Portugal Gets Stable Coalition

Portugal's electorate turned against the Socialists and elected the Social Democrats although it realizes that this means austerity is ahead.

Tags: Portugal EU
Amiel Ungar , | updated: 5:32 PM

Passos de Coelho
Passos de Coelho


It was not the "bloodbath" that occurred during the Irish elections where Fianna Fail was thoroughly routed, but the Portuguese Socialists(PS)  paid the price for governing Portugal when the economy turned sour, necessitating an IMF EU bailout. They lost 23 seats.

The Social Democratic Party, that in Portugal is more conservative than the name sounds, took 39% of the votes and 105 of the 250 seats in the Portuguese Parliament. Nationwide, the party commanded across-the-board support and was the biggest vote getter in 17 out of 20 constituencies.

Assuming that disagreements about the allocation of portfolios can be ironed out, they have a compatible coalition partner in the Democratic and Social Center Party (CDS-PP) with 124 seats, giving the 2 parties an outright majority.

Now, 46 year-old former businessman Pedro Passos Coelho, the PSD leader, will take the helm, although he has no previous political experience. Both parties in the forming coalition plan to carry out the bailout plan in full and perhaps even go beyond it. This particularly applies to the realm of privatization.

The majority accorded to two parties committed to making the bailout work will reassure investors. Appropriately, the interest on Portuguese debt declined moderately. The bailouts in Greece and Ireland have proven problematic due to the massive resistance that they aroused. In the Irish case, the then-opposition Fine Gael went to the electorate with a pledge that it could renegotiate the terms of the bailout, something that it has failed to do.

The Prime Minster designate was deferential to the EU, admitting that he knows that his country is a burden on its partners: “We don’t want to weigh down our (European) partners for a day or a second more than necessary.”

The only negative in the election was a slight increase in support for the Communist party.

As Portugal has had a caretaker government since the Socialist minority government fell in March and the coalition partner is clear, Portugese President Anibal Cavaco Silva asked Pedro Passos Coelho on Monday to urgently begin negotiations on the formation of a majority government.

In addition to meeting debt payments, the new government will have the unenviable task of corralling the 12.6% unemployment rate while the economy first contracts before it can contemplate renewed growth.