Gains and challenges for the left in Portugal

Left Bloc MP Sandra Cunha
Friday, May 19, 2017

Sandra Cunha is an MP for the Portuguese Left Bloc, representing the industrial and port city of Setubal. She gave the following speech to the May 12-14 annual conference of the Danish Red-Green Alliance (RGA).

Cunha’s speech covered the Left Bloc’s relationship with the Portuguese Socialist Party government, which rules with the support of the Left Bloc, the Portuguese Communist Party (PCP) and the Green Party.

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First, I want to thank the Red-Green Alliance for the invitation to the Left Bloc and for the opportunity to come here and talk to you about the current political situation in Portugal: about the conditions that led to the development of a left-wing parliamentary majority that currently supports the Socialist Party (SP) government in Portugal, but also about the challenges and difficulties of this arrangement and the role the European Union (EU) austerity project plays in it.

During the four years of right-wing coalition government, between 2011 and 2015, Portugal was completely under EU domination.

The austerity policy of the Troika [EU, International Monetary Fund and European Central Bank] and the right-wing government destroyed jobs, forced thousands of young people to leave the country, ransacked the pension system, depleted public assets and services, privatised essential services and diverted all resources into paying a debt that, nonetheless, did not stop growing. Before the Troika’s intervention, in 2010, Portugal’s public debt was 96% of GDP; by 2015, it had increased to 129%.

Despite all this devastation, the SP failed to win the 2015 legislative elections. They presented themselves at the election with a liberal project and an obedient commitment to Europe that did not gain the confidence of the voters.

However, although the SP did not win, the right-wing coalition did not win a majority either. Together, the SP and the left-wing parties – the Left Bloc, PCP and Green Party – obtained the majority of votes and the majority of MPs.

Unprecedented agreement

The parliamentary majority agreement between the SP and left parties is not only unprecedented in Portuguese democracy, but arose from unique conditions as well.

On election night in 2015, the Left Bloc affirmed its rejection of the continuation of the right-wing government. This position pressured the SP and facilitated the negotiation process that followed. The SP needed the support of the parliamentary left to govern.

The growth of the Left Bloc, with 10.1%, and the electoral alliance between the PCP and the Greens, with 8.25%, changed the Portuguese political framework, putting the right in the minority and preventing the continuation of austerity measures that had penalised jobs, created a cycle of impoverishment and degraded the position of labour in the social relation of forces.

This increased vote was essential for the creation of a left-wing parliamentary majority capable of defeating the right-wing government and of putting an end to the process of impoverishment imposed on the country.

This parliamentary majority has not formed a coalition government. It is an agreement for four years to be tested annually by annual budgets which operate as confidence motions.

The negotiation process brought significant changes to the SP government’s program, putting an end to a cycle of economic degradation, restoring labour income and ensuring rights (for example, the law on same-sex couples’ right to adoption or the repeal of the limitations on abortion introduced by the previous government).

The Left Bloc reached an agreement with the SP aimed at ending the policies of impoverishment, the defence of public services and an economic strategy for growth and employment.

Specifically, the agreement focused on the restoration of wages, increasing the national minimum wage, ending the freeze on pensions, extending the social electricity tariff, increasing workers’ income and reducing the tax burden on labour.

In these almost two years of socialist government, it has been possible with the support of the left-wing parties, to reverse privatisations in public transport, restore four previously eliminated national holidays, reverse salary cuts for public sector workers, reduce the working week in the public sector to 35 hours, eliminate the surcharge on individual income tax and increase the supplementary solidarity payment for the elderly as well as family allowances and other social subsidies.

It was possible to go much further than the mostly liberal electoral program of the SP, for instance overcoming the SP’s attempt to liberalise dismissal conditions and reduce the Single Social Tax paid by employers (at the cost of decapitalising the social security fund).

Concerns

However, despite this progress, the current and future situations is not without cause for concern.

Almost at the mid-point of the SP’s mandate, economic recovery has been sluggish and there are still major core commitments to be met — such as the increase in the national minimum wage (the goal is to reach €600 a month when it is now still at €557), the unfreezing of public service hiring, the fight against casual work (a major problem in Portugal) and the reversal of the savage tax increase imposed on the Portuguese during the right-wing government.

Public investment is at historic lows. Without public investment, there can be no sustained recovery of employment or regeneration of public services, much less a serious revival of the national economy. Here the Left Bloc considers that there is an insurmountable contradiction between the EU Fiscal Compact [mandating public sector deficit reduction targets] and a left-wing policy.

Also, Portugal’s Government Stability Program, recently delivered in Brussels, foresees a huge contraction of public expenditure and does not provide for specific solutions for economic recovery and income restoration. It aims at a 1% of GDP deficit in 2018 and a primary surplus of more than €5 billion. This surplus could be used in health or education. However, when there is more than €8 billion of public debt interest to pay annually, that accounting surplus becomes a deficit.

The choices in the stability program represent an obvious rightward radicalisation of the SP economic program. It is becoming progressively clear that the Portuguese SP is increasingly acceding to the demands of Brussels, distancing itself more and more from left-wing policies and carrying out a worrying shift to the right. This is not, however, surprising — we must not forget that the SP was co-responsible for the Troika intervention in Portugal and for its austerity policy.

The SP minority government’s end of term is therefore uncertain. The agreement between the SP, Left Bloc, PCP and Greens had a four-year mandate as its horizon, but was not guaranteed in advance. The biggest risks regarding the durability of the government lie on the side of the SP. If it continues to insist on programs that preserve austerity, it objectively opens a debate about the consequences and nature of the agreement.

However, despite these limitations and dangers, the Left Bloc is engaged in finding a solution that would allow the continuation of a parliamentary majority that supports state budgets capable of relaunching the economy and recovering labour income.

Europe

Some final words about Europe: The European institutions, from the European Commission to the ECB and even the Organisation for Economic Cooperation and Development, have never ceased to threaten and blackmail Portugal since the start of this parliamentary arrangement.

And we know that the left-wing alliance did not interrupt the SP’s centrist course, nor its subordination to the rules of the euro and the European treaties. It is this subordination that keeps the country's fundamental problems intact: major interest on debt and unemployment still at 10.1%, even though that is the lowest rate in the past five years (in 2013 it reached 16.2%); and youth unemployment (now at 25.1%).

Public debt remains a major risk to the country. Austerity doctrine proclaimed that deficit control would be the answer to the problem of public debt, guaranteeing the country's external credibility and low interest rates. This was blatantly false.

At the end of 2016, year of the reversal of some of the austerity measures, the Portuguese public deficit was at its lowest level of the past four decades (slightly above 2% of the GDP). This clearly undermines the dogma that austerity policies are the ones that ensure a low budget deficit.

Another dogma has been refuted with the decline in the deficit. A low budget deficit does not ensure low interest rates. The interest repayments on public debt have not stopped rising in Portugal, as in other Troika-intervened countries.

We therefore maintain that to restore Portugal’s democratic control of the economy and finance, it is urgent to ensure a strong public presence in the financial system and to prepare the country for the possible scenario of exiting the euro or even of the end of the euro. Those are actions that would not by themselves open the road to development but would be a consequence of disobeying presently existing Europe.

European left

In Europe, the Left Bloc works for an alliance with all progressive forces that struggle to break with the European treaties and to build a new cooperation to serve the interests of the people, protect democracy and defend social, economic and environmental rights.

We reject the “centrism” that sees the European status quo as a barricade against the growth of the extreme-right in Europe. It is with this status quo and this "centrism", paving the way to xenophobia and economic decay, that the extreme right finds the space to grow.

The failure of EU treaties and institutions is not the failure of Europe and its peoples. The left must be the answer that rejects NATO militarism, fear and hate, while building the alternative of democratic cooperation as the road to a Europe for the people, a Europe that does not shatter hope and close the door on refugees.

Finally, I would like to salute the RGA’s fight against social inequality and in defence of a strong welfare state. And, of course, your struggle in defence of equality between all people and your resistance to this anti-democratic Europe that despises human rights and sovereignty.

I would also like to express all our solidarity for your fight against the extreme right here in Denmark. From the Left Bloc we would like you to know that your fight is our fight. And we all know that in a globalised world we need more than ever to unite forces and cooperate to fight conservative, capitalist and patriarchal societies and to resist oppression and the rise of extreme right on the journey to freedom, democracy and equality.

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