LISBON - The most far-reaching programme of privatisation of state enterprises in the history of Portugal kicked off Thursday with the sale of almost all of the state's shares in the Energias de Portugal (EDP) utility to China's Three Gorges Corp.

A demonstrator holds a banner reading "Do not steal the future" in front of the Finance Ministry during a protest against the government's austerity measures in Lisbon December 15, 2011. Besides selling off the state's remaining shares in EDP, a company that brings in major profits, the government must privatise the highly lucrative national airport authority - Aeroportos de Portugal (ANA) – and is to complete the sale of Transportes Aéreos Portugueses (TAP) – the national airline – by the end of 2012. (REUTERS/Rafael Marchante) The Chinese company paid 3.5 billion dollars for a 21 percent stake, beating out Germany's E.ON and Brazil's Eletrobras and Cemeg, and making it the largest shareholder. The state was left with less than four percent of the shares in the power company.

Three Gorges' victory in the bidding for EDP will open Portugal's doors to Chinese financial institutions, making more credit available in Portugal, as the giant Chinese corporation promised Lisbon.

The privatisation of public enterprises is one of the conditions Portugal agreed to under the 110 billion dollar bailout agreed in May.

The government of conservative Prime Minister Pedro Passos Coelho has thus begun to sell off state assets under the austerity programme agreed with the "troika" of international creditors: the EU, the European Central Bank, and the International Monetary Fund.

Besides the massive privatisation plan, the bailout package signed by the government of then socialist prime minister José Socrates and the right, which took power a month later, was conditional on austerity measures like a more flexible labour market making it cheaper and easier to fire workers, major spending cuts, a freeze on wages and pensions, tax hikes, cuts in unemployment benefits and income tax benefits and deductions, and an increase in the value-added tax.

Besides selling off the state's remaining shares in EDP, a company that brings in major profits, the government must privatise the highly lucrative national airport authority - Aeroportos de Portugal (ANA) – and is to complete the sale of Transportes Aéreos Portugueses (TAP) – the national airline – by the end of 2012.

The IMF, EU and ECB are more flexible with respect to the deadline for the sale of the state's shares in the GALP oil company and in the Red Eléctrica Nacional (REN) power-grid company, agreeing that they can be sold off "when market conditions improve."

But according to the established timeframe, the government must begin privatising the national postal service, CTT, in the second half of 2012, and should complete the process by early 2013.

The Portuguese news agency Lusa quoted Tuesday from the revised memorandum of understanding with the "troika", which refers to "plans for the partial sale of Rádio e Televisão de Portugal (RTP) and Aguas de Portugal (the water company), and for the sale of concessions in public transport from Lisbon to Porto, after the restructuring of companies in those cities has been completed."

Parpública, Portugal’s holding company for state-owned enterprises, will begin to be dismantled in 2013, when the government is to have completed most of the privatisations, according to the new version of the memorandum of understanding.

Privatisations will begin to look more and more attractive to investors when certain measures go into effect in 2012: a half-hour longer workday, vacations cut from 25 to 22 working days a year, cuts in salaries and benefits, the elimination of holiday bonuses equivalent to two extra monthly salaries a year, and the elimination of a bonus given to the most diligent workers: three extra days off a year.

The secretary general of the powerful CGTP central union, Manuel Carvalho da Silva, said "we have a government that behaves as if the country were under occupation by foreign powers...and the workers are facing a monstrosity…that shows that the government has stopped governing for the country's citizens and is now governing for economic and financial groups" – a situation he described as "social terrorism."

Portugal's privatisation agenda has no precedent in the EU – not even in conservative prime minister Margaret Thatcher's Britain (1979 -1990).

Earlier this year, economy Professor Mario Gomes told IPS that "we are embarking on an ultra-liberal programme similar to the reforms that some South American dictatorships carried out in the 1970s and 1980s, although they did it in a gradual manner."

For his part, Ignacio Ramonet, editor-in-chief of the Le Monde Diplomatique monthly newspaper, wrote in an editorial this month that the EU "is the last territory in the world where the brutality of capitalism is cushioned by social protection policies – what we call the welfare state."

But, he added, the welfare state is tottering because "the markets no longer tolerate it and want to demolish it…That is the strategic mission of the technocrats who have taken the reins of government, thanks to a new method of taking power: the financial coup d'etat, which is presented, moreover, as compatible with democracy."

Under the 1973 to 1990 dictatorship of late General Augusto Pinochet, Chile became the first country in the world to put into practice the unadulterated economic theories of Milton Friedman from the Chicago School of Economics, based on a free market and strict monetary policy.

When asked about the editorial in Le Monde Diplomatique, José Cademartori, the last economy minister of the government of socialist president Salvador Allende (1970-1973), told IPS "I agree with Ramonet.

"But what he and other critics fail to say is that the European bourgeoisie want to liquidate or reduce to a minimum the benefits of the welfare system, to favour privatisations, lower their costs, and increase their profits.

"In the face of fierce competition from China and other countries that have lower labour costs, they rightly fear that in 20 years or less, Europe will lose its influence in the world," he said.

What they want to do, he added, is impose "Chilean dictatorship-style neoliberalism, even if it means years of suffering for the poor and middle classes."

Cademartori said the bourgeoisie in Europe understand that "this is the right moment to do it quickly, when the trade unions and leftist parties are weakened, disconcerted or divided, before protesters organise and react, and, if necessary, put an end to democracies to ensure change. There is a great deal at stake here."