Portugal's political crisis: 'Europe is very concerned'

October 30, 2015
Portuguese President Cavaco Silva.

Portugal's incoming government will most probably prove to be the briefest in modern Portuguese history.

It is headed by conservative Social Democratic Party (PSD) leader Pedro Passos Coelho, whom Portuguese President Cavaco Silva appointed on October 22 to continue as prime minister. Passos Coelho has already overseen the 2011 “bail-out” memorandum applied to Portugal by the “Troika” (European Commission, European Central Bank and International Monetary Fund).

The PSD will again be joined by the neoliberal Democratic and Social Centre-People's Party (CDS-PP), with whom it ran in the October 4 legislative election as the Portugal Ahead coalition.

The near-certain end of the government will come from a November 10 vote of no-confidence from the left majority in the incoming parliament. Of the parliament's 230 seats, the three parties identifying as left hold 122 seats, while Portugal Ahead has 107 and the animal rights party People Animals Nature (PAN) one.

The PSD-CDS coalition won only 38.4% of the vote on October 4. It was followed by 32.3% for the Socialist Party (PS), 10.2% for the Left Bloc — which nearly doubled its vote from 2011 and became the third largest force in parliament — and 8.3% for the Portuguese Communist Party (PCP), running in coalition with the Greens (PEV).

The left has already used its majority to vote up its candidate for parliamentary speaker.

On November 10, PS leader Antonio Costa will announce the detail of an agreement between the PS, Left Bloc and PCP-PEV that would allow a stable, full-term government to be formed.

Whether this will take the form of a minority PS government, supported from outside by one or both of the other left forces or a coalition, is still being finalised.

What happens after parliament votes no-confidence in Passos Coelho will be critical. Will Cavaco Silva, a former PSD prime minister completely allergic to accepting the Left Bloc and PCP as members of the so-called “arc of government”, then ask Costa to form a government? Or will he stick by his ban on the PS's “anti-European” partners?

If he sticks with his ban, Cavaco Silva will in effect install the minority PSD-CDS as a “caretaker” government until new elections can be held.

Such a decision would spark at least 8 months of political tension and turmoil. That is because Cavaco Silva's term ends in January. Under the Portuguese constitution, the newly elected president cannot call a legislative election for six months.

Path to crisis

In Portugal, the broadly defined parties of the left have had a parliamentary majority for 22 of the 41 years since the 1974 Carnation Revolution overthrew a decades-long dictatorship.

However, only today has this majority pitched the country into constitutional crisis. In the words of Mujtaba Rahman of risk consultancy Eurasia Group, “Europe is watching and is very concerned”.

“Having just stabilised Greece and heavily distracted by migrants, the last thing Europe needs is a crisis in the south.”

The immediate cause of this new headache for “Europe” — that is, the continent's ruling elites — is the PS's decision to seek a governing alliance with the Left Bloc and the PCP.

Why has this party — set up as an anti-communist outfit in 1973 and which has previously governed in coalition with the right — taken this unprecedented step?

The answer has two sides: the depth and intransigence of Portugal's economic and social crisis and the vulnerability of the PS to pressure from its left, especially the Left Bloc.

Until the present crisis, mainstream commentary on Portugal tended to compare the country favourably with Greece. For example, a May country report by Dutch banking giant Rabobank noted with relief that the country was not “facing politically destabilising populist and extremist trends despite its high unemployment and considerable reform and austerity effort in the past few years”.

This complacency was not without foundation: Portugal's 2012-13 mass movement of revolt against the Troika-imposed austerity was not as powerful or sustained as in Greece and did not lead to the rebirth and growth of the radical left. A downturn in struggle after mid-2013 also produced a crisis in the Left Bloc, which almost split in two at its national convention last year.

Meanwhile, austerity has ground on, producing miserable economic growth at the expense of acute social pain. Hundreds of thousands of young people continue to flee their country, where youth unemployment runs at 31.8%. Average household income has fallen 8.9% since 2009.

Political impact

The main political impact in the economically and socially stagnant country is growing mass disillusionment with politics, eroding support for the right and a small rise in support for the SP — but only to the degree that potential voters can be convinced that it has become a different beast than the one that brought in the Troika in 2011.

At the same time, the inability of the Left Bloc and PCP to develop unity to the left of the PS meant that the PS was still seen by most working-class voters as the only alternative party of government.

This was the context in which PS leader Costa promised in a “Letter to Undecided Voters” to give Portugal a new modern model of development, to end casualisation and poverty, to defend public health and education and to “turn the page on austerity so as to relaunch the economy”. It pledges to adopt “an active role in Europe — that enables us to resume convergence [with other EU countries] and strengthen our position in the euro.”

Costa added: “We have to overcome depression, scepticism, resignation and the feeling of national decadence, and rebuild a feeling of collective hope in our common future.”

The Left Bloc and PCP-PEV had to decide how to react to Costa's stated rejection of austerity. The Bloc's response was to further re-emphasise its message for a political dialogue on the left “with a view to ending the cycle of the country's impoverishment and to recovering the value of worker income and pensions”.

It was the Left Bloc's decision to focus on wages, pensions and job protection as the core conditions for supporting a PS government — leaving aside debt restructuring and euro membership — that made some sort of three-way left agreement thinkable.

It also helped induce the PCP to engage with the possibility of throwing out the PSD-CDS — even though the PCP supports a rapid Portuguese exit from the euro and has a history of strong hostility to the PS.

As for the PS, in pushing negotiations to its left, Costa faced opposition from various factions, including those who thought an agreement with the PSD-CDS was feasible.

Such a course would have caused the PS enormous damage: it would have been seen — correctly — as having kept the authors of hated austerity in power.

In an October 19 letter to the PSD-CDS, Costa wrote: “What separates us ... are the pressing needs of the country and the sovereign will of the Portuguese for a reorientation of politics, which you persist in not accepting.”

Presidential panic

Once it became clear that negotiations between the “parties of government” had broken down, Cavaco Silva addressed the nation to justify his choice of Passos Coelho as prime minister despite the fact Portugal Ahead failed to win an electoral majority.

He said: “In 40 years of democracy, no government in Portugal has ever depended on the support of anti-European forces, that is to say forces that campaigned to abrogate the Lisbon Treaty, the Fiscal Compact, the Growth and Stability Pact, as well as to dismantle monetary union and take Portugal out of the euro, in addition to wanting the dissolution of NATO.

“This is the worst moment to radically change the foundations of our democratic regime ... Outside the European Union and the euro the future of Portugal would be catastrophic.

“After we carried out an onerous programme of financial assistance, entailing heavy sacrifices, it is my duty, within my constitutional powers, to do everything possible to prevent false signals being sent to financial institutions, investors and markets.”

Former PS health minister Antonio Correia de Campos analysed the result of the speech in the October 26 Publico: “Rarely has the impact of a political performance been so contrary to that aimed for by the performer.

“We can't yet manage to envisage Doctor Cavaco as a socialist activist, but we can at least see him as the great adhesive, the main actor, in the process of unifying the left.”

Cavaco Silva's speech, which openly invited the “markets” to distrust his country, made it impossible for right-wing PS MPs, whose betrayal he was actively courting, to vote against their party.

The president's boomerang-speech created a constitutional crisis and enormous outrage: he told the 1 million Portuguese who voted Left Bloc and PCP that their parties were denied any role in choosing a Portuguese government.

As a result, the country is divided for and against its president. The November 9-10 parliamentary session will take place amid a demonstration called by the General Confederation of Portuguese Workers (CGTP) demanding the president appoint Costa as prime minister.

If the president refuses, insisting that Passos Coelho continue as “caretaker”, the dormant class struggle in Portugal will surely revive as an illegitimate government starts making decisions affecting the Portuguese people.

If he accepts, the incoming government will face a hostile European Commission that must already be wondering whether it will have to tame Portugal as it did Greece.

[Dick Nichols is Green Left Weekly's European correspondent, based in Barcelona. A more detailed version of the article will soon appear at Links International Journal of Socialist Renewal.]

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