Portugal’s Election Will Decide If Working People Really Benefit From the Recovery

Today Portugal votes in snap elections, as prime minister António Costa seeks to end his center-left government’s reliance on far-left parties. If he succeeds, it will commit Portugal even further to a failed low-wage, low-investment model.

Portuguese prime minister António Costa speaks with journalists while waiting for his wife to cast her ballot in today's snap elections. (Horacio Villalobos / Corbis via Getty Images)

After two years of pandemic conditions, leaders across Europe are holding on to their positions as if to dear life. The first to go was Italian prime minister Giuseppe Conte, who buckled under pressure last February, handing over the reins to the technocrat Mario Draghi. In Germany, Angela Merkel’s long-awaited departure brought a swing to the center left. In Britain, Boris Johnson faces mounting calls to resign following a steady stream of revelations about parties held in his residence during lockdown.

But what no European politician even thought of doing was risk a snap election, in the belief that, despite current unknowns and adversities, they would amass a thumping majority. None, that is, bar Portuguese prime minister António Costa. Today he will find out whether his gamble has paid off — and if he has improved upon the 36 percent his party achieved in the last such contest in October 2019, shortly before COVID-19 hit.

The move can’t simply be explained as some sort of megalomaniac bout of confidence. Rather, Costa had material reasons to believe this was a smart political maneuver when the opportunity presented itself. His Socialist Party (Partido Socialista, PS) had ruled as a minority government since 2019, following four years in which he depended on a governmental agreement with the far left. This was a victory for PS, which for the last two years has thus been free to tack between passing progressive laws with the support of the Left Bloc (Bloco de Esquerda, BE) and the Communist Party (Partido Comunista Português, PCP), or else more conservative policies with the help of the center.

But a minority government was still too limiting for Costa, who at different phases of the pandemic saw his approval ratings soar and crash and soar again. A highly successful preemptive lockdown in March 2020 burnished the Socialist premier’s reputation as a skilled leader, but soaring infections and COVID-related deaths following that year’s Christmas festivities threatened to crash the national health service and the government with it. Costa’s redemption came in the shape of an extremely popular vaccination campaign in spring and summer 2021, but the laurels went mostly to the task force’s charismatic coordinator, Admiral Henrique Gouveia e Melo. By fall, Costa knew he had to do something if he was to guarantee that PS could continue governing unimpeded by either the Left or the center-right opposition. He got his opportunity as parliament was called to approve a new budget for 2022.

In 2022, Portugal is poised to begin allocating its €45 billion ($50.8 billion) slice of EU COVID-19 recovery funds. Who gets what and how they will be repaid became a matter of family dinner conversations, and consensus couldn’t be found in either Portuguese homes or parliament. The Left demanded economic and labor reforms; liberals and the opposition hinted at austerity measures. But the prime minister dug his heels in and refused to change the spending plan — which was, in turn, voted down by almost all other parties. President Marcelo Rebelo de Sousa called snap elections — a prospect which Costa was well-prepared to accept.

Squeezed Like Sardines

In a Foreign Policy column last September, the economist Michael Moran coined a cutesy name for Portugal’s alleged recovery from the global financial crisis: sardine capitalism. Moran extols the virtues of the Portuguese approach, which had since the mid-2010s turned the tables on crisis and maintained a “reasonable cost of living, relatively low unemployment, steady economic growth, and general public contentment in an age of polarization.”

But “sardine capitalism” either glosses over or forgets to mention many of the elements that allowed Portugal these few years of meager growth so easily undone by the pandemic. Portugal’s heavy reliance on foreign capital, either in the shape of tourism or investment, meant bankruptcy for many of the country’s small and medium-sized businesses when COVID first hit. The pandemic might not have fully stopped the nation’s economic growth (with the IMF forecasting a 5 percent GDP rise in 2022), but it visibly exacerbated the wealth discrepancies across Portuguese society.

Portugal saw the lowest public investment across the European Union in 2020 and 2021, while salaries and pensions continue to be scandalously low by Western European standards. Among all OECD countries, Portugal has the sixth-lowest average salary ($1,230 a month) but the comparative highest rise in housing prices. In simple terms, this means that while the average Portuguese voter still has a job after two years of coronavirus, most feel underpaid, overworked, and unable to afford much else after paying their rent. Even Moran’s “reasonable cost of living” idea has been shot to pieces, with “COVID inflation” rendering everyday items like meat and fuel prohibitively expensive. Sardine capitalism might look shiny — but crack open the lid and it’s a cramped and tight place to live.

Much Ado About Nothing

With the European-dictated austerity of 2011 to 2015 still fresh in most people’s minds, the arrival of the EU recovery funds (and their repayment) is being followed with understandable apprehension. While Costa and his cabinet might still come across as the safest pair of hands to deal with the public purse, the mood is rapidly changing.

Most of Portugal’s liberal professionals might still vote PS, but many have defected to the 2019 newcomer Liberal Initiative (Iniciativa Liberal) or even fallen for the braggadocio of the far-right leader André Ventura and his party simply called Enough (Chega). Both speak to the business owner and the entrepreneur, both abhor higher taxation and wealth redistribution, and both have declared war on the welfare state. The former appeals to the individualist fintech bros, the influencer capitalists, and all those whose wet dreams feature Elon Musk riding a penis rocket ship to Mars. As for Ventura, his support is a mix of misogynists, racists, and opportunistic business interests looking for powerful connections on the coattails of his rising force.

The Socialists can only count on two certainties. The first is that it is unlikely that its further-left competitors will make significant gains beyond their existent electorate. The Communists are focused on internal renewal and tending to their constituencies inside the trade unions. New generations of PCP voters bring fresh demands and an exciting promise of regeneration. But they do so at a time when the more numerous ranks of veteran Communists are dying off, and the party’s growth curve is flat.

The Left Bloc, in turn, is exhausted after six years of public “domestics” with the Socialists. It might be the party with the healthiest approach to power, balancing an often radical program with a political strategy that turns its policies into law. But standing so close to PS, even if to serve as a thorn in its side, has its nasty side effects. On the electoral campaign trail the Left Bloc failed to carve out a distinct identity or show a purpose beyond “pushing the Socialists toward socialism.” Its flightiest voters might decide to sample one of the newer flavors of progressive politics — a scoop of ecosocialist party LIVRE or the animal-rights-focused PAN. The Left Bloc currently holds 19 of the 230 seats in parliament, but polls suggest it will be lucky to hold on to that number.

The PS’s best bet lies in the divisions within the Portuguese bourgeoisie. Yes, opposition leader Rui Rio has polled well in the final weeks of the campaign — bringing his center-right Social Democratic Party (PSD) just two points behind Costa’s party. Yet he remains a controversial alternative. His rhetoric is often too vernacular, with interventions bordering on banter, when what big capital wants is a premier capable of appeasing Brussels while keeping the workforce content enough with only meager salary increases. To some of the Portuguese upper class, Rio is also too ambiguous about committing to keep the proto-fascist Chega out of a possible coalition. For those who favor privatizations and low fiscal responsibilities, PSD remains too devoted to supporting pensioners and — however feebly — nursing the social services on which many depend. For those pining for the dictatorship years, PSD is too democratic. And for the few devout Catholics still left in Portugal, they will rather go down with the Christian Democrats than vote for the churlish, self-styled “Catholic nonbeliever” Rio.

Ultimately, the gap between PS and PSD will be decided by the numbers who abstain. And with this election taking a particularly elaborate form under pandemic-era rules (many have cast a postal or early ballot; those isolating or diagnosed with COVID will be able to vote today on a special timetable), turnout numbers are anyone’s guess. In all likelihood, the result will bring a reshuffle rather than an overhaul — a few more seats for the Liberal Initiative, perhaps another MP for Chega, and some adding and subtracting between the Left and center left. PS might hold on to just enough seats to form a government, but will have to either go back to making a supply-and-demand agreement with BE and PCP or do the unthinkable: offer PSD the option of forming a grand coalition.

The situation isn’t wholly without precedent: in Spain’s general election in 2019, Costa’s counterpart, the Socialist prime minister Pedro Sánchez, thought he could strengthen his center-left party’s position and end the political stalemate by heading to premature elections. Instead, Sánchez’s party lost seats while the far right advanced. The political stability Sánchez so yearned for was found through a multiparty cabinet including several members of Spain’s largest radical-left forces. With a bit of luck, we might find a similar silver lining across the border in Portugal.