BRUSSELS (Dow Jones)–In the first real admission by top European officials that Portugal’s bailout program may need some kind of adjustment, German Finance Minister Wolfgang Schaeuble was caught on camera telling his Portuguese counterpart that would be possible once key decisions on Greece are out the way.

The comments, made on the sidelines of Thursday’s Eurogroup meeting of finance ministers, were caught on camera and broadcast on YouTube and in the Portuguese media. Some of the words of the 53-second clip aren’t audible.

However Portuguese finance minister Vitor Gaspar is seen holding a one-on-one conversation with Schaeuble.

Schaeuble tells him “If then there would be a necessity for an adjustment of the Portugal” program, “we would be ready to do that.”

Gaspar responds: “That is much appreciated.”

But Schaeuble tells him it is “key” that any decisions on Portugal’s program are made “after a substantial decision on Greece.”

It is the first time a top European official has said there is now a case for making changes to Portugal’s bailout program despite a worsening economic situation in the country. Coming from Germany, the euro zone’s most powerful member states, the comments have extra weight. Until now, European officials have publicly said there is no question around Portugal needing more help.

Portuguese Prime Minister Pedro Passos Coelho has also said his government won’t ask for more money or an extension of the bailout program. However, he has referred to a past commitment from the European Union it was ready to help Portugal and Ireland further if they followed the program but couldn’t return to markets when needed.

Portugal signed onto a EUR78 billion ($104 billion) three-year bailout program last May which foresees it returning to financial markets towards the end of 2013. However there have been growing doubts among investors and economists that the country, which was in recession through all of 2011, will be able to access funding by then.

German’s Ministry of Finance had no comment because the remarks were private talks that weren’t supposed to be broadcast with sound, a spokesman said.

However, a German government official said that Germany has “said all along” that countries that meet or overperform on their bailout program obligations can win some flexibility over their programs in return.

The comments are nonetheless embarrassing to Schaueble. He signals to Gaspar that any Portuguese decision must await the resolution of the Greek situation because German parliamentarians and public opinion is skeptical about the government’s handling of Greece’s situation.

A Portuguese government official said “the comments are a personal reassurance from a trusted partner that the Portuguese program will be executed under conditions of increasing stability.”

Gaspar later told the Portuguese press the government isn’t seeking a readjustment of its program.


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