The 69 members of the recently-elected administration were sworn in by Portuguese President Marcelo Rebelo de Sousa on October 26th, after the PS won 108 seats in the 230-member assembly, despite the lowest voter turnout since 1974. Even while falling slightly short of the necessary majority, the party was given a clear mandate to form a government.
Costa is credited with spearheading the significant recovery of the Portuguese economy. Over the last four years, his administration has managed to achieve the lowest budget deficit rate in the country’s history and regain international credibility after the turbulent economic crisis.
Rebelo de Sousa praised Portugal’s successes while addressing the new government, but warned Costa that he would be leading the country in a changing world. “The task that awaits you is not easy. Today’s Europe, and the world, are different, more complex and more unpredictable”, said the President. He added that the Prime Minister would also have to contend with less political capital available to him to meet the demands of citizen’s increased expectations after the success of the last several years.
Costa agreed that there would be more expected from his administration, even while significant trials lie ahead. “Portugal is, hopefully, a different country from what it was four years ago. But governance is more demanding as the Portuguese demand that we do more and better” he said.
Fiscal Conservatism vs. Public Services
The country has benefitted from hugely positive public relations thanks to the transformation of Lisbon into one of Europe’s most popular cities. Tax breaks for foreign investors – which allows them to become residents in Portugal – has also helped. Not all growth is believed to be positive, however. The investment boom has been a downside for many locals as it caused property prices to rise, particularly in the capital.
Then earlier this year, fuel drivers launched a protest that forced the government’s hand. Health care workers also protested about pay and conditions. Critics of the Prime Minister’s policies claim that they have deviated from the principles of a socialist administration by focusing on fiscal conservatism instead of public services. This led to increased tensions within the previous administration, which was supported by two left-wing parties. The administration also faced withering criticism for their response to the country’s deadly wildfires this season, which saw an underfunded and beleaguered firefighting force facing blazes the likes of which the nation had never seen before.
These setbacks are believed to play into why a significant proportion of disaffected locals stayed away from the polling booths, resulting in a low election turnout of approximately 54 percent.
“Portugal looks great to those who come from outside but our health system has never been worse, the new jobs come with rubbish salaries, and our politicians continue to get caught up in scandals”, Vasco Farias, a 56-year old civil engineer told the New York Times.
Meanwhile, Lisbon has drawn fire for its lax efforts in clamping down on money laundering and bribery. Earlier this year, Angola’s vice-president Manuel Vicente was charged with paying 680,000 euros to a Portuguese judge to quash a corruption investigation. Angola is recognised as one of the world’s most corrupt nations, and a massive building boom fuelled by oil revenues has led to the purchase of large tracts of prime real estate and property. This has triggered enormous wealth for the privileged few who have invested heavily in Portugal.
In reference to the country’s stance on dealing with bribery, the OECD has said that “enforcement of the foreign bribery offence has been very low”. Socialist politician Ana Gomes reinforced the sentiment, saying that in Angola they “call Portugal the laundromat. Because it is”.
In terms of foreign policy, relations with Spain have developed positively in terms of security cooperation around issues relating to illegal immigration and narcotics, with both countries partnering with Morocco to help develop the North African country’s security capabilities. And Costa has garnered considerable praise from EU partners for stabilising the economy, despite criticism from some quarters for what they brand an ‘austerity-lite’ style of government.
Onward and Upward Despite Challenges
One of the primary objectives of the new administration is a significant increase in the minimum wage in Portugal, which currently stands as the lowest in Western Europe. Costa has promised to put forward measures that will increase the minimum monthly salary to 750 euros by 2023. “The national minimum salary will evolve every year through discussions with the collective bargaining partners, depending on the employment dynamics and economic growth, but never ignoring the social importance it has”, he added.
In addition to wage increases, the government plans to prioritise fighting inequality and corruption, digital transformation, and overhauling the old age pension. Meanwhile, the topic of climate change is of unceasing importance. The country is recognised as being one of Europe’s most progressive nations in terms of sustainable energy and climate change protocols, and intends to remain that way through continuous development of their environmentally friendly policies and innovative technologies.
The new government has gained significant political capital thanks to its reforms over the last four years, which will allow members a considerable grace period to settle in and focus on the tasks ahead. Even so, the low voter turnout may be an indicator of trace dissatisfaction amongst many.
If his administration is to succeed again, Costa may need to shift toward his party’s socialist centre in order to stave off any criticism that it prioritises fiscal targets over much needed social reforms.
