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Prime-minister António Costa to face weeks of coalition talks

coalition talksAntónio Costa, who was elected to continue in his role as prime-minister on Sunday, is set to face weeks of fragile talks on forming a new left-wing alliance after winning the country’s general election but failing to win an outright majority.

The centre-left Socialist party (PS) polled almost 37 per cent of the vote in Sunday’s election to win 106 seats in parliament, 20 more than in the previous election four years ago, but 10 seats short of an outright majority.

The centre-right Social Democrats (PSD), the main opposition party, lost 12 seats and the smaller conservative People’s party (CDS-PP) lost 13, giving left-of-centre parties a majority of 27 in the 230-seat parliament, up from eight previously. None of the smaller left-wing parties are seeking a place in government.

Shaping a second version of the pact that supported Costa’s minority administration over the past four years — the so-called “geringonça”, which roughly translates to unlikely contraption — could prove to be a complex process.

“Portuguese voters liked the “geringonça”, they really did, and they want that political solution to continue, this time with a stronger PS,” Costa said in his victory speech early on Monday morning.

Costa came to office in late 2015 at the head of a minority PS government backed by the anti-capitalist Left Bloc (BE) and the Communist party (PCP), vowing to “turn the page on austerity” following Portugal’s 2011-2014 troika bailout by the EU and IMF.

In a barely concealed appeal for an absolute majority, Mr Costa warned during the election campaign that support for the BE could disrupt the stability Portugal has enjoyed for the past four years. There was a danger, he warned, of Portugal finding itself in a similar deadlock to that of neighbouring Spain, where failed coalition talks between mainstream socialists and the left-wing Podemos party have led to calls for a fourth general election in four years.

In any event, the BE failed in its bid to gain more leverage over the PS, suffering a marginal drop in its share of the vote to just below 10 per cent, but winning the same number of parliamentary seats, 19. The PCP, running in a leftist coalition known as the CDU, won 12 seats, five fewer than in the previous election, with just below 7 per cent of the vote.

“The PS can now achieve a majority with the support of only one of the two leftwing parties that previously backed it in parliament,” said Ana Andrade, a Eurozone analyst with the Economist Intelligence Unit.

“This and the fact that the left-wing parties lost or maintained their parliamentary representation gives Mr Costa more leverage in a potential left-wing alliance.” Catarina Martins, the BE leader, said Mr Costa could “choose stability” by negotiating a government programme with her party or negotiate for its support “budget by budget, year by year”.

Jerónimo de Sousa, the PCP leader, has completely ruled out the possibility of a second formal agreement with a PS government. The BE said it would press the PS for concessions over labour legislation, pensions, public investment, housing and climate change. Such demands could prove problematic for the prime-minister as Europe prepares for a global downturn.

Mário Centeno, who is expected to continue his stint as finance minister, has promised budget surpluses from 2020 onwards to protect Portugal from any possible negative external impacts, which could lead to budget tensions with left-wing partners. Costa said he was open to a new deal with the left, but warned the left-wing parties that had “made it their goal to deprive him of an absolute majority” that at this time they had a “greater responsibility” to ensure stability.

Talks on a new government pact could be further complicated by an increase in the fragmentation of parliament. Three parties have been thrown into the political arena, two on the right and one the left won one seat each. Chega (Enough), one of new parties, is the first far-right movement to win a seat in Portugal. PAN, a small left-leaning environmentalist and animal rights group gained four seats, up from one previously.

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