Portugal’s political crisis threatens government’s stability

The morning after António Costa’s minority government collapsed last week, Portugal’s prime minister crossed the border for scheduled talks with Pedro Sánchez, his Spanish counterpart and fellow socialist.

Portugal was “an example of stability” and Costa possessed a capacity for dialogue and reaching agreements shared by few other prime ministers in Europe, Sánchez said.

That praise will ring hollow this week as Marcelo Rebelo de Sousa, Portugal’s president, prepares to dissolve parliament and call an election two years ahead of schedule after Costa failed to persuade the far left to support his 2022 budget.

After sparking hope among Europe’s flagging centre-left parties by showing that overturning austerity in the wake of the sovereign debt crisis was not incompatible with EU fiscal rules or stability, Costa now faces a snap election that could leave Portugal without a clear government option.

“It’s difficult to see how an election will clarify things, rather than making the situation even more unstable and volatile,” said Francisco Pereira Coutinho, a professor of constitutional law at Lisbon’s Universidade Nova.

Concern is also growing that far-right populists will make gains in the election, complicating coalition building and damaging the image of a country that had prided itself on being a European haven untroubled by such political movements.

Pereira Coutinho said Chega, a rightwing populist party whose name means “enough”, was likely to increase its share of the vote “enormously” from currently having only one deputy. “Chega has the most to gain from this crisis and the way that affects the election outcome could create difficulties,” he warned.

Costa, the leader of one of Europe’s strongest socialist parties, has impressed his centre-left peers by forging an unorthodox path to power and making it work.

In striking a pact between his mainstream Socialists (PS) and the far left in 2015, he brought Portugal six years of stability despite having a minority government. Sánchez followed his example four years later by entering into a government coalition with the anti-austerity Podemos party.

But the Portuguese alliance that sought to reconcile EU fiscal rules with Marxist-Leninism collapsed last week when the anti-capitalist Left Bloc (BE) and the hardline Communist party (PCP) sided with right-of-centre opposition to vote down Costa’s budget bill.

Seeing no electoral gains for their support and frustrated by the limits imposed by EU fiscal rules, the BE and PCP began distancing themselves from the PS after Costa was re-elected to a second term in 2019, failing for a second time to win an outright majority.

Unlike Sánchez, Costa has been unwilling to bring his radical partners into government and failed to renew the written pacts between them after 2019, relying only on regular talks to ensure their backing.

But after months of difficult negotiations and last-minute pleas, he failed to convince the BE and PCP to accept a budget that the PS claimed to be the most leftwing in recent history.

Pedro Siza Vieira, economy minister, blamed the BE and PCP for throwing away a golden opportunity. “Never before in our democracy have the parties to the left of the PS had so much capacity to influence the government’s agenda, nor has a budget been so influenced by their ideas,” he said in the debate.

The PS argues that by rejecting the budget bill and triggering a political crisis, the far-left parties have refused to take responsibility for shaping the country’s future in favour of returning to the protest fringe of politics.

Catarina Martins, the BE leader, however, said the leftwing pact, known as the geringonça, meaning “bizarre contraption”, had been “killed off by [Costa’s] obsession with winning an absolute majority”.

The prime minister, now governing in a caretaker capacity, will try for a third time to achieve that goal in the election expected in February, promising a leftwing platform and the same budget.

On the basis of current polling, however, he will fall short, with the PS emerging as the largest party, but without an overall majority, a difficult feat for any party under Portugal’s proportional voting system.

Deprived of backing from the BE and PCP, Costa could face the dilemma of having to enter into a coalition with the centre-right opposition — an option he has ruled out as preventing any alternation of power — or accepting a right-of-centre government dependent on support from Chega.

“To avoid being seen as ungovernable, Portugal will need to take a German-style approach to discussing ‘grand’ or other formal coalitions,” said Pereira Coutinho. “Our parliamentary arithmetic will have to be much more creative.”