State Budget rejected in Portugal; what happened and what will happen?

A few hours ago, the Portuguese parliament voted against the State Budget presented by the minority Partido Socialista (PS) government led by António Costa. Unsurprisingly, this document was rejected by right-wing parties Chega, Iniciativa Liberal (IL), CDS-Partido Popular and Partido Social Democrata (PSD). What came as a surprise in the last few weeks was the strong possibility that left-wing parties Bloco de Esquerda (BE), Partido Comunista Português (PCP) and Partido Ecologista ‘Os Verdes‘ (PEV) would also vote against the State Budget (portrayed by the government as the most left-wing budget in years). In fact, during the 2015-2019 legislature, those parties were close allies of the Socialist government, via a form of contract parliamentarism popularly known as geringonça (contraption): the minority Costa cabinet signed formal agreements with them to secure their parliamentary support in exchange of incorporating some of their proposals in the government’s program. This ‘geringonça’ actually died in 2019, after the October legislative election, but left-wing consensus regarding the State Budget was never a credible problem in 2019 and 2020. This time, the BE, PCP and PEV support to the Socialist State Budget proposal was indeed withdrawn, paving the way for the dissolution of the parliament and early elections. What happened? 

A possible line of analysis of the current political crisis stresses the importance of strategic considerations by all left-wing parties involved, more than the specifics of the State Budget. Granted, the BE, PCP and PEV accused the government of not being sufficiently open to negotiation, neglecting their demands. However, these parties actually may have understood that their support to the Socialist governments is costing them votes, and that a return to their traditional stance as blatant opposition parties could improve their electoral prospects.

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Indeed, for the communist-green coalition CDU (PCP-PEV), the last few years have been disastrous: compared with the previous electoral contest of the same nature, they lost circa 190,000 votes in the 2019 European election, 100,000 votes (and 5 parliamentary seats) in the 2019 legislative election, and 80,000 votes in the 2021 local election (an open wound for this party, traditionally strong at the municipal level, especially in the Southern region of Alentejo). The most recent polls show that if legislative elections were to take place, the CDU would experience an additional decrease in terms of electoral support.

The BE’s electoral debacle has been less pronounced in legislative and local elections, but this party witnessed the loss of 300,000 votes by presidential candidate Marisa Matias between 2016 and 2021, and polls show that under the current state of things legislative elections could mean a nonnegligible loss of parliamentary relevance. In sum, instead of keep supporting the PS minority government and running in the 2023 legislative elections against a backdrop of continuous electoral appeal decay, these parties may have decided that it was better to change profile and go back to their traditional blatant opposition stance, even if this would mean political crisis and early elections, as this move would allow them to attract the votes of citizens that are unhappy with the government’s record.

Also, although the PS blamed the parties to its left of having been exceedingly inflexible during the State Budged negotiation, the fact is that early elections in January or February 2022 may be the very last chance for António Costa to secure an absolute majority of the parliamentary seats. By blaming the leftwing parties for the political crisis, the Socialists might hope to foster strategic voting by the leftwing electorate. At the same time, they could benefit from the current frailty of the main opposition party PSD – a situation that could be reversed during this legislature, with a possible change in leadership that might very well take place in the few months, as MEP Paulo Rangel has recently challenged Rui Rio’s leadership. 

If this analysis is correct, both the PS and the parties to its left have made exceptionally risky moves. In fact, if the parliament is dissolved and early elections are called, as President Rebelo de Sousa threatened it would happen if the State Budget was rejected, the parties with higher odds of improving their current status quo are the right-wing Chega (radical right-wing populist) and IL (liberal), as both polls and recent presidential and local election results portray them as very likely to expand their presence in parliament. Subsequently, going from one MP each to several MPs will increase these parties’ odds of being junior coalition partners in a right-wing cabinet or involved in a sort of right-wing ‘geringonça’ in the very near future. What seems to be highly unlikely to happen in the years to come is the resurrection of the innovative left-wing collaboration that has taken place in Portugal since 2015. The Berlin Wall separating the center-left from the left-wing parties in Portugal is apparently live and kicking, and the 2015-2021 years might have only constituted a small breach, easily and rapidly repairable. 

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