Portugal: the Costa government on the brink

A major political crisis unfolded this week in Portugal. A scandal over the nationalisation of TAP airline spiralled out of control, and has caused an open conflict between the presidency and the government. António Costa’s Socialist Party was swept into power with an absolute majority in January 2022. Little over a year later, it is racked by scandal and division.

The popularity of Costa and his ministers has crumbled. His capacity to complete his term in office is now seriously called into question. However, in a highly fragmented and convulsive political landscape, his fall would only augur greater instability. All this comes at a time of radicalisation and mass protest by the workers and the youth.

Absolute responsibility

Costa’s Socialists have been in power since the 2015 elections, which witnessed a sharp turn to the left in Portuguese society in the wake of years of troika-imposed austerity. Until 2022, they did not command a parliamentary majority, but were able to govern rather comfortably thanks to the sustained support of the Communist Party and the Left Bloc. And they were able to remove or mitigate some of the previous right-wing government’s most controversial austerity measures.

This setup allowed Costa – a bourgeois politician – to bolster his ‘leftist’ credentials. He capitalised on the (very limited) progressive measures that the Communist Party and the Left Bloc were able to wrest from him in exchange for their votes in parliament. Conversely, responsibility for his numerous capitulations was shared with his left-wing partners.

The popularity of Costa and his ministers has crumbled / Image: PES Group Committee of the Regions, Flickr

In short, this alliance protected the government’s left flank and ensured years of relative social peace. At the same time, this prolonged phase of collaboration blurred the political differences between the three left parties, to the benefit of the strongest force in the alliance – Costa’s Socialist Party.

In October 2021, once he felt himself to be in a strong enough position, Costa engineered a government crisis and called early elections. As he had predicted, they delivered his party an absolute majority. In all of this, he was goaded on by the ruling class, which resented the radicalising influence of the Communist Party and the Left Bloc. The stock exchange celebrated Costa’s majority, but as we warned at the time, his victory would prove to be a poisoned chalice.

To coin a phrase, with an absolute majority comes absolute responsibility. Blame for any unpopular measures now fell squarely on Costa’s shoulders. Moreover, the formation of his new government came at a time of growing social malaise, in the aftermath of the pandemic and in the midst of an inflationary spiral, with public debt reaching record highs.

Scandals big and small

Yet Costa’s main bugbear has come from an apparently accidental source: the nationalisation of the TAP airline in 2021. The latter had been created by the Portuguese state in the 1940s, was subsequently privatised, tottered on the brink of bankruptcy during the pandemic, and was brought under state control in 2021.

This nationalisation was intended to be for a temporary period, in which the company would be ‘restructured’ to put it on a sound financial footing, after which it would be privatised. In other words, this was a bailout. Once again, the capitalist state came to the rescue of the bosses in their moment of crisis. And, yet again, it is the workers who are expected to foot the bill, both indirectly (through their taxes) and, in this case, quite directly, through dismissals and pay cuts.

Early this year, Costa formed an investigative commission to shed light on mismanagement at TAP and speed up privatisation efforts / Image: Aero Icarus, Wikimedia Commons

Of course, the owners and administrators of TAP are not expected to undergo such austerity. The nationalised TAP airline has been run like a private venture since it was taken over, and an army of ‘advisors’ and executive officers, drawn from the ruling party and from the corporate world, have been placed at its head to supervise its ‘restructuring’.

Soon, scandals related to the mismanagement of TAP began hitting the headlines. The most noteworthy involved Alexandra Reis, a Socialist Party apparatchik, who was made executive director of TAP for 14 months, with a salary of €28,000 per month. When her tenure came to an end, she was handed €500,000 in severance pay, and moved to another obscure (yet well-paid) government job.

Her job at TAP was, as a trade union delegate from the company put it, to wield the knife of austerity against the company staff, cutting and firing her subordinates. These findings generated public outrage and led to the resignation of the Infrastructure Minister, Nuno Santos, in January 2023.

Early this year, Costa formed an investigative commission to shed light on mismanagement at TAP and speed up privatisation efforts. This commission aggravated the situation, as new scandals began surfacing. In panic, some state officials attempted to destroy (or leak) information. Frederico Pinheiro, an Infrastructure Ministry official brought down by the Reis affair, stole a laptop from the ministry that had to be retrieved by the Portuguese Intelligence Agency (SIS).

Public pressure for the dismissal of the new Minister of Infrastructure, Joao Galamba, began to mount. The right-wing opposition even called for early elections. Galamba himself issued his resignation earlier this week. His fate seemed to be sealed when president Rebelo de Sousa called for Galamba’s dismissal and for a cabinet reshuffle, threatening to use his constitutional powers to dissolve parliament. He has used these threats a number of times in recent months, wielding the extraordinary powers he possesses to intimidate Costa.

Rebelo de Sousa has intervened frequently in national politics and presents himself to the ruling class as a bulwark of stability / Image: Web Summit Flickr

As in all bourgeois democracies, the so-called division of power, and especially the figure of the presidency, are used to discipline unruly, unstable, or discredited governments in the interests of the capitalist class as a whole. Rebelo de Sousa has intervened frequently in national politics and presents himself to the ruling class as a bulwark of stability and predictability as against the Socialist Party government in its state of decomposition.

But Prime Minister Costa has not buckled and has stood by his minister. Letting him fall would have further discredited him and undermined his already shaky grip on power. This obduracy has generated an open clash between the presidency and the government. But as Rebelo de Sousa has warned, this risks discrediting and weakening “the institutions”. That is to say, he is worried that the true character of capitalist democracy stands to be exposed.

Far from being a repository of the ‘will of the nation’, the state is in fact a machine for the defence of the private interests of the ruling class and its various factions. It is oiled by graft and corruption, and a heavy dose of cynicism. Extravagant incomes and perks keep politicians – and ‘socialist’ apparatchiks – in lifestyles closer to those of the capitalist class, ensuring that their sympathies likewise align with the bosses. This is all hidden behind a wall of secrecy and confidentiality. Whilst this may take the form of illegal graft, more often than not it is fully legal or semi-legal, as with the enormous pay off received by Alexandra Reis.

The ruling class is sitting on a volcano

The president is now faced with a tough choice. He could dissolve parliament and call early elections, as most commentators expect him to do. However, this is a risky decision. The main opposition force, the conservative PSD, is not calling for new elections. Only the loose cannons of the far-right Chega are pushing for the fall of the government.

What is the reason for these vacillations at a time of extreme vulnerability of their socialist adversaries? When the TAP scandal broke out, Rebelo de Sousa ruled out early elections because there was no clear alternative ‘government-in-waiting’. Opinion polls predict an extremely fragmented parliament. Costa’s resilience, therefore, stems from the weakness of his rivals rather than from his own strength.

The centre-right PSD is rudderless and divided, and may not be able to pull ahead of the socialists. If it is able to form a government, it would have to share power with the free-marketeers of Liberal Initiative and would need the support of the far-right Chega. The latter is set to make gains, utilising aggressive demagoguery to exploit the decomposition of the traditional right-wing parties and the stagnation of the left.

Such a government would be fragile, thrust around by contradictory pressures, and, most importantly, hated by the masses. Indeed, this crisis in the ruling class parties is taking place atop a volcano that is ready to erupt.

The €500,000 ‘golden handshake’ that has caused such a crisis between the government and presidency is mere pocket money compared to past scandals. Its impact is down to the fact that the politicians are terrified of its perception in the eyes of a public seething with rage.

Conditions of life are becoming desperate: most workers earn less than €1,000 a month; the average pension stands at €500; inflation for basic foodstuffs reached 20.1 percent this year; and a worker on an average wage cannot rent a flat in Lisbon without spending at least 35 percent of their income.

In this fraught context, news of graft and privilege hits a very raw nerve. The capitalist opposition parties and media are doing their best to avoid agitating social and economic problems, lest they fan working-class fury. Therefore, they throw the blame for everything on individual instances of corruption and mismanagement. But in this polarised atmosphere, these denunciations have spiralled into a major political crisis that threatens to further radicalise the masses.

Recent months have seen a major wave of mass mobilisations / Image: own work

The fears of the ruling class are well grounded. Recent months have seen a major wave of mass mobilisations. The masses are venting their anger on the streets rather than at the ballot box, as the parliamentary road appears to be blocked.

Not only does the Socialist Party have an absolute majority, but the opposition to its left is somewhat demoralised and disoriented, and has stagnated in opinion polls. The Communist Party and the Left Bloc were given the boot after almost seven years of close collaboration with the Socialist Party. The more oppositional stances they have recently adopted therefore ring somewhat hollow. They have failed to draw the lessons from the last period.

To recover their authority, they need to explain clearly why their alliance with the Socialists failed. In essence, they need to explain the limits of reformism: the impossibility, at a time of deep capitalist crisis, of conquering substantial reforms without serious, militant struggle and, ultimately, without challenging private property.

The masses, in any case, will not wait for the Communist Party and the Left Bloc to get their act together. They are taking matters into their own hands.

In February, there was a large demonstration against the cost of living crisis, where workers from the neglected peripheries of Lisbon came out in force. In March, the turnout for International Women’s Day was the biggest in recent years. In early April, tens of thousands protested in Lisbon, Porto, and smaller provincial towns against the exorbitant price of housing. Later that month, the march commemorating the 25 of April revolution stood out for its turnout and for its militant mood. Only last week, students occupied schools and faculties to demand an end to fossil fuel production.

All disgruntled social sectors are entering the fray / Image: own work

All disgruntled social sectors are entering the fray. Yet the most significant feature of these mobilisations has been the wave of industrial action that has swept the country. The teachers, transport workers, civil servants, healthcare staff, and many others have walked out in recent weeks or threatened to do so. Some of these strikes culminated in mass demonstrations of tens of thousands, such as the teachers marches of January and February or the CGTP union rally in March. Industrial action has increased by 150 percent year on year. Inflation is a whip that is galvanising the working class and forcing it to take action.

Portugal is in a state of great agitation. The main weakness of these protests lies in their fragmentation. The government has been able to skirt around each movement because it has faced them separately. What is needed now is unity in action. All disgruntled social layers, all fighting organisations, all trade unions and social movements, should gather in local assemblies to list their demands and work out a plan of action.

These discussions should lead to a mass, national assembly that would have the authority to launch a programme for struggle, capped by a general strike. Almost fifty years ago, the Portuguese people brought down the Estado Novo dictatorship through revolution. The bourgeois democracy that took shape after the revolution has failed to meet their basic demands, and the wealth of the nation remains in the hands of a tiny minority, as was the case in the past. The dreams of 1974 were betrayed and foiled. The main tasks of the revolution are yet to be accomplished: to overthrow capitalism and build a truly free socialist society. It is the duty of our generation to complete this task.