Portugal's leftist opposition set to topple coalition government

Brigitte Hagemann
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Portuguese Prime Minister Pedro Passos Coelho (centre) won the most votes in last month's elections but his centre-right coalition has lost the absolute majority it had enjoyed since 2011

Portuguese Prime Minister Pedro Passos Coelho (centre) won the most votes in last month's elections but his centre-right coalition has lost the absolute majority it had enjoyed since 2011 (AFP Photo/Patricia De Melo Moreira)

Lisbon (AFP) - Portugal's left-wing opposition alliance looked set to topple the country's centre-right minority government Tuesday in a crucial parliamentary vote, barely 10 days after it was sworn in.

The vote comes as European fears mount over the prospect of a left-wing coalition taking power in a country still recovering after receiving a 78-billion-euro ($87-billion) bailout in exchange for strict austerity measures, and with investors concerned over the political crisis.

Finance Minister Maria Luis Albuquerque, from the centre-right coalition which won the most votes in last month's polls but lost the absolute majority it had enjoyed since 2011, warned that the rival bloc would derail Portugal's economic recovery.

"If investor confidence is shattered, the threat of bankruptcy is real," she told parliament.

Prime Minister Pedro Passos Coelho accused the newly formed bloc -- comprising the Socialist Party (PS), the Communists and their allies -- of wanting to push through an "unrealistic programme."

"We are already paying the price for the uncertainty surrounding the issue of this debate," he added, referring to plunging stock prices and rising borrowing costs.

The author of the Socialists' economic programme, Mario Centeno, retorted that "Portugal needs another policy and it will have another policy."

Together, the Socialists, the Communists and the Left Bloc -- which is close to Greece's ruling Syriza party -- hold a majority in parliament, 122 seats out of 230.

- Investors nervous -

Their alliance is the first of its kind since the birth of a democratic Portugal in 1974, and had seemed unimaginable just weeks ago due to differences between the various leftist groups.

If they succeed, the vote would force the government to resign after just 11 days in power, making Passos Coelho's administration the shortest in Portugal's history.

The parliamentary session on the plans of Passos Coelho's administration began Monday and resumed Tuesday, when the leftists are expected to table a motion against the government's programme.

PS leader Antonio Costa has been seeking to reassure investors and Portugal's eurozone partners that a Socialist-led government would not be headed for a Greece-style clash with creditors.

He has repeatedly said that any Socialist-led government would respect Portugal's international commitments.

"All the conditions have been met to ensure a stable, responsible, consistent and lasting government," Costa said late Sunday.

Unlike in Greece, where the far-left Syriza party leads the government, Portugal's Communists and the Syriza-allied Left Bloc would play a supporting role to the traditionally mainstream PS.

The full details of the pact between the left-wing parties are not yet public, but their plans include giving back government workers pay that was cut and restoring four public holidays that were scrapped to boost productivity.

"A PS government will not seek confrontation with the European Union. It will try to convince Brussels to not adopt a hard line in case there is a budget slippage," political scientist Antonio Costa Pinto told AFP.

"A Socialist Party government will be obliged to respect commitments between Portugal and Brussels."

But investors appeared nervous, with Lisbon's stock exchange falling on Tuesday after closing down 4.05 percent on Monday.

Yields on the country's benchmark 10-year bond rose 15 basis points to 2.84 percent, compared to 2.29 percent before the elections.

Experts fear a leftwing alliance could prove unstable, with Commerzbank analyst David Schnautz warning of the possibility of early elections next year and fatigue with years of austerity meaning much-needed reforms could be put on the back-burner.

The tension inside parliament will be reflected in the streets outside.

Supporters of the government plan to protest against the effort to topple it while union members and other leftists will rally outside the assembly in support of a Socialist-led government.