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Good evening,

At the beginning of this New Year, I greet all the Portuguese, wherever they may be, and wish them all the best for 2010.

Exactly one year ago, when I spoke to the Country, I stated that 2009 would be a very difficult year.

I added, at the time, that I feared unemployment would worsen and for an increase in the risk of poverty and social exclusion.

And I also stated that Portugal, every year, spent much more than it produced.

These words were not uttered with a political purpose. As President of the Republic I am above party political controversy.

I speak to the Portuguese when I believe that the interests of the Country so justify and always bound by the essential need not to trade on illusions or hide the Country’s real situation.

My duty to truth is to alert the Portuguese to the difficult situation of the Country and to the challenges we are facing collectively.

Throughout this last year, unemployment rose markedly, reaching 548,000 people in the third quarter. Approximately 20% of the unemployed were young people.

To all those who, last year, lost their job or could not resume a professional activity, I wish to give a word of comfort, but equally of hope. Do not be discouraged.

But unemployment is not the sole motive for concern.

The State’s indebtedness has been growing markedly and is reaching danger level.

The Country’s indebtedness abroad has been increasing very rapidly and is reaching worrying levels.

In addition to this the days of low interest rates are coming to an end.

If the imbalance of our external accounts continues at the rate of the last few years, our future, the future of our children, will be seriously engaged.

When we spend more than we produce, there will always be a time when someone has to pay the bill.

With these increases in external indebtedness and in unemployment, together with the imbalance in public accounts, we may be reaching an explosive situation.

Portugal has to join all its forces to reverse this situation.

We cannot continue to be overtaken, in terms of level of development, by other countries in the European Union.

In line with the most recent indicators, Portugal has already gone down to the 19th place, and is only ahead of eight Eastern European countries which adhered to the Union a few years ago.

Difficult times are times of greater demand and high responsibility. For all of us, of course, but more demanding and with greater responsibility for those in public office.

The example must come from above.

The real Country that wants to work, that aims for a better life, expects that politicians leave aside artificial squabbles, which never settle people’s real problems.

It is time for us to concentrate on what is essential, with emphasis on the fight against unemployment.

This is not the time to find excuses not to carry out what must be done. We are facing one of the most decisive crossroads in our recent history. For this reason, in conscience, I cannot remain silent.

Due to the seriousness of the situation, we must make choices; we must clearly establish our priorities.

Public funds are not enough to cover everything and we cannot indulge ourselves in laying them to waste.

I recall what I have insistently been defending.

In the current circumstances, I believe that the way to our future must be based on two fundamental priorities.

On the one hand, strengthening the external competitiveness of our companies and increasing the production of goods and services which compete with foreign production.

On the other, provide social support for the more vulnerable and unprotected and for the victims of the crisis.

It is pure fiction to believe that a lasting improvement in the well being of the Portuguese is possible without an increase in productivity and in the competitiveness of our economy.

The strengthening of competitiveness depends immediately upon the confidence and the credibility of our institutions, specifically the justice system and Public Administration.

We must invest, on the one hand, in public policies which promote a demanding education and qualified professional training, which develop innovation, and encourage investments in companies producing goods and services which compete with foreign production.

Approximately ninety five per cent of our companies have less than twenty employees.

Since this is the structure of our productive fabric, the contribution of small and medium sized companies is decisive for the reduction in unemployment and for the Country’s development.

In turn, financial institutions must adequately support the strengthening of the capabilities of the small and medium sized companies to face external competition.

If the State is responsible to guarantee the stability of the financial system in times of turmoil, banks have the social responsibility to guarantee that credit reaches the companies.

We have lately heard many appeals for the President of the Republic to actively interfere in political life.

However, within the logic of our constitutional system, it is not the President of the Republic’s duty to interfere in that which is within the exclusive remit of the Government or in that which is the opposition’s own responsibility.

The Portuguese Government is imbued with all the legitimate conditions to govern, a Government based upon a relative majority gained in recently held elections.

The new parliamentary framework, along with the grievous economic and social situation which the Country is going through, demands specific capability to promote understandings by those who govern, and which must be corresponded by the opposition, with an attitude of dialogue and a culture of responsibility.

The Portuguese would find it difficult to understand that the several political leaders would not concentrate on the settlement of the issues affecting the people and would not do their utmost to achieve inter-party understanding.

In this context, the difficult situation of our public accounts calls for a political challenge placed on the parties represented in Parliament.

The costs of correcting the imbalance in the public accounts can be dramatic, as has been shown in the case of other European Union countries.

It should be noted that Portugal already has levels of public expenditure and taxation which are disproportionate when compared to its level of development.

As such, it would be totally desirable that political parties should seriously negotiate to reach an understanding regarding a credible medium term plan, in order to place the public sector deficit and public indebtedness on a sustainable path.

The State Budget for 2010 is the adequate moment for this political understanding which, with a general sense of responsibility, would serve the national interest.

We cannot afford to wait for others to impose the resolution of our problems.

Portuguese,

In this year of 2010 we will be celebrating the centenary of the Republic.

We will be doing it in an environment of grievous difficulties. But, precisely for this reason, we must be aware that our crisis is not just economic.

It is also a crisis of values.

We must recover the value of the family. The fading of family links is one of the factors which contribute to a greater extent towards the worsening of the difficulties which are being felt by so many.

We must also give value to the practice of republican ethics. Ethics in business, in the markets and in entrepreneurial life, but also in public office, must be an attribute of behaviour for all of us.

We must also restore the value of trust in the institutions and in justice. The Portuguese must believe that there is justice in their Country, and that nobody is above the law.

I know that the large majority of magistrates endeavour, seriously and discretely, to perform their work wisely and well.

In this first day of the year, it is important that the value of hope is reasserted. I repeat to the Portuguese what I said to them precisely one year ago: do not fear.

We have a long History of which we are proud, because in the past we were not afraid.

And here we are today, a democratic State which is part of a United Europe.

Here we are today, in 2010, because we believe in ourselves and in a fate called future.

In the name of this future we must continue fighting.

Our fight for Portugal is carried out on our behalf and on behalf of our issue.

I believe in Portugal. For this reason I will go on fighting for the future of this Country of ours.

In the midst of so many uncertainties, the Portuguese may be sure of one thing: as far as I am concerned, I will not give up and I will never depart from my duties or from my commitments.

To you all, a Happy New Year.