It used to be said of long-time Portuguese dictator António de Oliveira Salazar that he distracted the public’s attention through recourse to the ‘three Fs’: fado, football and Fátima. Salazar was retired in 1968 and his regime fell six years later, but one could be forgiven for thinking that little has changed in the intervening decades of democratic rule. In just one day – Saturday 13 May – Portugal witnessed, and much of it celebrated, the canonization of two out of the three Fátima seers (Jacinta and Francisco Marto) by Pope Francis, Benfica’s fourth consecutive triumph in the national football league and, in the evening, an overwhelming victory in the Eurovision song contest. It was an exhausting twenty-four hours that left the country feeling good about itself in the wake of other recent successes – the election of former Prime-Minister António Guterres as Secretary-General of the United Nations and, of course, the Euro 2016 tournament, won in France against the home team, long a bugbear of the national squad.
The positive mood generated by these events is the icing on the cake in what some commentators have described as a remarkable turn-around in the fortunes of a country apparently crippled in the wake of the subprime crisis, culminating in a bailout by the European Commission/ECB/IMF troika in 2011. The political forces guiding this recovery place Portugal very much at odds with the rest of Europe. Prime-Minister António Costa’s Socialist Party is a pro-European left-of-centre formation of the kind in retreat across the continent. More strikingly still, his government survives in parliament thanks only to the support of those to its left. Costa’s minority cabinet is dependent on the votes of both the dour and austere Portuguese Communist Party, out of step since Mikhail Gorbachev unveiled Glasnost and Perestroika, and the youthful Left Bloc (Bloco de Esquerda), a neatly repackaged coming together of various far-left groups which, unlike the Communists, places great emphasis on culturally fracturing issues. Together, these two formations regularly earn the allegiance of nearly one-fifth of the electorate. In negotiating this arrangement to secure parliamentary breathing room for his government, Costa turned his back on decades of political precedent in Portugal, which had seen an impenetrable barrier separate the so-called ‘regime parties’ (the Socialists, the centre-right PSD and the conservative CDS-PP) from the anti-European and anti-capitalist forces to their left. Costa further cemented his position by developing a good working relationship with the more recently elected President of the Republic, Marcelo Rebelo de Sousa, a former leader of the PSD turned television commentator. Rebelo de Sousa’s optimism is contagious and he has made clear his support for Costa’s approach.
President Rebelo de Sousa’s stance contrasts clearly with that of his predecessor, Aníbal Cavaco Silva, who made his displeasure with Costa’s path abundantly clear. In this Cavaco Silva was joined by the parties which governed Portugal between 2011 and 2015. Both the PSD and CDS-PP cried foul when Costa and his newfound allies voted down their proposed government after the 2015 elections, which they had won (without, crucially, securing an absolute majority) by standing together on a ticket promising stability, continuity and cooperation with Brussels. They believed, after their partial victory, that tradition would hold and that Costa would not reach out to the hard Left; if nothing else, its loud criticism of the European Union would make it impossible to secure both domestic stability and good will in Brussels. But they were wrong; Costa’s unprecedented initiative gave him the numbers in parliament he needed to govern, while the EU’s predicted hostility never materialized, despite much anti-Lisbon briefing in the government’s first months in office. The nickname given by a critical commentator to this unprecedented political experiment – geringonça (contraption) – stuck, but it is now worn as a badge of pride by Costa’s government. One is tempted to say of it, eppur si muove. Social Democrats, in retreat all over Europe, must be scratching their heads: what is Costa’s secret? How did his party survive when theirs are in tatters?
When in opposition, the Socialists had clamoured for a consumer-led recovery, and once in power they quickly took steps to bring this about, reversing some of the more emblematic austerity measures adopted by the PSD/CDS-PP government while increasing the minimum wage. They also overturned the decision taken to privatize TAP, the national airline. Costa’s predecessor, PSD leader Pedro Passos Coelho, had attempted to twin troika-imposed austerity with his own promised structural reform of the Portuguese economy. Although there were eventually some encouraging signs when it came to exports, the results were politically toxic: salaries fell while taxes rose; as the economy shrank, jobs dried up and emigration rose. Angola, then undergoing a massive oil-related economic boom, was one favoured destination for a well-educated and trained middle class that had never before considered emigration a possibility, never mind a necessity. Passos Coelho was portrayed by critics as a Quisling, happily imposing Brussels’ unnecessarily harsh diktat on his people. Signs of economic recovery by 2015 were not sufficient to spare Passos Coelho and his coalition partner Paulo Portas, of the CDS-PP, from that year’s pyrrhic victory and a subsequent relegation to opposition. António Costa’s subsequent relaxation of austerity-related measures was well received by the electorate, and, contrary to the opposition’s warnings, it did not deliver economic meltdown. Quite the contrary. As exports continue to strengthen, Portugal has also seen a dramatic upturn in tourist activity. Costa, a former mayor of Lisbon, may well have been betting on this. The arrival of low-fare airlines has turned both the capital and Oporto into fashionable city-break destinations, while the security-related crisis that has hit North Africa and Turkey has worked to the benefit of more traditional Portuguese destinations such as the Algarve. Visitors are arriving in record numbers, generating jobs all across the economy. Allied to growing exports and foreign investment, the latest economic numbers, while well shy of Irish totals, are the best in years: growth now stands at 2.8%. This is Portugal’s best performance since 2010 – but even that year’s numbers represented an unusual spike due to massive government spending; growth has been essentially dormant since the last millennium. Significantly, the deficit has also fallen, to 2.1%, much to Brussels’ delight.
Right and Left are now locked in the standard and predictable discussion over what is responsible for the economic upturn: Passos Coelho’s cutbacks and reforms or Costa’s relaxation of austerity. It is probably safe to say that one factor made the other possible, but that, ultimately, forces outside either government’s control have also played a major part. And Costa is clearly happy to highlight his anti-austerity credentials, obscuring the fact that he is still having to follow deficit-tightening strictures imposed from outside. This balancing act cannot last indefinitely. Economic growth, if sustained, will of course lead to tension within the geringonça: the Left Bloc and the Communist Party will demand a greater social dividend, in terms of pay, pensions, working conditions, investment etc. This might very well be a false move on their part. Buoyed by the country’s increasingly strong economic performance and other recent successes, Costa’s Socialist Party is, according to the latest polls, within touching distance of an absolute majority in parliament. Should such a scenario play itself out, the Left would lose its ability to influence policy-making directly. There are other clouds in the horizon besides potential parliamentary manoeuvres. Although the numbers were confused by the spike in emigration during the years of austerity, abstention reached a new high in the 2015 general election, at over 43%. Portugal’s political system, based on electoral lists in large electoral districts, rather than single-seat constituencies, makes it hard for both independents and new political formations to make a significant impact at national level. Drawn up by the national leadership, electoral lists reward loyalty over independent thinking and increase the divide between the political class and the population. Such a high level of apathy suggests that, clearly, not all is well: it appears that many Portuguese do not consider the traditional parties capable of generating solutions to their problems. No populist force has yet appeared, capable of challenging the old parties – but that is not to say that it will not do so in the future. In local politics, where there is greater room for the establishment of clientelist networks, it is not uncommon for well-known figures who have built up a loyal following to campaign (and win elections) as independents.
It is also the case that the economic growth recently announced is still incipient. Increased consumer spending without a corresponding growth in the production of wealth cannot last long; meanwhile, tourism is a fickle industry, subject to frequent changes in fashion. Relatively small cities like Lisbon and Oporto can only absorb so much tourism before losing the authenticity that made them popular destinations in the first place. And Brexit might very well complicate the matter, given that Great Britain provides the single largest contingent of tourists who visit Portugal every year. Diversification is the name of the game. While traditional exports are indeed performing well, much emphasis is being placed on the importance of start-ups, notably in the realm of software, and on events such as the Web Summit. All of this takes time, however, to make an impact. The banking sector was decimated in recent years, making inward investment more difficult: foreign confidence in a long-term economic recovery is essential. Finally, of course, there are deeper issues, such as the desertification of the interior (most of the population being concentrated along the coast), which has a negative impact on the delivery of services, and the worrying figures regarding the make-up of the population. The Portuguese are ageing, and the process was accelerated by the recent bout of emigration. Keeping talent at home, given higher salaries abroad, is a growing challenge for the country.
For the moment, though, the mood is one of celebration, and Portugal is presenting the world with an original sight: a left-wing government reminding the European Union that austerity is not the only game in town. Still insisting that debt restructuring makes sense, António Costa’s government has moved forward without it. Its hope is that some more successive quarters of good economic news – growth allied to continued deficit reduction – will convince the international rating agencies to lift Portugal’s debt rating out of the junk status which all but the Canadian DBRS have consigned it. In the meantime, Portugal’s case serves as an important reminder of the need for solidarity and cooperation within the EU, where no single country has a monopoly on virtue (or, for that matter, on vice) and where coercive blanket solutions will fail, at a high cost to individual member states and the European project as a whole.