In Portugal’s Election, the Center Left Struggles to Hold On

Pedro Nuno Santos heads into Portugal’s election with a promise to revamp the Socialist Party after eight years in power. But talk of him leading a left-wing turn is overblown — and among young voters, libertarian and anti-immigrant forces are gaining ground.

Portuguese Socialist Party leader Pedro Nuno Santos gestures during a speech at the party headquarters in Lisbon on December 17, 2023. (Patricia de Melo Moreira / AFP via Getty Images)

This Sunday, Portugal votes in a snap general election that will mark the end of Socialist Party prime minister António Costa’s eight years in power. Despite three election victories, Costa had to step down in November after prosecutors suggested that he may be involved in a major corruption scheme.

Costa’s rule has been through different phases. In the 2015 elections, when he first became prime minister, his party in fact failed to get more votes than the right-wing coalition. This latter had ruled the country under harsh austerity measures agreed during the European Union (EU) and International Monetary Fund (IMF) bailout (2011–14), leading to the longest recession in Portugal’s democratic history.

Under these constraints, in his first term Costa could become prime minister only by reaching a confidence agreement with the parliamentary left: the Communist-Green coalition (CDU) as well as the Left Bloc (BE). But in 2019 he dispensed with any broad political agreement with these forces and went on to lead two governments that each ended with early elections. His most recent government, since January 2022 — the only one where his Socialist Party had an absolute majority of seats — was especially unstable.

For the Left, Costa’s premiership had a mixed record. On a positive note, his first government was marked by stopping the austerity drive which was then dominant in Portugal as in Europe more generally. The Socialists, supported by the Left, defied the idea that permanent austerity was inevitable. There was also a notable increase in the minimum wage, rising from around €590 to €950 a month (as calculated on a twelve-month basis) — a 40 percent improvement, after inflation. There were some important expansions of the welfare state and reversals of privatizations — a rare sight in the neoliberal period.

Still, much of Costa’s economic success relied on the growth of tourism. This model relies on low wages and weak labor conditions, driven by attracting foreign low-paid workers, and resulted in an acute housing crisis. Nationally, house prices have more than doubled since 2015. Today, the price of a square meter in Lisbon is higher than in richer cities such as Milan and Barcelona. The weaknesses of costismo are particularly felt by the young, whose political memories were formed with the Socialist Party already in power; this makes them lean to the right, compared to previous generations.

Alongside a precarious economic model, austerity and tight fiscal discipline never fully disappeared. Even with the war in Ukraine and inflation, Portugal was one of the few EU countries to record a budget surplus in 2023. Public debt is below 100 percent of the GDP for the first time since 2010, and Portugal became the darling of the EU institutions and the rating agencies. This was achieved on the back of a chronic lack of public investment (among the lowest in the EU), deterioration of public services, and using the inflationary shock to induce real wage cuts in the public sector. Although the IMF left Portugal almost a decade ago, its inheritance lingers on.

Costa was able to politically neutralize the left-wing parties by having them approve budgets in exchange for implementing only a minor part of their agenda — even as he also attracted liberal centrist voters who had earlier seen the Socialists as irresponsible and corrupt. Effective but shortsighted management of the state of affairs has been Costa’s trademark.

The corruption accusations that led to Costa’s resignation initially looked like a major stain on the Socialist Party’s reputation — and an electoral gift to the right-wing bloc. However, as time goes by, Costa looks less likely to be indicted. The lack of evidence and the way Costa dealt with the case have instead begun to look like an electoral strength. Costa remains a major asset in the campaign trail, while he continues to be seen as a credible name for the presidency of the European Council.

From Firebrand Socialism to Developmentalism

In Sunday’s election, the chances for the Socialist Party’s new leader, Pedro Nuno Santos, depend greatly on his ability to deal with the legacy of his predecessor — both its successes and its failures.

While Santos has been a Socialist Party member since his teens and held positions in the party apparatus, he is only mistakenly seen as a leftist maverick in its ranks. His reputation mostly comes from past positions he has taken. First, as a blogger, along with his fellow travelers (mostly to his left), he challenged the dominant third-way ideology of the center left. Then, as an MP in 2011, Santos made a speech at a local event where he floated the idea of the government defaulting on its loans. His expressions — “either the gentlemen [German bankers] get into shape or we won’t pay back the debt” and “the German bankers’ legs will shake” — soon made headlines.

But Santos’s track record in cabinet shows that he is far from an independent thinker pressuring Socialist policies from the outside (i.e., Bernie Sanders), or even a constant challenger of the party line (i.e., Jeremy Corbyn). During Costa’s first government, Santos was the main mediator with the left-wing parties, which enhanced his reputation as a true socialist. Later, he became the minister responsible for infrastructure and housing, where he was able to show how he differs from many of his Socialist Party peers.

In contrast to most of Costa’s premiership, Santos’s ministry was marked by a long-term vision, bringing back the idea of state planning, notably in the rail sector. With a decades-long investment deficit, Santos energized the sector with infrastructure projects and investment in the publicly owned rail operator (CP). The company was able to improve its capacity by expanding its maintenance branch, with rapid and visible results. Within the neoliberal competition rules set by the EU, Santos used the little wiggle room he had for procuring new trains to attract French multinational rail manufacturer Alstom. Santos aims to build an industrial hub in partnership with a new engineering research department and the publicly owned rail operator. His efforts were crucial to finally launching the first ever high-speed rail line, connecting Portugal’s two largest cities: Lisbon and Porto. Still, Santos’s policy record in this area is closer to a Bidenomics within the European periphery than a return to postwar social democracy.

The other portfolios held by Santos lack such a positive legacy. The housing crisis deepened during his tenure, and his policy proposals were underwhelming at best. The renationalization of the national airline (TAP) during COVID-19 may not be described as a failure, but a clumsy sign-off of a €500,000 severance payment to a board member via WhatsApp eventually led to his resignation.

Trying to capitalize on his reputation in the rail sector, Santos promises to bring the same energy and strategic planning to his premiership with the motto “Mais Ação” (“Do More”). While not criticizing the party’s eight years in government, the slogan recognizes that more ought to be done. This message is further developed by using popular Portuguese sayings such as “you can only make mistakes if you act” and “better done than perfect” — an entrepreneurial lingo typically seen in right-wing managerial circles.

While silently recognizing the shortcomings of Costa’s legacy, Santos presents the experience of the past eight years as the best tool to face the upcoming challenges. He attempts to use a focus on his own individual traits to maintain some distance from his predecessor without openly criticizing him.

Game of Coalitions

Presenting himself as a “doer” also allows Santos to cancel out his biggest drawback and win over layers of the electorate who perceive him as a radical or impulsive leftist. Rebranding himself from a firebrand socialist into a (sometimes impulsive) decision-maker, Santos hopes to fight off his main right-wing challenger, Luís Montenegro. Montenegro leads the main right-wing coalition (led by the deceptively named Social Democratic Party, PSD), which competes with two radical parties still further to its right: Iniciativa Liberal (IL), whose agenda flirts with libertarianism, and the far-right Chega.

Both parties are fairly new, entering the parliament in 2019 and gaining more seats in 2022. These result from a reconfiguration of the right-wing bloc during its spell out of power. The right-wing bloc was dominated by PSD, under the leadership of Pedro Passos Coelho, who proudly implemented the EU-IMF austerity package. In 2015 Passos Coelho overtook Costa in seats, but the popularity of the left-wing alliance led to his resignation as leader of the right-wing opposition in 2017, after a disastrous local election run.

These emerging parties came from the most radical factions of the right-wing bloc. Still, they also chose different focuses: IL emphasized cutting taxes for the wealthy, as well as privatization; Chega trained its sights on migrants, benefit recipients, and corruption. Both agendas were already grounded in many right-wing circles, but the new parties allowed for tactical flexibility and experimentalism to expand the Right’s social base. Their popularity among the youngest voters testifies to this.

One key aspect of the Santos/Montenegro contest for the premiership is the ability to form stable coalitions. Montenegro has struggled to prove that he can form a right-wing majority. For much of the electorate, negotiating with Chega remains taboo — a problem Montenegro is trying to solve with an ambiguous position on whether he would reach an agreement with a racist far-right party to become prime minister. With the far right polling at 15–20 percent, a right-wing government without Chega’s support looks impossible.

On Santos’s side, things look easier. He constantly signals that he could make a political agreement with the left-wing parties that wouldn’t require giving them much. While the Socialist Party was forced to make several concessions in 2015, the power dynamics have changed considerably since then. Still feeling the scars of the 2022 election, where the Socialist Party was able to rally votes from its left (in part due to polling that showed the Right on the way to power), the Communists and Left Bloc adopted a moderate tone regarding Costa’s legacy over the last eight years. Also, unlike in the past, a strong far right pressures the Left to reach an agreement with Socialist Party in the case that a majority is possible.

In a period of polycrisis, Portugal faces the economic impacts of international wars, droughts in the South, and an unprecedented housing crisis. With billions of EU recovery funds available and rising technological-industrial competition between the United States and China, the case for modest state planning may look more attractive than a not very credible agenda of tax cuts for the wealthy promoted by the right wing. This could put Santos in the lead to win the premiership.

Yet media coverage of the election might be his greatest threat. As the right-wing opposition bloc does not have a coherent policy package, the right-leaning mainstream media is opting for a depoliticizing campaign, heavily focused on polling. While many opinion polls show PSD ahead, the large share of undecided voters leaves much in question. Just like Costa in 2022 and Pedro Sánchez in Spain last summer, we might once again find that there’s more to politics than what the pollsters tell us.