Sunday

19th Aug 2018

Analysis

How Portugal's leftist 'contraption' works

  • Antonio Costa's coalition has managed to approve a budget, but also to pass other measures such as a minimum wage increase or the legalisation of same-sex adoption (Photo: Clara Azevedo/PM's office)

Every Portuguese political leader heaved a sigh of relief on 18 May. The European Commission decided to postpone a decision on whether to impose fines on Portugal and Spain for having excessive deficits.

It was the result the leftist government, which celebrates its six months in power on 26 May, was hoping for. It was also what all the other parties and the centre-right president had been lobbying for in Brussels.

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Former centre-right prime minister Pedro Passos Coelho asked Jean-Claude Juncker to let Portugal go unpunished, according to the Portuguese newspaper Expresso. Coelho's PSD party sided with the government because a fine imposed by the commission would reflect badly on their previous administration.

“It was one of the few moments of complete unanimity on Portuguese politics,” Jose Adelino Maltez, a political scientist from the University of Lisbon, told EUobserver.

Behind the unanimity on this issue, however, there is serious disagreement.

The centre-left Socialist Party (PS) leads a coalition supported by the more radical Left Bloc (BE) and the Communist Party (PCP), both of which are fiercely critical of the EU.

The coalition was improvised after the PSD fell short of a majority following the election in October and the PS grabbed the opportunity to take power.

Yet somehow this unwieldy grouping has managed not only to approve the 2016 budget, but also to pass other measures such as a minimum wage increase, the reversal of privatisation schemes and the legalisation of same-sex adoption.

Paradox

“The lower the expectations are, the more the 'geringonca' can transform itself into a real machine,” political commentator Jose Pacheco Pereira had noted six months ago.

The Portuguese word, which can be roughly translated as “contraption”, is often used to describe his government.

“It is a geringonca, but it works,” prime minister Antonio Costa quipped in April.

The success of this arrangement can partially be explained by political tactics.

If the previous centre-right executive posed as the 'good student' towards Brussels, carrying out austerity measures without questioning its directives, Costa is following a different path.

“In terms of its discourse, this government says it doesn’t embrace these policies. Although they keep their international agreements, they say they’re trying to stop austerity,” political expert Pedro Magalhaes told this website.

This kind of paradox pleases the Portuguese electorate, according to Magalhaes.

Still, not everything can be seen through rose-tinted glasses. The European Commission may have postponed the fines, but it has demanded a 2.3 percent deficit this year, much lower than the 2.7 percent proposed by the Portuguese government.

Astute tactician

At the same time, Portuguese imports are rising, investment is low and unemployment is over 12 percent. These are all big challenges for an economy with a public debt over 130 percent of the GDP.

In spite of this, Antonio Costa is still confident that his plan to relaunch the economy through stimulus to private consumption will work.

Although the indicators have not kept up with his expectations, few commentators think his government is in immediate danger.

Not only is Costa widely regarded as a very astute tactician, it also seems neither of his radical coalition partners have an interest in breaking up their agreement.

If the radical leftists were to cause a rift over Portugal’s role in the eurozone, Costa could turn to their right in order to stay in power.

“The best insurance for this government is [the radical parties'] fear of a coalition between the socialists and the right-wing parties,” said political scientist Adelino Maltez.

Debt renegotiation?

An example of this kind of trade off came a couple of weeks ago when finance minister Mario Centeno insisted the government was not looking for a renegotiation of its debt like Greece is doing – even if this is one of the proposals that the Left Bloc has been championing.

“Right now there is no one on the Left Bloc that truly thinks it’s rational to make Centeno demand a renegotiation in Brussels. But they still have to take a stand”, Magalhaes said.

“The problem is that these [leftist] parties can’t just base their positions on posture. In the long run, they will need to get something back. The evolution of the economy will tell what they can or can’t get.”

And thus determine the geringonca’s lifespan.

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