A left-wing opposition alliance in Portugal on Tuesday toppled the country’s minority conservative government in a parliamentary vote, less than two weeks after it was sworn in.
The newly formed bloc comprising the Socialist Party (PS), communists and their allies voted for a motion rejecting the government’s program, in a move likely to spook investors and markets as the country continues to recover from an economic crisis.
The move brings an automatic end to the government of Portuguese Prime Minister Pedro Passos Coelho, whose center-right coalition won the most votes in last month’s elections, but lost the absolute majority it had enjoyed since 2011.
Photo: Reuters
His second government becomes the shortest-lived since Portugal returned to democracy in 1974.
“It is possible to turn the page of austerity in the eurozone,” 54-year-old Socialist Party secretary-general Antonio Costa said after the vote.
The text was passed with 123 votes in favor and 107 against.
Together, the socialists, communists and the Left Bloc — which is close to Greece’s ruling SYRIZA party — hold a majority in parliament, with 122 seats out of 230.
Their alliance is the first of its kind since the birth of a democratic Portugal, and had seemed unimaginable just weeks ago due to differences between the various leftist groups.
It is the first time that the three parties have put aside their differences and agreed to work together to form a government.
The parties want to reverse some cutbacks and reforms demanded by creditors following Portugal’s 78 billion euro (US$83.9 billion) bailout.
The full details of the pact between the left-wing parties are not yet public, but their plans include giving back government workers pay that was cut and restoring four public holidays that were scrapped to boost productivity.
Passos Coelho, 51, ahead of the vote accused the newly formed bloc of wanting to push through a “short-term and unrealistic program” that “would be viewed as a threat” to the country’s economic recovery.
“The Socialist Party has made a radical choice, preferring to team up with minorities, which they have always fought,” he added after the vote.
Portuguese President Anibal Cavaco Silva will now have to decide who will lead the country. Reluctant to hand the reins to a government backed by the far-left, he could decide to leave fellow conservative Passos Coelho, whom he was scheduled to meet yesterday, at the helm until a new election is held — by June next year at the latest.
BNP Paribas analyst Colin Bermingham said that the Portuguese president might “need to give the left the opportunity to govern.”
Costa has been seeking to reassure investors and Portugal’s eurozone partners that a Socialist-led government would respect the country’s international commitments and not be headed for a Greece-style clash with creditors.
Unlike in Greece, where the far-left SYRIZA leads the government, Portugal’s communists and the Left Bloc would play a supporting role to the traditionally mainstream PS.
“A PS government will not seek confrontation with the European Union. It will try to convince Brussels to not adopt a hard line in case there is a budget slippage,” political scientist Antonio Costa Pinto told reporters.
“A Socialist Party government will be obliged to respect commitments between Portugal and Brussels,” he added.
However, investors appeared nervous, with Lisbon’s stock exchange on Tuesday closing down by 0.3 percent before the result of the vote was known, after falling 4.05 percent on Monday.
Yields on the country’s benchmark 10-year bond rose 15 basis points to 2.84 percent, compared with 2.29 percent before the elections.
Analysts warned that any new left-wing government would face trouble.
“Costa will have a difficult balancing act on his hands if he is appointed prime minister,” Bermingham said, predicting at least two weeks of uncertainty before a new government took office.
Commerzbank’s David Schnautz warned it would be a “weak executive” and predicted early elections would be called next year.
The divisions inside parliament were reflected in the streets outside, where about 5,000 left-wingers rallying in favor of a new socialist-led government faced off with about 2,000 supporters of the conservative government.
“We’ve been dreaming of a union of the left since the April 25, 1974, revolution,” 66-year-old Fatima Carvalho said.
Isabel Norton de Matos, a 59-year-old interpreter, said she hoped that “with Antonio Costa, Portugal does not become a new Greece.”
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