Portugal's Democracy Cracks Under Weight Of Austerity

Elections in Portugal this week offered the latest sign that when an individual European nation’s voters challenge eurozone austerity policies, the monetary union -- and the international creditors it represents -- takes precedence.

Portugal’s president, Anibal Cavaco Silva, fueled an ongoing debate about the future of European democracy on Thursday when he reappointed an outgoing center-right prime minister despite election results that gave three left-leaning political parties the majority of seats in parliament. 

Cavaco Silva named center-right leader Pedro Passos Coelho prime minister over the objections of Socialist leader Antonio Costa. Passos Coelho’s Forward Portugal Alliance (PAF) received the largest share of the vote of any single party in the Oct. 4 elections, the president said in a televised speech Thursday, and the party with the best showing has always formed the government since Portugal returned to democracy 40 years ago.

Cavaco Silva made clear, however, that his decision was influenced more by the desire to avoid challenging eurozone fiscal policy than by mere consideration for the country’s political traditions. 

"In 40 years of democracy, the Portuguese governments never depended on anti-European political factions," he said.

Costa, the Socialist leader, has asked to form a cabinet with the support of a parliamentary majority that includes the radical Left Bloc and Communist Party, since together, the three parties received over 50 percent of the country’s votes and have the power to control Portugal’s parliament. The Left Bloc and Communist Party are considered “euro-skeptics,” but the Socialist party, which would control the cabinet, is decidedly committed to remaining in the eurozone.

To be sure, as the president noted, Passos Coelho’s PAF won 38.6 percent of the vote in the country’s Oct. 4 elections -- the largest share of any single political faction. 

In Portugal’s political system, however, a minority cabinet is virtually guaranteed to fail without the support of a parliamentary majority.

"It is incomprehensible to name a prime minister who the president knows in advance will not be able to hold majority support in parliament," Costa told Agence France-Presse Friday.

Cavaco Silva said he fears that Costa’s premiership would put Portugal on a path to confrontation with eurozone leaders and international creditors. Costa has proposed to end the country’s "obsession with austerity" by, among other things, restoring spending on education and health care.

Observing Portugal's commitments to the eurozone "is decisive, is totally crucial for the financing of our economy and, consequently, for economic growth and job creation,” Cavaco Silva said. 

He fretted that a left-leaning ruling government would jeopardize Portugal’s standing with its international creditors.

“After having completed a demanding program of financial aid, which implied heavy sacrifices for the Portuguese, it is my duty, within the scope of my constitutional remit, to do everything possible to avoid that wrong signals are transmitted to the financial institutions, investors and markets, placing in question the country’s external trust and credibility,” he said.

Portugal exited a 78 billion euro ($116 billion) international bailout program in May 2014, which required unpopular wage and pension cuts. But the country must continue to reduce spending and increase taxes if it is to meet the eurozone's requirement that it reduce its debt to 60 percent of GDP within the next 20 years.

German chancellor Angela Merkel, who has led the continent’s push for austerity in response to the Great Recession and subsequent eurozone debt crisis, expressed her support for a center-right government. “Given the election results in Portugal, we hope Pedro [Passos Coelho] will be successful in forming a government,” she said on Thursday, in a speech to the center-right European People’s Party in Madrid.

But Passos Coelho’s government may not last long. Costa has said he would back an effort to oust the PAF from power if he can secure support from the other left-leaning parties. Passos Coelho must submit a four-year program within 10 days of taking office, and the Left Bloc and Communist Party have announced plans to reject any program that does not significantly undo austerity policies. If a majority of parliament rejects a prime minister’s four-year program, the ruling government collapses.

In that scenario, it would be up to President Cavaco Silva to tap another leader to form a ruling government. Given his harsh rhetoric, he might still deny Costa the opportunity do so, prompting a political crisis.

Portugal’s political system effectively precludes new elections from taking place until June at the earliest, raising the prospect that the president could be forced to appoint an unelected caretaker cabinet in the interim.

Critics say the dilemma facing Portugal shows how the eurozone’s economic mandates undermine its commitment to democracy.

Ambrose Evans-Pritchard, a columnist for The Telegraph, compared the situation in Portugal to the one in Greece, where the radical left Syriza party was elected in January to undo austerity policies, but ultimately was forced to agree to even harsher spending cuts and tax increases than were in place before.

“Greece’s Syriza movement, Europe’s first radical-Left government in Europe since the Second World War, was crushed into submission for daring to confront eurozone ideology,” Evans-Pritchard wrote Friday. “Now the Portuguese Left is running into a variant of the same meat-grinder.”

Antonio Costa Pinto, a political science professor at the University of Lisbon, voted for Passos Coelho’s center-right coalition earlier this month, but told The Huffington Post on Saturday that he opposes President Cavaco Silva’s attempt to exclude the radical left political parties.

“The president cannot exclude from Portuguese democracy two parties -- the Left Bloc and the Communists -- that represent 1 million voters and 20 percent of the Portuguese electorate,” Pinto said.

To do so, he added, would mean that “nowadays, especially in the periphery of Europe, parties that do not support the strict policy orientations within the eurozone do not count.”

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