Portugal's elections should have been a major victory for Europe's left, but the country is now in the middle of a political crisis. So what exactly is happening?
President Aníbal Cavaco Silva has sworn in incumbent Pedro Passos Coelho as Prime Minster after his centre-right party got the most votes in the election, but lost their majority in Parliament.
However, the left-wing, anti-austerity parties have taken over the majority of the legislative branch in the Assembly of the Republic (parliament), and they have declared that they will not stand idly by as the Social Democratic Party (PSD/Partido Social Democrata) attempts to return to power without a majority.
Image: Prime Minster Pedro Passos Coelho. Armando Franca / AP/Press Association Images
The Partido Socialista (PS/Socialist Party), Bloco de Esquerda (BE/Left Bloc) and the Partido Comunista Português (PCP/Portuguese Communist Party) have all been in discussions to form an anti-austerity coalition to reject the four-year programme for government of Passos Coelho when he presents it to the Assembly next week.
According to the Diáirio de Notícias, the parties hope to have a formal agreement signed soon to present, but the difficulty comes in negotiating a left-of-centre coalition that will be able to accommodate all parties.
PS leader Antonia Costa would be the man heading that particular delegation, and although there are no meetings being held on Sunday by the potential partners, there is still some work to be done to bring the BE, the most radical contingent, into the fold.
Image: Antonio Costa, center, leader of the Portuguese Socialist Party, chats with members of parliament during the national assembly's first session. Armando Franca / AP/Press Association Images
Passos Coelho had hoped to negotiate with the Socialists to form a government, but they instead turned towards the other leftist parties and quickly showed during that first meeting of the Assembly that their 122 (out of 230) seats gave them the power to make changes, electing a Socialist speaker of the house. They further stated that any program for government involving further austerity measures, as the PS has said would be required, would be rejected.
Further fuel was added to the fire of the left when President Cavaco Silva stated that he would not be able to give power to "anti-European partisan forces", referring to the BE and PCP, and that "now would be the worst possible moment to radically alter the foundation of our democratic regime which is not in line with the democratically expressed will of the Portuguese people".
"After having completed a demanding program of financial aid, which implied heavy sacrifices for the Portuguese, it is my duty, within the scope of my constitutional remit, to do everything possible to avoid that wrong signals are transmitted to the financial institutions, investors and markets, placing in question the country’s external trust and credibility", he said.
Silva could appoint Passos Coelho to head a caretaker administration with limited powers, especially in budgetary matters, and since Portugal's constitution does not allow another election within six months, the crisis may well drag out until the middle of 2016.
"It is incomprehensible to name a prime minister who the president knows in advance will not be able to hold majority support in parliament," Costa told AFP.
Portugal has already become the first country to miss the October 15 deadline for budget submissions to the European Commission since new regulations on economic governance were put in place in 2013.
EU officials have warned this may result in consequences, while Spanish Prime Minister Mariano Rajoy and German Chancellor Angela Merkel have expressed concern at the possibility of an anti-austerity government coming to power, with the latter describing it as a "very negative" move.
Image: Michael Sohn / AP/Press Association Images
A left-wing government, coupled with an expansionary budget, would set Portugal on a collision course with EU leaders, who have already made an example of Greece. Their radical left SYRIZA government failed in its attempt to renegotiate its bailout package after years of crippling austerity.
The party swept general elections in January, but EU figures, most notably German Finance Minister Wolfgang Schauble and Eurogroup head Jeroen Dijsselbloem, were resolute in their refusal to grant a debt haircut. Brinksmanship brought the euro to the brink of collapse, with Greek Prime Minister Alexis Tsipras eventually forced into a humiliating capitulation after an all-night summit in Brussels in July.
Along with the other so-called PIIGS nations (Ireland, Italy, Greece and Spain), Portugal has been subjected to Troika-mandated austerity, which included widely unpopular spending cuts and tax rises.
Portugal exited its three-year €78bn bailout programme in May, and the economy is expected to grow 1.7% this year, but the impact on Portuguese society has been staggering - one-third of under-25s are unemployed and emigration has not been so high since the dictatorship of Antonio Salazar. Those who remain find employment opportunities limited, with the majority of under-35s earning less than €900 per month.
Image: Members of parliament vote to elect the national assembly's president during its first session. Armando Franca / AP/Press Association Images
As in other bailout states, austerity has resulted in a skyrocketing debt to GDP ratio which currently stands at 130%. But further spending cuts and taxes are required by the eurozone for Portugal to reach its goal of 60% by 2035.
Catarina Martins, spokesperson for the more radical BE, has said that the negotiations with other parties to find common ground are "difficult and complex" but that they have to be done. However, even if they do manage to come to an arrangement, it might not get them into power.
The programme of government is scheduled to be tabled on November 9, but it is understood President Cavaco Silva would strongly prefer a so-called 'government of combat' led by Passos Coelho rather than appointing any sort of left-wing coalition
Diáirio de Notícias reports however, that those within the party are very clear that the PSD leader would be unhappy with such an arrangement. Passos Coelho has said he is "open to compromise," but has criticised plans to take down his minority government:
"No-one should sacrifice the well-being of the Portuguese people in the name of ideology or for personal or partisan ambition," he said.
Cavaco Silva has warned that Portugal risks becoming "ungovernable," and that "efforts at dialogue and compromise with other political forces must continue."
But should the President be unwilling to bend, Portugal's paralysis may be far from over - an unwelcome possibility for European onlookers on both sides of the austerity debate.
