Almost no one wants new early elections in Portugal. However, the current scenario seems to lead to a tangled landscape that may force the President of the Republic, Marcelo Rebelo de Sousa, to dissolve Parliament and call elections for the third time in four years. On one side, a government with a great parliamentary weakness (80 deputies, two more than the Socialist Party) that seeks to establish itself after a nine-year cycle of socialist government before facing the ballot box. On the other, an opposition that is fighting its own battle to symbolize the alternative government, between the socialists and the far-right of Chega, who won 50 seats in the elections last March.
The ultimate test will be the negotiations on the 2025 State Budget, which are now starting between the government and the opposition. If the prime minister, Luís Montenegro, who was re-elected on Friday 6 as president of the Social Democratic Party (PSD, centre-right) in a primary without internal opposition, fails to win sufficient support among his political rivals, on the right or the left, Rebelo de Sousa will have to decide whether to call off the legislative session or allow the minority government to manage the country with its hands tied financially with the so-called twelfths budget (only one twelfth of what was spent in the same month of the previous year is allowed to be spent monthly).
The head of state will also be putting his political coherence to the test, since in 2021 he chose to dissolve the Assembly of the Republic and call early elections when the socialist government of António Costa, then without an absolute majority, did not obtain sufficient support to approve the Budget for the following year. The signals now being emitted by the Belém Palace, the seat of the presidency of the Republic, are contrary to a new electoral date. Rebelo de Sousa has been repeating for months that the Portuguese want stability and not another visit to the polls. His messages seek to put pressure on the opposition, especially the Socialist Party, to give the green light to the Budget and allow the new cycle to advance in the hands of the centre-right, the political family of the President of the Republic.
Red lines of the socialists
At the moment it seems difficult. The socialist leader, Pedro Nuno Santos, already warned in his first speech after the holidays that there are two red lines that will not be crossed and that are essential for the Government: the reductions in personal income tax for those under 30 years of age and the corporate tax. “A radical, unfair and expensive fiscal agenda”, in the words of the socialist, who denounces the creation of two parallel models of personal income tax differentiated by age and the transversal reduction of the tax burden on companies, which could remove 1.5 billion euros of annual income from the State.
Giving the green light to the Government Budget, as some socialist voices advocate, is a decision with sharp edges both in Santos’ party and in the rest of the left, which wants to strengthen itself as a block against the Executive. “Whoever approves a right-wing budget supports a right-wing government,” warned the national coordinator of the Left Bloc, Mariana Mortágua.
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For the government, which is in the hands of a coalition between the PSD and the conservatives of the Social Democratic Centre (CDS), pushing through its fiscal proposals is an important axis of the reformist programme that Montenegro is advocating for the country. Its economic measures have the backing of right-wing parties, but Chega announced a few days ago that he would probably vote against the budget in November, when it goes to the plenary session. Its leader, André Ventura, who does not hide his resentment against Montenegro for refusing to make a pact with the far-right, said that his party has done everything possible “so that this country would have a budget, a majority and a future without political crises. If that has not been possible, it is due to the PSD government.”
However, Chega is a party of fluctuations, capable of promising one thing and then the opposite in a short time. After stating that it would not participate in the new round of meetings on the Budget with the Government, which resumed on Tuesday, it retracted its decision a few hours later.
The latest polls show a continued decline for Chega, which already lost momentum in the European elections. While it received 18% of the votes in the March legislative elections, the Intercampus poll for August gives it 13%. This decline is leading the party to opt for a radicalisation of its proposals, especially on immigration. The far-right party has called for a demonstration in Lisbon, which will coincide with the process to regularise some 400,000 foreigners, and has requested the calling of a referendum to ask the Portuguese whether they agree with the imposition of limits on the entry of immigrants.
In parallel to the budget negotiations, Montenegro is also facing its first major political shock, following the release of the report by the General Inspection of Finance on the privatisation of the airline TAP in 2015, which notes possible crimes in the process negotiated by PSD officials. “The most alarming thing is the confirmation that the purchase of TAP, signed by a caretaker government just days before ending its mandate, was made through a loan of 226 million dollars from Airbus, which implies that the company’s own funds were used to buy TAP,” says the president of the socialist parliamentary group, Alexandra Leitão.
The opposition has requested several parliamentary appearances by former people involved in the sale, including the current Minister of Infrastructure and Housing, Miguel Pinto Luz, just when a new privatisation process has been opened for the airline that his department runs.
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