So, what are the implications for the EU of a new socialist-led, but communist-green and leftist-supported, and ostensibly anti-austerity government in Portugal? I keep hearing this question; less frequently, the interrogation is sometimes accompanied by ‘is Portugal a new Greece’? Will there be a new conflict within the European Council, a new battle with the ECB, a new Varoufakis, and renewed talk of a Eurozone exit?
Let’s put it this way: there are, in a comparison well known from the world of creativity, inventions and innovations. Greece’s government was (and still is, to some measure) an invention, i.e., an almost new reality in the European scenario. Portugal’s new government is more like an innovation, meaning that it is an adaptation of a form that has existed elsewhere, but with a noticeable difference. In any case, as practitioners of the history or economics of science and technology can tell you, an innovation may sometimes be as consequential, or even more consequential, than an outright invention.
As all metaphors, this one needs to be qualified. Greece’s government was not a complete novelty in Europe. Yes, it is extremely rare to have an EU-government that originated in the Party of the European Left. However, it has happened quite recently with Cyprus, whose Communist-led government even presided to the EU in the second half of 2012. What was special about the Greek government was that its main party, Syriza, had come to power in the wake of a complete implosion of the center-left in the country and that it had promised to go for a frontal assault on austerity policies in the European Council and the Eurogroup.
In the face of this, Portugal’s new government is less spectacular. It is dominated by a party from an European family, the Party of European Socialists, well represented in the European council (in fact, by some measures, the governmental change in Portugal may have tipped the scale in the European Council from the center-right EPP to the PES; this has not happened yet in the Eurogroup). The new Prime Minister, Antonio Costa, has explicitly vowed to not challenge the Fiscal Compact Treaty and to not put himself at odds with Eurozone authorities. And the new Finance Minister, Mario Centeno, is an understated social liberal who has written a lot in support of labour flexibility.
This may come as a surprise to whomever followed the formation of the new government. Remember that, in the wake of an electoral result that left the center-right coalition in Portugal being the first in the polls but without an outright majority, and after negotiations that made clear that there was no ground for an agreement that would lead to a “Grand Coalition” government, the Portuguese President, Cavaco Silva, had very explicitly threatened to not appoint a government supported by what he suggested were anti-European and anti-NATO parties (the Left Bloc and the Portuguese Communist Party, along with the former’s allies, the Ecological Party “Os Verdes”). A short-lived center-right government was formed, only to fall in Parliament eleven days afterwards. And there was some frantic talk about either a coup in Portugal or a new “Greek” scenario in the Eurozone.
What gives, then? Was any of this plausible? More importantly, what is the meaning and the consequence of the new Portuguese government for the EU and the Eurozone?
First and foremost, I would say that this government’s main characteristic is that of the left-wing support it enjoys in parliament. If the Syriza-led government in Greece has come to power after the collapse of that country’s center-left, the Socialist Party-led government in Portugal has come to power after the collapse of the consensus between center-left and center-right parties. This, I will vouch, is more consequential, both because it is more easily replicated in other EU countries, and because the centrist consensus is so instrumental to mainstream European politics.
In itself, one can say that centrist consensus does not exist anymore. Austerity is what killed it. Eurozone politics have moved so much to the right that even economic doctrines that were recently considered mainstream — especially Keynesianism — have been under sustained attack from the ordoliberal establishment, particularly in Germany. This has been especially felt in the crisis countries in the EU’s southern periphery. It is not surprising that this state of affairs has managed to unglue the historical coalition that has produced the welfare state and the European project. The surprise, in a country like Portugal, is why it took so long. We had to wait for five years of austerity, high unemployment levels, and the drain of almost five percent of the country’s population, for the center-left to take its distances from the neo- and ordoliberal Right.
More to the point, it took all this time for the radical left to leave its complacent counterpower attitude and make itself available for a de facto coalition with the center-left. The reasons for the enmity between what was known as reformist and revolutionary Left run deep in Portugal, but its materialization in day-to-day politics has always been shallow. Leftist parties had hidden themselves behind an increasingly uncompromising rhetoric in order to not take up the responsibility of matching that rhetoric to reality. But the people in the streets were demanding just that kind of compromise: a commitment to do the utmost to reverse austerity policies without running the risk of euro-exit, and a commitment to approve and enact progressive policies in all other fields of political action that are independent of the economy.
The former part is, of course, the easier when you have a social and political majority behind it. The new left-wing dominated parliament in Portugal has already undone conservative policies on abortion that were decried by feminists; full adoption rights for same-sex couples have been granted; the first black government minister in the history of Portugal has been appointed (Mr. Costa himself, it is worth pointing out, being of Indian Goan descent on his father’s side, is Europe’s first non-white chief of government).
The new Portuguese government and parliament have not sat still on the anti-austerity front either. There are ongoing discussions on raising the minimum wage, undoing pension cuts and gradually giving back to taxpayers the result of special taxes that were supposed to be temporary but have remained in place for too many years.
All this will be done under the pale of further Eurozone membership and integration. This is, however, what makes the Portuguese innovation more interesting and evolutionary. This is an anti-austerity government supported by an even more anti-austerity parliament. If anything, Mr. Schäuble has certainly lost an ally in Eurogroup meetings. Given the incremental and power-balance nature of European politics, this is maybe more relevant, if less visible, than a confrontational stance.
It remains to be seen if the Portuguese example will be followed elsewhere. I write on the eve of elections in Spain, where politicians have followed closely the political evolution of the neighboring country. If these elections produce a coalition government that breaks with the traditional EPP-and-PES consensus, then one can say that Portugal has inaugurated a trend that may turn out to be determinant at least in the southern Eurozone. By bringing center-left parties closer to their progressive roots and leftist parties closer to the reality of European politics, I believe this may be important news for the whole of the European Union.