Portuguese Could Give Neither Left Nor Right Majority

Polls predict that neither the ruling coalition nor the opposition Socialists will win a majority next month.

Neither Portugal’s ruling right-wing coalition nor the opposition Socialists are expected to win an overall majority in parliamentary elections next month, potentially plunging the country of ten million into political instability after four years of austerity.

Recent polls give Prime Minister Pedro Passos Coelho a slight edge of around 40 percent support against 36 percent for the Socialists, led by former Lisbon mayor António Costa.

Through the last three years, the Socialists had led Passos Coelho’s Social Democrats in the polls. But since the ruling party formed an electoral pact with its Christian Democrat coalition partner this summer, it has edged ahead of its rivals.

After a televised debate between Costa and Passos Coelho earlier this month, the right-wing coalition saw its popularity inch up further.

Although analysts proclaimed Costa the debate’s winner, a plurality of voters appears to agree with the prime minister’s warning that changing the government now would be a risky “adventure”.

Costa accused the ruling parties of using a €79 billion bailout from other European countries and the International Monetary Fund as cover for an “ideological rolling back of the welfare state.” Passos Coelho, he said, had gone beyond the requirements of the financial support package to “dismantle the national health service” and reduce labor costs.

Almost one in five Portuguese lives under or just above the poverty line. But that is a legacy of the last Socialist Party government. The number has barely changed since Passos Coelho took office.

The left also left him a deficit equivalent to 10 percent of economic output and a debt that had exceeded it. Passos Coelho’s coalition cut the deficit in half and reduced government spending from 52 to 49 percent of economic output, a reduction roughly in line with efforts made across the eurozone.

Portugal had more leeway than Greece to fill in its spending cuts. The coalition shrank a bloated public administration and privatized hospitals, the national airline and utilities. Fees for the state-run health service have gone up while the period for jobless benefits has been reduced from thirty to eighteen months.

The measures allowed Portugal to successfully exit its rescue program last year. Growth has returned since.

Unemployment has come down from a 17-percent high in 2013 to 12 percent this summer, still above the European average of 9.5 percent but a far cry from Greece’s 25 percent.

Portugal does not have a populist left-wing party like Greece’s Syriza. It does have a coalition of communist and Green parties that is polling as high as 10 percent.

If Costa manages to beat the right into second place, he may need to reach out to the far left to govern. The Socialist leader has ruled out a grand coalition while a minority administration would be unattractive. The last time the Socialists tried to govern without a majority, the communists and right-wing parties teamed up to force them out of office.

The far left’s manifesto, however, includes commitments the Socialists are unwilling to make. Most problematic is the communists’ support for leaving the euro.

By associating themselves with the far left, the Socialists could also discredit themselves with moderate voters, giving a boost to Passos Coelho’s centrist blend of liberal economic policies and social conservatism.