Global Independent Analytics
Joshua Tartakovsky
Joshua Tartakovsky

Location: USA

Specialization: Israel and the Middle East, US politics

Portugal: A New Emerging Coalition Will Place it on a Collusion Course with Brussels

Do Brussels and Berlin need to find a new point of establishment in Portugal?

On Tuesday, October 10, in the Assembleia da República of Portugal, a coalition of the Socialist Party, the Communist-Green alliance and Left Bloc voted for a no-confidence measure in the right-center government and brought it down.  This should not come as a surprise. The government headed by Passos Coehlo appointed by President Cavaco 11 days earlier, did not have a majority in parliament. In fact, it had only 107 out of 230 seats. The ostensible reason given by the president for appointing Passos Coehlo as the prime minister was highly questionable in the first place since although the center-right Portugal À Frente was the largest bloc, a majority of voters gave their votes to anti-austerity parties. Indeed, the president’s appointing of Passos Coehlo was rightly seen by many as an attempt to circumvent the popular will of the people in order to please Brussels and Berlin.

Costa, the leader of the Socialist Party and the likely new prime minister is a moderate, who said he would respect Portugal’s financial commitments. But his two other coalition partners, the Communists and the Left Bloc strongly oppose EU-led austerity and are in favor of NATO’s dissolution. While the new coalition agreement between the Left parties calls for respecting Portugal’s financial commitments, they also call for restoring the salaries of public service workers that have been cut earlier, reversing privatizations, increasing the minimum wage, and establishing four public holidays. These and support for public programs in the areas of health and education, may eventually place the government in a collusion course with Brussels and Berlin as the latter are likely to demand further cuts.

A closer look at the details of the coalition agreement between the separate coalition agreements between the Socialist Party and the Communist Party and the Socialist Party and the Left Bloc, reveal the degree to which the new government, if formed as planned, intends to be fairly ambitious in restoring the welfare state and protecting the rights of the citizenry from Brussels’ incursions. This, despite the fact that in the new government led by Costa, who may be appointed as prime minister by President Cavaco by the end of next week, will only have Socialist Party ministers while the other two large parties will remain supportive from the benches of the Assembleia.

The Socialist Party – Communist Party agreement contains commitments to unfreezing of pensions, reconstituting public holidays, ensuring the right for the public sector to bargain collectively, reducing VAT for restaurants from 23% to 13%, protecting residents of homes from evictions,  enlarging the fiscal stimulation of the economy, reinforcing the public health sector so that it will be better equipped to deal with the public’s needs including the provision of family doctors, revoking the recent alteration of the law on unpaid leave from work for pregnant women, ensuring by 2019 total access of children after the age 3 to kindergartens, enacting scholarships for students and providing school supplies. It also includes linking working teachers and workers to schools, reducing the number of students per class by adding classes, enacting of progressive payments for primary and high schools, enacting progressive salaries for post-doctoral researchers, reversing the process of privatization of public transport, and abstaining from carrying out any new process of privatization. In short, it sees austerity and neoliberal cuts as everything that Portugal does not need at the moment. It calls for a state that will be on the side of the people rather than against them. It seeks to address the urgent needs of the public which can not be ignored or glossed over.

The agreement also commits to repositioning public salaries in 2016, reversing working hours in the public sector to 35 hours a week from 40, eliminating restrictions in the hiring contracts of the public sector, pushing for progressive IRS taxation, eliminating taxes which prevent access to healthcare, enforcing social security rights and diversifying the sources of funding for the service.

The Socialist Party – Left bloc agreement is also a socially conscious agreement. It commits to an increase in the minimum wage to 600 euros in the coming four years, with a 5% increase in the coming two years and states it will put an end to privatizing water companies and reverse privatizations that have already taken place. The agreement states clearly: “The results of the legislative elections realized in October 4, 2015, signify unequivocally the defeat of the impoverishment strategy and the austerity policies carried out by the PSD-CDS [Social Democrat Party and People’s Party that formed the center-right pro-austerity bloc] and coalition for the past four years.”  There is no turning back.

The Socialist Party – Left Bloc coalition agreement calls for the establishment of working groups that will actively seek a national plan against austerity, anti-poverty measures, assessing the sustainability of the debt, reducing energy costs for families, and formulating a housing policy. One should be reminded that Greece also had its parliamentary Greek Truth Debt Committee that after a prolonged process of a thorough investigation declared that Greek’s debt is “illegal, illegitimate and odious” and therefore has no validity. The problem in the Greek case, however, was that the government itself did not take these findings to heart, let alone the lenders and Troika. Portugal received its €78 billion bail out from the IMF and EU in 2011 and its debt now lies at 130% of its GDP.

Portugal has major economic challenges, a significant number of which is due to the constraints placed on it by the bail out agreement. According to The Guardian, the percentage of unemployed is 12% among adults and 30% among youth. 485,000 young and professionals have left the country since 2011 until 2014. One of every five Portuguese lives below the poverty line.

Now the country is waiting for the president to appoint Costa as the prime minister with the hope that the government will carry out the popular will and reverse austerity or at very least put an end to the financial dictates that have been suffocating the country. The Portuguese corporate media, however, is already engaged in a demonization campaign of the center-left majority parties.

It is in this light that one should view the coalition agreements: an attempt to climb out of the pit created by austerity that was demanded by the EU and its financial bodies.

The Socialist leader Costa said that the government will respect existing commitments and will abide by its obligations. But in the long run, as Portugal seeks to restore public services, halt privatizations and save the public health and education sectors, it may discover that it has less room to operate than it thought. After all, sovereignty means very little for indebted countries that are EU members as the Greek case has demonstrated clearly.

Chancellor Merkel said in the recent past that she views an anti-austerity coalition in Portugal as “very negative”. It remains to be seen how she and others will respond to the new center-left government is formed. But if it is serious about enacting a significant percentage of its commitments, and there is little reason to suspect it is not considering the fact that the Socialist Party could have formed a comfortable coalition with the right wing Portugal à Frente, it will not be long before the Portuguese government finds itself on a collusion course with Brussels and Berlin. Having generous social programs does not run well in pro-austerity Europe. On the other hand, if the government bends too far to external demands, the government will probably fall. The Portuguese, however, have a tradition of trying to seek out differences peacefully. Whether Berlin and Brussels will seek the same remains to be seen.
 

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