The Eurozone crisis and its implications in present Portuguese politics

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Lukuaika: 7 min.

Political spectrums in Portugal seem to follow an international tendency of radicalization and further polarization of speeches and parliamentary rhetoric. Portuguese politics is an interesting point of departure for the study of political and economic crises.

This article provides an overview of the recent political developments in Portugal in the context of the Eurozone crisis. Different Portuguese governments have reacted to this crisis differently: The governments under analysis will be the Sócrates I and II governments (center-left), the following center right government of PSD (Partido Social Democrata) and CDS-PP (Centro Democrático e Social – Partido Popular) under international supervision which subsequently led to the “contraption government” of the Socialist Party (PS), with parliamentary support of the radical left. This “contraption government”, although with some short-lived disagreements with the far left, is presently in its second legislature but the appearance of a new far-right party in the Portuguese parliament seem to indicate a greater political polarization.

The concept of “crisis” is one of great economic, political and philosophical importance, as it is usually associated with a shift between models, whether it be an epistemological shift, a shift of economic paradigms (higher or less state/supranational intervention), or a shift of political regime (whether it be democratic or authoritarian). Crisis, in short, signals a challenge, perhaps an end, to an existing order, and opens room for a new one.

My focus will be on the definition of crisis in the context of the Eurozone crisis in Portugal.

The concept of crisis is, in its essence, a contested concept. It is difficult to ascertain to what extent a crisis is socially constructed, and to which extent it is empirically verifiable.

For the purposes of this article, my focus will be on the definition of crisis in the context of the Eurozone crisis in Portugal. The very concept of crisis and its causes can be analyzed through the Sócrates I and II cabinets (prime minister José Sócrates: pre-crisis and the request for financial intervention; 2005-2011) the Passos Coelho government (prime minister Pedro Passos Coelho: beginning and middle of the crisis, and the first signs of recovery 2011-2015), and the following PS “contraption government” (prime minister António Costa: center left supported by the extreme and far left, 2015-2019, and until today despite present occasional parliamentary frictions).

The Portuguese case is an interesting example as it was one of the four countries that required supranational financial assistance together with Ireland, Greece, and Cyprus and was able to restructure itself (both politically and economically) in order to survive the Eurozone crisis under relatively stable political governments and a rhetoric of non-defiance towards supranational requirements (similarly to Ireland and contrary to Greece).

Such an approach would demand an analysis of both supranational flaws and of national flaws. These arguments were used on all three governments.

 

Political differences in the understanding of the nature of the crisis in Portugal

José Sócrates was adamant in his rhetoric that the Portuguese state and government would have been able to circumvent the Eurozone crisis and his PEC (Pacto de Estabilidade e Crescimento – Stability and Growth Pact) programs I, II, and III were the instruments to achieve this goal. Therefore, according to him, the crisis was under control or at least manageable at the time.

However, due to the failure of the PEC IV to pass in parliament (Sócrates’ Socialist Party was a minority government), this controllable economic crisis transformed into a political and economic crisis demanding a supranational financial intervention. One could argue that in this case a political crisis was the catalyst of an economic crisis.

However, this stance was (and still is) highly criticized by the center-right opposition. The alternative explanation of the main leaders of the Portuguese center-right was that the policy choices made by the Sócrates governments were themselves the catalysts of this crisis, such as the frequent use of public-private partnerships (PPP’s), high public debt and uncontrolled deficits, and the alleged corruption in the midst of the Sócrates government (with cases such as Freeport, Portugal Telecom, and Espírito Santo Bank).

In this case a political crisis was the catalyst of an economic crisis.

With the subsequent Passos Coelho government (a coalition of two center-right parties: PSD and CDS-PP), the focus and the rhetoric were put on the former PS government’s great responsibility for allowing the crisis to worsen. To counter the crisis the Passos government would be “going beyond the troika” (“troika” refers to the three institutions responsible for the application of the financial assistance package: the European Commission, the European Central Bank, and the International Monetary Fund) – in other words, engaging in austerity politics beyond what the troika had demanded.

The Passos Coelho government used the oversight of the troika as an opportunity to try to partially remove what they saw as state interference in the economy, focusing instead on export growth, reforming justice in order to accelerate court decisions, attracting foreign investment and tourism, and changing labor laws facilitating hiring and firing. In this government’s rhetoric, the economic crisis was a direct consequence of the policies of the Sócrates government. The failures of the PEC program had led to both an economic and political crisis.

The Passos Coelho centre-right (pro-troika) government faced a relatively weakened opposition. The centre-left and the radical-left did not have much common ground apart from their opposition against the austerity policies implemented by the Passos Coelho government. The Socialist Party was still weakened by having lost the 2011 elections but kept on protesting that it was unnecessary to commit to austerity policies beyond what the troika had demanded.

 

Reorientation of the government: left-right-left

Around September 2014, the parliamentary leader of PS, António José Seguro (who had replaced José Sócrates), was repeatedly attacked from within his own party. This led to internal elections inside PS between António José Seguro and a newcomer, António Costa. Costa won and would soon lead the party into the next parliamentary elections in October 2015.

The October 2015 elections at first seemed to have indicated another victory of the centre-right (PSD and CDS-PP) but António Costa managed to reverse the outcome by uniting the centre-left and the radical left that had been politically separated for decades.

The ramifications of the economic crisis and austerity politics of the Coelho government enabled the so-called geringonça (contraption), which allowed the center-left and the radical left to form a new type of government: a government ran solely by the Socialist Party (PS) as a minority government, but with the parliamentary support of the Portuguese Communist Party, the Green party Os Verdes, and the Left Block.

The ramifications of the economic crisis and austerity politics of the Coelho government enabled the so-called geringonça (contraption), which allowed the center-left and the radical left to form a new type of government.

The concept of crisis had evolved from the Eurozone crisis into a crisis of austerity (amplified by external troika oversight) politics, which created the necessary conditions for a new political constellation that united the entirety of the Portuguese left. This is a notable political turn, as the different factions of the Portuguese left had been in odds with one another almost since the beginning of the Portuguese democracy in 1974.

 

Changes in the Portuguese right

The four years of the “contraption” government from 2015 to 2019 pushed a rhetoric of improving public sector wages mixed with various types of budgetary captivations. Despite its unorthodox composition, the “contraption” government won in 2019 to continue for another term. The PS is currently in government, despite minor frictions with its left-wing partners in parliament.

Unable to overthrow the “contraption” system, the Portuguese right became segmented, which led to the creation of new right-wing parties. For example, the market-liberal (Hayekian) party Iniciativa Liberal (Liberal Initiative) gained its first member of parliament.

Unable to overthrow the “contraption” system, the Portuguese right became segmented, which led to the creation of new right-wing parties.

Perhaps more interestingly, the 2019 elections saw the rise of the first far-right populist party in Portugal during the democratic era: the Chega! (Enough!) Party. Although the party gained only a single representative in parliament, current polling predicts considerable potential for growth in popularity.

In Finland, the party best comparable with Chega! is the Finns Party. While the Finns Party have had parliamentary representation since 1999, Chega! gained a representative in parliament only after the 2019 elections. Given its autocratic past, Portugal had been a country that seemed impervious to far-right rhetoric ever since the end of the dictatorship.

Upcoming presidential elections in January 2021 might illustrate the potential for growth in the new Portuguese right.

 

An endogenous or an exogenous crisis?

The chain of events and political shifts originating from the Eurozone crisis, therefore, can be seen as a catalyst for numerous changes in Portuguese politics.

From this point of view and after analyzing the perspectives from several governments, one can make a division between the concepts of endogenous crisis (crisis from within) and exogenous crisis (crisis from the outside) that are useful for the analysis of the Eurozone crisis and also for the understanding of the rhetoric used by different governments. The crisis in Portugal, despite the important exogenous factors, is in its essence an endogenous crisis due to the economic mistakes taken ever since the entrance into the Eurozone and its public debt and deficit misevaluations.

It is not at all uncommon for governments to blame their predecessors, especially if they represent the other end of the political spectrum, but a constant swing of the pendulum between left and right can create problems of political stability.

The crisis in Portugal, despite the important exogenous factors, is in its essence an endogenous crisis due to the economic mistakes taken ever since the entrance into the Eurozone and its public debt and deficit misevaluations.

The Portuguese case allows us to study the dimensions and the frontiers between political crisis and economic crisis and the rhetoric of governments in the understanding of these phenomena. A more macro approach could perhaps deal with all parties in parliament in order to get a broader understanding of how party rhetoric evolves with each swing of the pendulum.

Each political direction taken by each specific government seemed to have had a catalyst effect on the opposite political spectrum making Portuguese politics after 2011 a relatively fluctuating and perhaps volatile development. Political spectrums in Portugal seem to follow an international tendency of radicalization and further polarization of speeches and parliamentary rhetoric. This aspect makes Portuguese politics an interesting point of departure for the study of political and economic crises, and the very operationalization or the conceptualization of crisis.

Luís Sargento Freitas finished his Ph.D. in Political Science at the University of Jyväskylä in 2018 and is in presently developing other research.

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