Coalition “determined to create stable government” as PS reaches out to Europe

In English and French, Socialist leader António Costa has been preparing Europe for a government of the left in Portugal, Diário de Notícias declares this morning.

After a week of nail-biting talks, what was described by prime minister Pedro Passos Coelho as “a perversion” of the October 4 election results is suddenly looking like it could happen.

With international media focussing on Portugal’s governmental ‘deadlock’, Costa has been “talking with political decision makers and calming investors and markets”, explains DN.

“There is only one concern in his head: the guarantee that an understanding with the Bloco Esquerda and PCP (Communists) will not compromise Portugal’s international commitments”.

As Costa told AFP news agency: “Europe can relax, the PS is not Syriza. We say clearly that leaving the Euro and the renegotiation of (Portugal’s) debt are not on the negotiating table.”

These latest developments – following hot-on-the-heels of the announcement by BE leader Catarina Martins two days ago that the PSD was “dead” – point to an unacceptable scenario for the “Portugal à Frente” coalition – the alliance that effectively won the most seats in parliament on October 4.

“Closed faces” is how the nation’s press described the expressions of prime minister Pedro Passos Coelho and his CDS deputy, Paulo Portas, after a second “make-or-break” meeting with Costa on Tuesday night.

A high-level source told DN: “We expect nothing else than the mandate to govern. This was the will of the Portuguese when they handed victory to the “Portugal à Frente” coalition and not to the PS”.

The truth is that the final decision lies with President Cavaco Silva – a PSD man through and through. Thus the furore ongoing nationally could be nothing more than “noise”. Certainly, international media is playing down the possibility of a government of the left, concentrating instead on Portugal’s state of political deadlock.

Issues blocking Cavaco’s “ideal solution” – a pact between PSD and PS

Cavaco set the scene last week, when he appealed for “dialogue between the various political forces”.

This dialogue was aimed only at the centre-right and Socialists, explained pundits. The more extreme left wing parties were to be excluded.

But the numbers coming out of the election show the country, all told, voted mostly for the left – and hence this current ping-pong round of talks between every party that has a seat.

The coalition claimed on Tuesday that it was ready to compromise with Costa bigtime. It was prepared to drop the looming €600 million cut to State pensions, and climb down over the unpopular IRS ‘surcharge’.

But Costa wants more, he explained – pushing the cause of the restaurant sector which has been decimated by the 23% hike in VAT.

Talking to journalists after he left the second “absolutely inconclusive” round of talks with the coalition, he said: “It is important that the coalition realises we are under a new Parliamentary framework”.

He said as much after the two-hour meeting he had with Cavaco Silva the day before, stressing that a left-wing alliance would not spark a new crisis.
“On the contrary, we will contribute to stabilising the eurozone with policies that promote growth and employment and which tackle the social crisis in Portugal”, he said

On Monday, national media buzzed the news of “market jitters” following the enthusiastic declarations over a left-wing alliance by Catarina Martins of Bloco de Esquerda. Costa has played these down, reiterating his mantra: “Investors can relax. Despite the lack of a majority in parliament, we will be capable of finding stable solutions as is the tradition of Portugal”.

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Photo: PSD leader and Prime Minister Pedro Passos Coelho (left) pictured with the PS leader António Costa, after the meeting in Lisbon on Tuesday between the PSD/CDS-PP coalition and the Socialist PS party to discuss a possible alliance. © MIGUEL A. LOPES/LUSA