreseen under its rescue plan.

This presents a host of tricky questions for euro zone finance ministers, who meet in Brussels next Monday week to sign off on the Portuguese rescue. Even before the Lisbon deal was done last night, euro zone sources freely acknowledged that the prime concern now is Greece.

The country is the subject of an ongoing “troika” review by the EU Commission, the European Central Bank and the IMF. This is likely to conclude shortly before the Commission publishes a growth forecast on Friday week for each euro zone economy.

Both the review and the forecast are crucial in determining the next phase of Europe’s great bailout debacle. With an adverse troika opinion ever more likely, ministers seem set to face a host of tricky questions.

Amid concern about missed targets and slippage in the delivery of policy requirements under the plan, there are increasing doubts about the sustainability of the current rescue plan.

Informed euro zone sources point to deep reluctance to contemplate debt restructuring for Greece as that would involve default, but they acknowledge that any extension of the package would create yet more political difficulties in countries such as Germany and Finland.

Greek finance minister George Papaconstantinou said yet again yesterday that any debt restructuring would be a huge mistake. However, sources acknowledge that some form of debt rescheduling may be in prospect. “It would have a very big cost and we would not have the benefit, we would stay out of markets for 10-15 years, the wealth of Greek pension funds would suffer writedowns, we would have problems in the banking system and hence the real economy,” Mr Papaconstantinou said.

The problem he is confronted with is that his counterparts are less and less willing to take at face value his promises to see the plan through.