Towards a government of technocrats in Portugal?
by Dimitris Rapidis and Miguel Coelho (October 28, 2015)
When we were writing on Portugal's prospective coalition government a couple of weeks ago we could not expect such unprecedented political developments in the country. The role of President Cavaco was definite on that, interfering and blocking the leftists from forming a coalition government, re-appointing Coelho as prime minister.
President Cavaco respected the constitutional arrangements and invited the winner of the elections Passos Coelho to form a minority government. The appointment still needs parliamentarian ratification, but the President did what it had to do. He was obliged to do so, as the trilateral discussions between the Socialist Party, Bloco de Esquerda and the Communist Party went well in theory, but in practice all three were delaying the process. From that perspective, the left-wing parties had a great, unique chance to form a coalition, majority government and overcome the constitutional deadlock that themselves provoked. But they failed to do so.
The problem with Cavaco's involvement is not the procedure he followed, but the essence of his speech last week and the reveal of his ideological preferences. He blatantly unveiled his inner thoughts in an inappropriate manner said basically that he would not allow a leftist government jeopardize the position of Portugal in the EU, Eurozone, and NATO. In other words, he clearly opposed to a government that would try to go against austerity politics without sensing and respecting the support that left-wing parties enjoy from the electorate.
It is almost certain that the opposition will not ratify Coelho's minority government and force him to resign. And here we have another deadlock: the constitution states that new elections cannot be held within six months of a previous vote. Therefore, and in face of a political vacuum, the most probable scenario is a new technocratic government to take the reins for a new election round next year. During that period, we should not expect major shifts in policy, but most of what has been done so far by the Coelho's cabinet.
Technocratic governments were also formed in Greece (2012) and Italy (2011-13). Both abided by the strict consolidation programs and did nothing more than distancing the political leadership from the electorate. Such governments can bring about tough measures, but the problem is that the do not have electoral legitimacy. Given the turbulence with the Greek program implemented by a left-wing government in Greece, a caretaker regime could supposedly lead Portugal into the path of recovery, even if such a recovery is almost impossible for the moment.
Portugal's success story is a myth. It only takes to see some basic indicators to realize that economic slowdown and persistent macroeconomic imbalances remain untouched. On the positive side, in 2015 domestic economy demonstrated weak growth (i.e. 0.9%), mainly due to increase of retail sales and industrial production, and a decrease of unemployment, from 16.5% to 14.1%. On the negative side, trade balance remained negative, the stock market fell massively, money circulation flattened, fiscal balance and public debt were not efficiently addressed, Debt restructure, loosening of fiscal discipline, emigration are among the major structural problems of the economy caused by Coelho's austerity ruling.
Political developments in Portugal could also affect Spanish elections, scheduled for December 20. Added to the intensification of the Greek bailout program, the continuous pressure exerted by the creditors and the inert problems of implementation, left-wing Podemos and the Socialist Party (PSOE) could increase their appeal seeking for a coalition government. Both parties have left windows open for cooperation, a fact that could prove positive as the political discourse in Spain -and Eurozone- is expected to sharpen in the coming couple of months.
Dimitris Rapidis is Director at Bridging Europe. Miguel Coelho is Junior Policy Analyst at Bridging Europe
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