When Greek voters elected a far-left government a year ago, rejecting the harsh terms dictated by European institutions for their bailout, the result was a major political crisis. The Greek people, having suffered tremendously from the austerity still in place, had had enough. When confronted with the apparent failure of their doctrines in the Hellenic Republic, Europe’s masters of budgets were quick to point to Portugal. There, they said, their plan had worked, hadn’t it? The westernmost country of the EU was recovering, back on track. Portugal proved that austerity worked. Or did it?
At the height of the crisis, the European ‘medicine’ – strict fiscal discipline and tax hikes – took a high toll on the ten million Portuguese. In 2013, the unemployment rate was higher than 16 per cent. The number of emigrants leaving Portugal doubled between 2010 and 2011. Income tax and VAT increased, forcing many restaurants to close and leaving Portuguese workers worse off. Billions of euros in cuts to healthcare, social security and education had a disastrous impact on the average citizen.
The economic and social crisis was accompanied by a political one. In 2009, the left-wing Socialist Party (PS) under Prime Minister José Sócrates narrowly won a re-election. But only two years later, after all opposition parties rejected his budget plan (which included harsh austerity measures), he resigned, triggering a snap election. In June 2011, the PS suffered a historic defeat, losing 23 seats in the Portuguese parliament. The conservative parties clearly won: PSD (Partido Social Democrata) and CDS-PP (Centro Democrático e Social – Partido Popular) won over 50 percent of the popular vote. PSD’s Pedro Passos Coelho was named Prime Minister. The following four years were a period of hardship and deprivations for ordinary Portuguese.
In that time, there were many mass protests and general strikes. Hundreds of thousands took to the streets to protest the government’s austerity plans.
In October 2015, the Portuguese took to the polls again. The centre-right, pro-austerity electoral alliance Portugal à Frente (“Portugal Ahead”) of parties PSD and CDS-PP got the most votes and won the most seats – but lost its absolute majority. They won 107 seats in the parliament, the Assembleia da República, short of the majority of 116 votes, and got 36.86% of the popular vote. But their result was some 13% worse than in the 2011 election. The PS got 86 seats in parliament and 32.31% of the popular vote, winning 12 more seats than four years earlier. And the Left Bloc doubled their share of votes, getting 10.2 percent. Observers feared the instability would lead to a political crisis.
On October 22, the Portuguese President (the highest office of the Republic, who appoints the cabinet and the Prime Minister), appointed Pedro Passos Coelho, who had led the conservative coalition since 2011, to be Prime Minister again.
Many protested this decision: it was undemocratic, they argued, because Coelho and his coalition had failed to get a majority in parliament. In the Twittersphere, some even called the decision to put a minority government a coup – the hashtag was trending that day. Despite this, on October 30, Pedro Passos Coelho and his centre-right cabinet ministers were sworn in.
At the same time, the left-wing PS was negotiating with the Left Bloc and the far-left CDU (an alliance of leftists and greens) about forming a coalition – the three parties would have had a majority of seats.
Therefore, the centre-right coalition was not to last long. On November 10, the leftist opposition called for a no-confidence vote and won. PS, BE and CDU subsequently presented a government program to President Cavaco Silva. The left-wing coalition that wanted to take power was not free of controversy: one party would like to leave the Eurozone altogether, another one exit the Nato. The parties promised to increase the minimum wage and take back some of the austerity measures of the previous government – including tax hikes and cuts to salaries and pensions of civil servants. Nevertheless, they also pledged to meet the debt reduction goals agreed on by the Coelho administration.
It was not until November 26, after some seven weeks of turmoil, that Socialist Party leader Antonio Costa, former mayor of Lisbon, and his cabinet were inaugurated. Portugal now finally had a government with a majority in parliament. In one last, futile attempt at preventing the inevitable, the conservative parties introduced a “rejection motion” in early December, calling on parliament to reject the left coalition’s government manifesto. Because the left-wing majority government was obviously set to reject the motion, it was destined to fail.
Portugal now faces an uncertain future. They kicked a government out of office whose tough budget cuts and tax hikes would hurt millions. They now have a leftist government promising to alleviate the social crisis that the austerity programmes have caused. But the markets are reportedly ‘worried’ about Portugal, once an obedient lap dog of the creditors, just like they were worried about the Greek when they voted for a far-left party this year. And for the European institutions these days, it is all about not upsetting the markets. As German chancellor Angela Merkel once said, the slogan of these times is “market-conforming democracy” – in other words, democracies have to be compatible with the market’s interest, not vice versa. For a government in Lisbon that challenges this doctrine – that wants money to be the servant, not the master – difficult times may be ahead.