Portugal opposition wins election after bailout: exit polls

Portugal’s opposition PSD won early elections Sunday and will be able to form a majority in parliament with a smaller party to implement a 78-billion-euro bailout programme, television exit polls showed.

The centre-right Social Democrats (PSD) captured 37 to 42.5 percent of the vote against 24.8 to 30 percent for Prime Minister Jose Socrates’ Socialists, according to polls released by RTP, SIC and TVI televisions.

The result would give the PSD between 102 and 121 seats in the 230-seat assembly, allowing them to govern with a majority if they team up with the conservative CDS-PP, which captured 12-28 seats, according to the exit polls.

PSD leader Pedro Passos Coelho campaigned on a promise to “go beyond” the demanding bailout conditions set by the International Monetary Fund and the European Union in terms of privatisations and economic reforms.

“The next two to three years will be hard. I am sure that we will make the necessary changes and Portugal will achieve prosperity.

“We are confident that we will fulfill the agreement we achieved with the EU and the IMF,” he said before voting at a primary school in Amadora, a blue-collar Lisbon suburb.

Investors have kept Portugal’s borrowing costs close to record levels even after the bailout agreement was reached in May on fears that the government that emerges after the election would lack a strong enough mandate to make parliament pass the austerity measures and reforms called for in the deal.

The bailout is conditional on measures that include tax hikes, a freeze on state pensions and salaries, and a reduction in unemployment benefits as well as their duration.

Passos Coelho also wants to require people collecting jobless or welfare benefits to do community work to “facilitate” their return to the labour market.

He intends to add more companies to the list of state firms to be sold under the bailout deal, such as the state water utility and the Lisbon metro, in line with his belief that the state must play a smaller role in society.

Passos Coelho warned during the last week of the campaign that if Socrates were re-elected, Portugal would find itself in the same “tragic” situation as Greece, which is seeking more money just a year after it received a bailout.

But opponents have questioned his ability to steer difficult reforms through parliament because of his lack of any previous government experience.

Many voters expressed disillusionment with politicians and were resigned to further austerity measures whatever the outcome of the election.

“I expect little from these elections. The margin for manoeuvre for the next government is very small; it was not easy to decide who to vote for,” said David, a 44-year-old computer science professor as he voted at a Lisbon public library.

The early election was triggered by Socrates’ resignation at the end of March after the parliamentary opposition, led by the PSD, rejected his minority government’s fourth austerity package in just under a year.

Two weeks later Portugal became the third eurozone nation after Greece and Ireland last year to request an international bailout.

Socrates, in power since 2005, argues he did everything to avoid a bailout. He blames the PSD, which had backed previous fiscal tightening, for provoking a political crisis just to topple the government “out of a greed for power.”

The new government will have to fight joblessness — which stood at a record 12.6 percent in April, the fourth-highest level in the eurozone — with the economy expected to contract by two percent this year and the next.