António Costa attempted to convince Catarina Martins and, above all, Jerónimo de Sousa, but only unsuccessfully. The Bloco voted against the state budget as did the PCP and the five abstentions by the PAN and the two independent MPS were not enough even to get the bill through to the phase of specialist discussion. Now, after Marcelo has sounded out the parties and the council of state, this is what will follow.

Leadership Elections In The PSD

When the date for the election of a new leader arrives, 4th December, the entire ambience of the PSD will be pre-campaign, gearing up for the looming national elections – and the choice of party members will end up being influenced by this. From the outset, we know: Paulo Rangel has the majority of the district structures behind him and will try and capitalise on the “elan” of the newly returned; Rui Rio seeks the “free vote” presenting himself as holding the right profile for head of government. The Social Democrats, in the midst of this, have had to discuss the bringing forward of deadlines; that of the party congress formerly scheduled for January to begin with. However, this also involves accelerating the making of choices, especially over whether to enter an election coalition with the CDS (more likely), IL (less likely) and what to do with Chega — Rio would not exclude the party while Rangel said he would. The objective, in any case, remains the same: attempting to capitalise on the Moedas effect, mobilising the right of centre electorate and seeking to obtain a majority in the next parliament. In every case, this requires the capacity to unite the party. Thus, to obtain any leadership election victory (and for their support), the next leader will emerge out of the strongest expectations of getting a good result in the national elections to follow.

Early Elections

Given the prevailing circumstances, it is unlikely any party obtains an absolute majority with the country effectively facing one of four feasible scenarios:

1) Victory for the PS, achieving a majority with PAN. This is the ideal scenario for Costa – and Santos Silva accepted this immediately after the budget rejection. However, this is not easily attainable: implying the need to pick up a lot of votes on the left without losing them on the right (which in turn depends greatly on the dynamic generated by the leadership election victor). However, this guarantees stability and eventually leading to a coalition government.

2) Victory for the PS with a left-wing majority. This reflects a repetition of the current scenario with a greater or lesser number of MPs for the respective three parties, and the PS would likely attempt a written agreement, with or without a formal coalition, with one or more partners. Given the budget rejection, the party scenario outlook is not reassuring for the PS: the Bloco and PCP would set the barrier high and giving ground on already rejected issues would be difficult for Costa. In any such scenario, the government program would get voted through by parliament.

3) Victory for the PSD, with a centre-right majority. This might be feasible should the rejection of the state budget lead to a low level of turnout on the left. However, without a majority and with a weakened CDS, the PSD leader would have to pass a test: in the case of the Rio strategy, to negotiate with Chega, as was done in the Azores (even if, please note, the regional government is already under threat), seeing just which of the radical flags planted by Ventura might be removable; in the case of the Rangel strategy, waiting to see if Ventura gives way in his approach — handing over nothing and leaving it in his own hands to decide on whether to bring down or approve a right of centre government in which Chega does not participate.

4) PSD wins but with a majority to the left. This would be a repetition of the scenario Passos faced in 2015. Costa would already have notched up six years in government and the negotiations would certainly be harder but, on the other hand, this would guarantee the ‘obligation’ of the left to sit down and negotiate a third PS government. In a coalition? With a written agreement? In a positive outcome, the new government would be able to leap directly through to October 2022 in the calendar. In a negative situation, this would be the following month: April.

Budget-2022, Take 2

The negotiations to the left would in any case face a first serious test: getting the 2022 state budget through after its rejection just months before. With the agreement of a solid government, this would be the first stage in a parliament that would have to last until 2026. However, in a left-wing government without any written agreement, it would be another D-Day for Costa: a new state budget rejection would leave Portugal in political quicksand without any foreseeable solution. In this worst case scenario, the PS and the President would play central roles. The socialists might try and change leader — Pedro Nuno Santos would be best placed — to try what Costa failed to do; in turn, Marcelo would have in his hands the most difficult decision of his mandate: provide space for a new PS leader for a left-wing agreement or to call another round of national elections?

The reverse side of this coin would turn up should the centre-right take office: could Rangel or Rio get their first budget through parliament? And should this depend on Ventura, would they negotiate with him? With what red lines? And what guarantees would there be for the state budget for the following year? A question for the final leg through this political labyrinth.

Budget-2023, Take 1

If Costa can get here, avoiding any political crisis in 2021, it is not at all certain that he would be able to repeat the same feat in the following year as the risks of the last state budget in the parliamentary cycle failing was already assumed by almost all socialists. However, if Costa does not manage to avoid this and gets re-elected, everything would depend on the prevailing circumstances. Has the economy improved? Has the fuel and energy crisis dissipated? Has the right of centre recovered? Was the government reshuffle successful? Did it gain power? And will the left wait for the calendar and/or end with the distancing that became so visible in this crisis?

If the centre-right takes office, the same questions nevertheless emerge: would Rangel or Rio be able to achieve stability? Or would a right-wing government get equally bogged down?