The new left wing government-in-waiting has made clear its stance on the planned unravelling of privatisations and today stated that the "the reversal of privatisations will depend on the cost.”
This new criterion, to be used by the Socialist Party alliance if and when it comes to government, fundamentally undermines a formerly firm commitment to take back into state hands public transport bodies, TAP, water companies and the merger of Estradas de Portgual with railway company Refer.
As recently as last Saturday, socialist party leader António Costa (pictured) was clear that his agreed programme included re-nationalisations.
The socialists today guaranteed that they will not raise taxes to finance the cancellation of privatisations carried out by the Passos Coelho coalition. This gives them a second get out clause.
As for state airline TAP, the original manifesto issued by the Socialist Party Political Committee in collaboration with its left wing allies, stated that "the government will not allow the state to lose ownership of the majority of the share capital of TAP."
This position was taken by the socialists when the current government and Gateway signed the sale agreement for 61% of TAP this summer.
The socialists said at that time that if they were in charge they would find "ways - including through effective action with European institutions and the capital markets - to re-capitalise, modernise and ensure the development of TAP to serve the Portuguese and the Lusophone markets.”
The socialist programme back then also included the reversal the merger of water companies that "has been imposed on municipalities."
As for transport, the pledge was for "the strengthening of the powers of local authorities in the area of transport which implies the cancellation of concessions and the ongoing privatisations of public transport companies in Lisbon and Oporto."
All of these privatisations and mergers now will be re-assessed to see if there is a cost involved, which of course there will be, and can be left in place, despite a clear promise in the manifesto to reverse all privatisations.
The situation for TAP is changing daily. As it stands, the sale may not be able to be closed this week as it was mandated by a government that no longer exists and was promoted by an executive that has been relived of its duties.
On Tuesday, a spokesman for the Gateway consortium, which in June 2015 won the tender to buy 61% of TAP, said that in principle the TAP deal can be concluded this Thursday and that it was not at all interested in becoming a minority shareholder under a socialist reworking of the airline’s privatisation conditions.
Gateway’s owners, Humberto Pedrosa and David Neeleman, are keen to sign the deal as, if it later is reversed, they will be entitled to a significant payment for their shares. If the deal is not signed, the dynamic duo will get back only their €2 million deposit and related legal costs.
António Costa has given an early indication of his modus operandi with the deft removal of a key tenet of the socialist programme.
