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Portuguese election results spell trouble for anti-austerity efforts in EU

Analysis: Growing disaffection with austerity policies has yet to influence economic policy

Portuguese voters on Sunday handed the ruling center-right government another term — a defeat for anti-austerity efforts across the European Union.

While austerity policies have provoked widespread discontent in Portugal, politicians have found difficulty translating that sentiment into concrete policy changes.

The center-right, pro-austerity government of Pedro Passos Coelho won re-election with some 38 percent of the vote. But it failed to gain an outright majority, showing that its policies were still met with considerable skepticism.

Although the opposition Socialists, led by Antonio Costa, campaigned heavily against the unpopular austerity measures, they failed to capitalize at the polls. The party won just over 32 percent of the vote, despite being clear favorites a few months ago.

Portugal emerged in May 2014 from a three-year $88 billion bailout from the European Union and the International Monetary Fund (IMF).

The rescue package – sought by Passos Coelho's Socialist predecessor, Jose Socrates – required tough spending cuts and large tax hikes. Joblessness peaked at 17.5 percent in 2013 before falling to the current 12 percent.

But the recovery has yet to be felt on the streets. One in five Portuguese continue to live below the poverty line, with an annual income of less than $5,500. A combination of unemployment and poor prospects has sent waves of young Portuguese abroad in search of opportunity.

"We will have a government that has to balance austerity, which is still necessary, and the compromises that it will have to accept in parliament," the Portuguese Jornal de Negocios said about Sunday’s election results. "The probability that this new government will see out its term is very low, not to say zero."

The somewhat muddled election fits a trend emerging elsewhere in the EU. But nowhere has the effort to unseat austerity politics garnered more attention than in Greece, which has received two EU bailouts. 

In January, the leftist Syriza party swept into power in Greece over the center-right party of Antonis Samaras, propelled by widespread dissatisfaction with previous government policy.

But while Greece’s conservatives were ousted there, unlike in Portugal, their austerity policies were not.

Syriza ultimately reneged on its initial political pledges, accepting a path that will trigger a third EU bailout full of austerity reforms, in a move that was supported by Greeks at the polls with Prime Minister Alexis Tsipras' re-election last month.

Portugal’s election, meanwhile, could point to a particular problem for the Socialist Party, which has been threatened by internal divisions and competition within the left.

While Socialist Party leader Costa has refused to resign after failing to win elections, his party could be threatened by the ascendant fortunes of the Left Bloc, the anti-austerity, radical leftist party that found success on Sunday in obtaining more than 10 percent of the vote.

"The good result of the extreme-left Left Bloc will force the Socialists to harden their stance towards the government, which does not bode well for political stability over the medium term," Antonio Barroso, vice president at Teneo Intelligence consultancy, told Reuters.

“In this way, Portugal’s election result illustrates a wider problem for Europe’s center-left,” wrote Tony Barber, an analyst with the Financial Times.

That difficulty of the center-left to oppose austerity politics was similarly illustrated in the U.K. in May.

Conservative Prime Minster David Cameron won re-election over the Labor Party, despite enacting austerity policies that were unpopular among sizable parts of the British electorate.

In reaction to defeat, the Labor Party nominated as its leader Jeremy Corbyn, an unrelenting critic of both Conservative party economic reform and center-left accommodation with austerity politics.

Within the next year, both Ireland and Spain, nations that like Greece and Portugal have been hit by economic reforms, will also face national elections.

In Madrid, the center-right government of Mariano Rajoy is favored to win re-election, but the electoral success of parties like Syriza in Greece and Left Bloc in Portugal have buoyed support and hopes for Podemos, an anti-austerity party in Spain that also serves up hefty criticism of Spain’s center-left.

But the results of a center-right win, or a failure to overcome the politics of austerity, could be echoed there as well.

“Despite capitalism’s gravest crisis in almost 80 years, voters by and large prefer center-right parties to try and set things straight," said Barber, of the Financial Times.

With Agence France-Presse

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