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31 January 2016

Could Portugal give new hope to Europe’s warring left?

Jeremy Corbyn certainly thinks that Portugal's new government may be the place to look for politicians hoping to lead Europe in a new direction.

By peter wise

Is Portugal the place to look for politicians hoping to lead Europe in a new direction? Jeremy Corbyn certainly thinks so. According to the Morning Star, the Labour leader has struck up a friendship with António Costa, the new Socialist prime minister, and is planning a speaking tour of that country to help build “an anti-austerity coalition” across Europe.

In Spain, Podemos wants to move the country out of its post-election deadlock by emulating what Costa has done in Portugal – that is, unite moderate, mainstream socialists with the radical left with the aim of rolling back austerity, but in a way that avoids head-on, Greek-style collision with Angela Merkel and Brussels.

Radical Portugal? But wasn’t the Lisbon government Merkel’s poster child, obediently applying the harsh dose of austerity deemed necessary for the EU’s debt-stricken southern fringe and emitting not a peep of resistance? It had seemed that way. Pedro Passos Coelho, the centre-right prime minister who came to power in 2011, promised to “go beyond” the terms of a tough EU-IMF economic adjustment programme, the quid pro quo for a €78bn bailout, and did his best to live up to his pledge.

At the cost of a deep recession, high unemployment and a wave of emigration, he succeeded in wiping out a huge current account deficit, disciplining the public finances and introducing reforms designed to increase export competitiveness. Northern European governments praised the heroism with which the Portuguese endured punishing austerity measures.

In October, as the economy began to pick up, Passos Coelho came close to becoming the first eurozone prime minister to be re-elected after overseeing a gruelling bailout programme. His right-of-centre coalition emerged from the vote that month as the biggest single force, but lost its overall majority in parliament. Costa, who only months earlier had taken over the leadership of the centre-left Socialist Party (PS) from a predecessor he accused of being ineffectual, was seen as the biggest loser in the election. Few counted on Costa’s uncanny knack of turning defeat into victory.

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He did what until then had been unthinkable in Portuguese politics. In the name of rolling back austerity, he negotiated a government pact not only with the Left Bloc (BE), a radical forerunner of Greece’s Syriza, but also the hardline Communist Party (PCP), a group left untouched by the moderating influences of Euro-communism, which had been a stern political enemy of the “sell-out” PS for decades. “It was,” Costa said, “like bringing down the last remnants of a Berlin Wall.” Aníbal Cavaco Silva, the outgoing conservative president, resisted to the point of swearing in Passos Coelho as the head of a minority centre-right government. It lasted a mere 11 days, brought down by the left-of-centre majority, energised by its new anti-austerity pact.

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This week Costa sought to conjure another victory from defeat after the election on Sunday of the right-of-centre candidate, Marcelo Rebelo de Sousa, as Portugal’s new president. The PS had failed to endorse any candidate and Rebelo de Sousa, the country’s most popular television pundit, trounced nine other, mainly left-wing contenders, winning a decisive 52 per cent of the vote. In statesman mode, Costa was the last to speak on election night, praising how the Portuguese, “unlike voters in some other European countries, have rejected populist and anti-system candidates” and promising to co-operate loyally with the new head of state.

Although they are from the same centre-right Social Democrat Party (PSD), Costa will find the emollient Rebelo de Sousa much easier to work with than the often crusty and abrasive Cavaco Silva. The new president has promised to use his powers to avert political crises and support the government, seeking to “build bridges and heal wounds” as Portugal emerges from its deep economic and social crisis.

Costa will need all the help he can get. Domestically, he has to please the radical BE and PCP, which play no role in the minority government, but on whose support in parliament his survival depends. At the same time, he has to satisfy Brussels and his eurozone partners that he can “turn the page on austerity”, as he puts it, within the EU’s tough fiscal rules. Nor can he afford to antagonise international investors, at the risk of increasing the government’s borrowing costs.

What Costa is trying to achieve has not been done before in Europe. Many see it as an attempt to “square the circle”. But he has, at least, made a start. 

This article appears in the 27 Jan 2016 issue of the New Statesman, Should Labour split?