Portugal chooses a new government with $50 billion in EU funds on the table
Portuguese voters headed to the polls on Sunday in a snap election that aimed to produce another vulnerable minority government, just as the country is set to start spending a huge windfall of European Union pandemic funds.
The outcome would take Portugal back to where it started two months ago, when lawmakers rejected the minority socialist government’s spending bill and the country’s president dissolved parliament.
The center-left Socialists and their main rivals, the center-right Social Democratic Party, were in a close race, according to opinion polls. These two parties traditionally collect around 70% of the vote and have alternated for decades in power in the poorest country in Western Europe.
The landslide victory needed to form a majority government, which can pass most laws despite opposition in parliament, is rare. Portugal has had only three majority governments in the last half century.
This means that one of the two main parties will probably have to form parliamentary alliances by striking agreements with smaller parties.
The stakes are high: Portugal, a country of 10.3 million people, is about to start rolling out 45 billion euros ($50 billion) in aid as an EU member to help stimulate the economy after the COVID-19 pandemic.
Two-thirds of this sum is intended for public projects, such as major infrastructure, offering the next government a financial windfall. The other third must be allocated to private companies.
Polling took place on Sunday amid a rise in COVID-19 cases blamed on the omicron variant, with around 1.2 million people confined to their homes but allowed to go to polling stations to vote.
President Marcelo Rebelo de Sousa, in a speech on the eve of the elections, urged people to vote, saying it is “a way of saying that… nothing and no one can silence our voice”.
He said the coming years would be marked by “the abandonment of a painful pandemic (and) an urgent rebuilding of the economy”.
Miguel Morgado, a 49-year-old business leader voting in the capital Lisbon, said he was not worried about the high rate of infection with the virus and hoped the country would return to normal soon.
“Above all, it is our civic duty to vote, the country needs it,” he said.
As of 4 p.m., 45.7% of registered voters had voted, up from 38.6% at the same time in the last election of 2019, according to official figures.
Since coming to power in 2015, the Socialist Party has relied on the support of its small allies in parliament – the Left Bloc and the Portuguese Communist Party – to ensure that the annual state budget has enough votes to pass. But last November their differences, particularly over public health spending and workers’ rights, were insurmountable, leaving Socialist Prime Minister António Costa short of votes to pass his party’s plan.
Costa may seek to resurrect the centre-left alliance, despite some acrimonious backlash during the election campaign.
The Social Democrats, meanwhile, may face a surge in support for Chega! (That’s enough!) populist party, whose policy of the leader of the Social Democratic Party, Rui Rio, is unpleasant. The Social Democrats also joined forces with the smaller People’s Party.
The Socialist Party promises to raise the minimum monthly wage, earned by more than 800,000 people, to 900 euros ($1,020) by 2026. It is currently at 705 euros ($800). Low wages are a common grievance among voters. The Socialists also want to “start a national conversation” on working four days a week instead of five.
The Social Democratic Party promises income tax cuts and more aid to private businesses, reducing corporation tax from the current 21% to 17% by 2024.
The winner will also have to solve deeper problems, including an economy that cannot start.
Portugal’s economy has lagged behind the rest of the EU27 since 2000, when its real annual gross domestic product per capita was 16,230 euros ($18,300) compared to an EU average of 22,460 (25,330 $).
In 2020, Portugal had risen slightly to 17,070 euros ($19,250) while the bloc’s average jumped to 26,380 euros ($29,750).
Helena Alves contributed to this report.