Portugal’s progressive government solution shows that a political alternative to the so-called ‘grand coalition’ is possible. Uniting left wing parties into a strategic partnership also demonstrates that breaking away from austerity is feasible and that progressive policies are conducive to economic growth.

 

Two years ago, few people would have imagined that Socialist leader António Costa’s left-wing alliance would have been a viable and enduring government solution to address Portugal’s brain drain, social inequalities and sluggish economic growth. The economic and financial crisis and the austerity-driven interventions by the Troika (European Commission, European Central Bank and the International Monetary Fund) had left some deep marks and a socio-economic and political situation that is difficult to manage.

What was perceived as a bizarre ‘experiment’ in November 2015 has by now proven its ability to remain united on the main aspects of economic policy.

From bizarre ‘experiment’ to success story

After four years of rigid austerity imposed by a combination of the Troika and the previous 2011 to 2015 conservative government, Portugal experienced a decline in economic growth (for three successive years, after a 1.9% GDP in 2010, Portugal recorded growth of -1.8% in 2011, -4% in 2012 and -1.1% in 2013), an increase in unemployment (from 11.9% in 2010 to 16.5% in 2013), with more than 100,000 Portuguese citizens leaving the country annually.

The deregulation of labour laws, the privatisation of transport companies, the increase in taxes on private consumption and incomes and the cuts in public servants’ salaries, social benefits and pensions laid out a socio- economic context that enabled a Socialist-led alliance with the far-left and thus a left-wing convergence to find common grounds to reverse this scenario and to come forward as a politically stable solution for the country.

What was perceived as a bizarre ‘experiment’ in November 2015 has by now proven its ability to remain united on the main aspects of economic policy and has shown coherence and results in terms of its socio-economic strategy. Portugal’s left has become today’s success story for progressive governance in Europe against the backdrop of a recurring narrative that Social Democracy is in decline on the continent and that there is no alternative to austerity.

Battle of confidence and stability has been won

The ‘contraption’ – the nickname given to this unprecedented and historical parliamentary alliance between all of Portugal’s left-wing parties – is living proof that a strong united left can oust pro-austerity conservative forces and launch the country back on a path aimed at ensuring growth and employment and at tackling inequalities.

The unambiguous drive by Costa’s left-wing coalition to ‘turn the page on austerity’ in reversing the former right-wing government’s measures by relaunching labour and social rights, cutting taxes and, most importantly, by fulfilling and honouring his campaign pledge to achieve more growth, better employment and more equality for the Portuguese people is beyond any doubt gaining citizens’ support. The double dividend of such a progressive platform is rather clear: better socio-economic fundamentals and higher support from the polls, as proved by the recent local elections (see pink map – http://expresso.sapo.pt/politica/o-novo-mapa-autarquico-de-portugal=f833155).

The ‘contraption’ – the nickname given to this unprecedented and historical parliamentary alliance between all of Portugal’s left-wing parties – is living proof that a strong united left can oust pro-austerity conservative forces.

Progressive policies in support of education, social inclusion and low incomes are already bearing fruit and are showing the sceptics that the ‘contraption’ is a viable governmental solution. Costa’s Socialist government has led to tangible results by showcasing sustained economic growth at an annualised rate of 2%; a substantial drop in the unemployment rate from a peak of 16.5% in 2013 to 8.9% in the second quarter 2017 and last but not least the lowest public deficit – under 2.1% of Gross Domestic Product (GDP) – since Portugal’s transition to democracy in 1974, whilst fully complying with EU fiscal commitments.

The positive outcomes of Portugal’s progressive policies are not limited to the economic sphere. Recent opinion polls reflect a more favourable public opinion towards public institutions and abstention rates in the last local elections have declined. These are concrete signs that such policies have also contributed to fighting those sentiments of disaffection for the democratic institutions that fuel populism.

Given these results, Costa’s decision not to join a grand coalition with the country’s centre-right and, instead, to push on with a markedly progressive agenda should give encouragement and inspiration to progressives everywhere in Europe.

What next for Portugal’s ‘contraption’?

Last October’s local election results reinforce the argument that a left-wing coalition delivering on a progressive agenda can effectively be a means to uphold Social Democratic values with considerable electoral support. Portugal’s Socialist Party not only secured a landslide victory but also achieved its best ever result. Socialists secured 165 out of 308 municipalities and will govern the capital, Lisbon, plus 10 out of the 17 most densely populated cities.

This unambiguous drive of Costa’s party to build bridges and foster an open dialogue within the Portuguese parties of the left shows that by working together it was possible to dismantle the entrenched TINA ‘there is no alternative’ myth.

Still, there is work to be done in the next two years. The Socialist victory in Portugal’s local elections reinforced Costa’s decision but it comes with considerable responsibility in terms of balancing the interests of its leftist coalition partners, who did not achieve such impressive results. The next two years will see people focus on the question about the sustainability of the ‘contraption’ as a political project of the left ahead of the next legislative elections in two years’ time. Even though the local election results stirred the political pot and changed the balance of the left-wing alliance, tensions still exist and will continue to exist in any form of coalition. What is more, Costa’s leadership and pragmatism coupled with his consistent commitment to cooperation and dialogue with the political spectrum on the left has kept his far-left coalition partners in check. At least for now, Portugal has not seen the rise of extremist parties, as happened with austerity-hit countries like Spain, Italy or Greece.

To sum up, the unity of the left underpins the strength of Portugal’s government solution, which certainly inspires – and will continue to inspire – progressives at the European level and is a promising example of how Social Democracy can regenerate itself across the continent and how perhaps in the near future the ‘contraption’ government solution will still be a positive and credible government solution for its people.