What’s next for Portugal?

naom_534af975b6b0eLike it has always happened for the last 40 years of democracy, the Portuguese President asked the leader of the most voted party to form government. Like every president before, he gave a political speech on what he believes the next government should do. He is also far from being the first president to warn about the risks of having communists in power. But, unlike what has always been the democratic tradition, the second most voted party will not allow the most voted party to form a minority government. It is their constitutional right to do so. So what is next? Here is what the future holds for Portugal:

Over the next few weeks:

1. The current PM will form a government with some people of his close group MPs and a few moderate party members. It will be hard to get good names on-board for a government that might not be around for more than 2 weeks
2. The government will not pass in parliament due to the votes of the socialists, left radicals and communists
3. The president will then ask the leader of the 2nd most voted party to form government. The supporters of the idea of a coup in Portugal will be saying some other nonsense about some other country
4. Costa will form a government without members of the radical left or the communists. Radical left and communists let the government pass in parliamentary vote.
5. President Cavaco will warn about the lack of stability of the new solution and once again defend the tradition of the defeated centrist party to allow the other centrist party to lead the government

In November-January:
6. The socialist party will have to get its first budget approved. In order to do so, it will make changes in the labour law (making the labour market rigid) and eliminate some of the expense cuts of previous governments in agrrement with Left Radicals.
7. The first draft will not be approved in Brussels, but after a few rounds and over-optimistic assumptions on growth and tax collections, the budget will be approved in Brussels and by the Portuguese parliament
8. The minimum wage will increase in January
9. The centrist candidate Marcelo will be elected president in January. During the campaign, he will be intentionally ambiguous about what he would do in different political scenarios.

After January:
10. Growth will continue the path of 2015 but employment will stop increasing at the same rate
11. The left-wing parties will be united in the first months of the year. A short-lived increase in consumption will be used as proof that ending austerity works. External balance will deteriorate. Left parties will change labour law, banking regulations and increase capital taxes.
12. After missing the original budget targets, the government will have to get a new revised public budget approved somewhere in April. This will be a hard one.
13. If the communists don’t approve it, and the right wing parties do not change leadership, the revised budget will not pass in parliament and the government will fall
14. The socialist party will accuse the right wing pro-european parties of being irresponsible for not approving their Brussels negotiated budget. Brussels will put pressure
15. New elections in June
16. If the communists approve the budget, the government will stay in power until the end of 2016. Around that time, the budgetary difficulties for 2017 will be impossible to address by a government with support from communists and left radicals. The wounds of a 1 year unexpected and unwanted coalition will become obvious.
17. Points 13 and 14 will happen anyway just a few months later.
18. Elections in March 2017.

Yes, this is Portugal

I grant you. I also find it hard to believe but it’s the plain truth. The portuguese offical media watchdog ERC has asked HotTV, a portuguese adult premium channel to “broadcast more programs in portuguese and more european and independent contents“. No subject escapes the grip of portuguese regulators. So it seems.

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Open letter to Mr. Pritchard of The Telegraph

Dear Mr. Pritchard,

This thing is out of hand. I can understand your stance against the EU, the euro, your integrity and whatever it is that keeps you fuelling the confusion between British euroskepticism and any cause that may propel this idea, regardless of how lateral it may be.

The British public is uninformed about the Portuguese political system, which is fine since Portugal is just a small European country, not an economical driving force or a cultural mammoth in a globalised world. I don’t know much about the Hungarian or the Polish system either. Nevertheless, publishing misleading information to propel the euroskeptic cause is harmful and plain wrong.

There are euroskeptics in Portugal too. People that believe that the EU concept is wrong, that the euro is flawed, that the bureaucrats are grim, and that the whole thing is the hyper-statist mess we’ve been dreading ever since Lady Thatcher fathom that that’s what it would become. Why would you then choose to align with the position of Marxists-Leninists (not an insult, it’s how they describe themselves) if there’s a center- and right-wing conservative nucleus of euroskeptics ready to help you understand the intricacies of the Portuguese political system?

You proved yourself wrong with Syriza, will prove yourself wrong with the Portuguese inexistent Left Coalition – which you believe won the election – and, most likely, will prove yourself wrong again with the Spanish Podemos next December. There is a huge community of British expats in Spain – I personally know more than a dozen, living in Andalusia, owners of property and integral driving forces of local economies. Under Podemos they will be heavily taxed as full members of ‘the rich’ club, as identified by the smooth talking and iPad-bearing communists. Their MacBooks are already full throttle with silly manifests including lots of words like ‘the people’, ‘the rich’, ‘the oppression’, ‘neoliberals’, ‘imperialism’, and other dialectics-prone keywords within the Historical Materialist framework.

Euroskepticism and Eurodenial shouldn’t give in to marxist dialectics in order to thrive. Two wrongs don’t make a right. Mr. Pritchard, your are entitled to your opinion, just don’t try to pass it as factual, as it is not. You can’t escape the EU-soviet-like-bloc by creating another soviet-like-bloc.

Sincerely,

The Red Threat strikes again?

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After losing the general elections that took place last week, the Socialist party seems determined to get the hold of power through unnatural coalitions with other left-wing parties. If you’re from the North of Europe this won’t sound that obnoxious. After all, countries such as Denmark or Finland have been governed by grand coalitions including parties from the left to the right. Except for one relevant detail. The coalition the Socialist party is proposing involves a trotskyist and a marxist-leninist party that have been very blunt regarding the role of Portugal in the Euro and in the European Union: out.

Now, even if they drop these radical proposals, thereby reducing the ideological distance to the Socialist party (which, after all, endorsed joining the EU and Euro), there will still be consequences. As part of the bargaining that is taking place, they may well demand disastrous conditions for giving the green light, possibly generating turmoil in the markets or in any reasonable person for that matter, at least one who remembers the outcome of radical left-wing experiments.

There is plenty of reason to worry. It takes a lot of time to push important reforms, and it took significant effort from the Portuguese people to put their public finances back in shape again. And all it takes, as Greece has witnessed, is a couple of months to throw it all away. This could well do it.

Did the radical left really achieve a good election result in Portugal?

Short answer: no.

It is hard to declare winners in an election where the government coalition lost its majority in parliament and the Socialist Party lost what some months ago was declared as the easiest elections of all times. But in one thing most political commentators seem to agree. The left bloc, a coalition of radical left movements similar to Syriza had a great day. Against all opinion polls, the Left Bloc was third in the election, getting more MPs than all but the 2 major parties in the country. They also almost doubled 2011’s score.

But look closer and you will see defeat. In the graph below, you can see the results of the other radical left parties belonging to the same european political family in the 4 peripheral countries that suffered more with austerity. (For Portugal and Greece we can see the results of the recent elections and for Ireland and Spain the latest opinion polls):

Election results and opinion polls in September
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Looking at this, you will be surprised to know that when the crisis started the Portuguese Left Bloc was the most popular radical Left party in these 4 countries.


Election results between 2007-2009

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Left Bloc’s evolution in election results since the crisis started is tiny, especially when compared with the same evolution in Greece, Ireland and Spain.

Score evolution since beginning of the European crisis
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Does this look like a winning party to you?

Portuguese elections: final results

With only a small number of votes still to be counted, here are the final results of the election:

– PàF (right-wing government coalition): 38.6% (107 MPs)
– PS (Socialist Party): 32.4% (86 MPs)
– BE (Left Bloc): 10,2% (19 MPs)
– CDU (Communist Party): 8,3% (17 MPs)
– PAN (People Animals and Nature): 1,4% (1 MP)

BE and CDU have announced they will veto a right-wing minority government, leaving the responsibility of maintaining political stability in the hands of the defeated Socialist Party. The Socialist Party is likely to ensure a government is formed, without taking part of it. It is not likely, however, that the government will stay in power for the full 4 years mandate.

Silence is golden

Today’s general election in Portugal has not earned that much international media attention. Considering the reason why elections in Greece, for exemple, do attract international attention, that’s not a bad thing.

The six graphs that explain what’s affecting the upcoming Portuguese elections

Many wonder why, after reducing public pensions, salaries, among other austerity measures, the government coalition ends the campaign ahead in the polls. Pedro Magalhães, a portuguese political scientist explains why. Here is a summary:

Austerity: after an initial austerity shock, the last 2 years saw a loosening of the austerity belt.

figure1

The widely antecipated recessive spiral from the initial austerity measures did not happen (both in unemployment and GDP)

Figure-2

Figure-3

Moral and confidence is increasing, both in terms of confidence in the economy…

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…and consumer confidence:

Figure-5

After an initial recovery, the socialist party has failed to keep growing in the polls after the economic recovery started. Most voters do not believe the Socialist Party would have done a better job in the last 4 years.

Figure-6

Worth reading the full article in the Washington Post.

Three large polls released today indicate political instability for the next months

The most comprehensive polls developed in this campaign were released today, 3 days before the election. Interestingly, the three have similar results: Government coalition (center-right) winning but with a left-wing majority in parliament.

If these are to be the final results, there will be a hung parliament with no clear government coalition. Cavaco Silva, the outgoing president, announced that he will break protocol and will not be present in the Republic celebrations on Monday due to the need to solve what is likely to be a very difficult post-election period. The socialist party already announced they would embark in a grand coalition and would prefer to join forces with the left. The left doesn’t seem to be interested in joining government (the communists wouldn’t do in any case and the Left Bloc wants to avoid Syriza’s faith).

Adding to this, there is the real possibility that despite losing the elections, the Socialist Party will elect more MPs than any other party. The government coalition is made of two party running together, but after the elections there will be two party groups in parliament, but potentially smaller than the Socialist Party’s. This adds an additional complication: traditionally, the PM comes from the most voted party who is also the party having the most MPs. This time, as two major parties are running together, the winning list might not include the party with more MPs. There is no precedent of the in Portuguese democratic history.



Interesting days ahead.