Portugal opposition leader raises prospect of leftist coalition govt

The head of Portugal’s main opposition Socialists on Monday raised the prospect of forming an “alternative government” with two other leftist parties, after inconclusive elections saw the ruling centre-right fall short of an outright victory.

The Socialists came second in the October 4 polls, trailing Prime Minister Pedro Passos Coelho’s Portugal Ahead coalition which took 38.9 percent of votes despite overseeing four years of painful austerity in the bailed-out country, although it lost its absolute parliamentary majority.

After scoffing at the idea of forming a grand coalition with the centre-right, Socialist leader Antonio Costa on Monday said he had identified “points of convergence” in talks with the radical Left Bloc, linked to Greece’s anti-austerity Syriza party.

“These talks, which we have also had with the Communist Party, allow us to evaluate whether the conditions are there to create an alternative government,” Costa told reporters, adding that there was enough common ground with the Left Bloc that “could serve as the basis for a strong and stable accord”.

Costa, who also met with President Anibal Cavaco Silva on Monday, said the Socialists wanted a government that would “defend public services, turn the page on austerity and respect Portugal’s international obligations”.

Left Bloc spokeswoman Catarina Martins said the centre-right’s reign was over.

“Today is the end of the government of Passos Coelho, because it no longer has the support in parliament and there is another way to govern that could be the alternative solution the country needs.”

The prospect of a far-left alliance was however criticised by the country’s second-largest trade union, the UGT, a traditional ally of the Socialists.

UGT secretary general Carlos Silva told the daily Diario economico that he would prefer to see “a compromise between the (centre-right) bloc that won the elections and the Socialist Party”.

Passos Coelho and Costa are set to meet for fresh talks on Tuesday.

Last week’s discussions between the two on forming a coalition government were described as “unfruitful” by Costa, who said it would take a “Martian invasion” for them to team up.

Coelho has said he was “not ruling out any solution” while insisting that any government which emerged must continue with tough economic reforms.

The political uncertainty has rattled investors, with the Lisbon stock exchange plunging by 3.05 percent on Monday, dragged down by banking shares.

Separately, the outgoing government on Monday announced it would not be sending a 2016 budget plan to the European Commission by the October 15 deadline, arguing that only the new government has the legitimacy to present the next budget.