Negotiated Possible Governing Deal with Socialist Party.

Today began with Bernard Guetta on France-Inter. In Un message de Lisbonne he talked of the possibility of a left government in Portugal after agreement had been reached between the Left Bloc and the Portuguese Socialist Party.

Whether the pro-European Guetta is right about this signaling the growth of a “new left” in Europe, both hostile to leaving the EU and the right-wing economic policies pursued across the continent remains to be seen.



But the news of a possible governing agreement has been sending out waves across Europe.

Portugal opposition leader says any leftist government would honour international commitments

The leader of Portugal’s Socialist opposition sought to calm worried investors on Monday, saying any new government formed with the backing of far-left parties would still respect Portugal’s budget pledges. Portuguese shares fell sharply on Monday as a second far-left party said it could back a Socialist-led government, raising concerns that the fall-out from last week’s election could lead to reversal of Lisbon’s strict budget policies. Socialist leader Antonio Costa said his contacts with the Left Bloc and the Communists were aimed at working out a government programme that would ease austerity, but also had “the condition to respect Portugal’s international commitments”. EU budget rules envisage countries keeping their deficits below 3 percent of economic output and working to reduce them further. Costa spoke after meeting President Anibal Cavaco Silva who has to name the new prime minister in the coming weeks. However, the far-left Left Bloc said Passos Coelho would fail to win enough backing to govern again. “The (centre-right) government is over as of today, because it will not have support in parliament, but also because there is another government solution that corresponds to people’s expectations,” Left Bloc leader Catarina Martins said after meeting Costa earlier in the day. “Conditions have been created for a basic consensus on the Left Bloc’s terms for allowing the creation of a government.” Costa was more cautious, saying there were “possible points of convergence” with the Left Bloc, especially on how to give more disposable income back to the Portuguese. “But it is premature to say whether an agreement is possible,” he said. ….. The inconclusive election result had left markets largely unmoved last week, with a leftist government seen as unlikely. But the prospect of prolonged political uncertainty unsettled investors on Monday. Shares in banks were hit particularly hard. The largest listed lender, Millennium bcp, slumped more than 9 percent, dragging Lisbon’s stock index 3 percent lower. Bond yields, cushioned by the European Central Bank’s asset purchases, were little changed. “The next few weeks will be a test for the political environment and risk is already up,” said Banco Best trader Alfredo Mendes. “Banks are the engines of the economy. If there are signs that the economy will be rudderless because there is no government, banks could be weakened.” Economists fear that a change in economic policy or a long delay in forming a government could undermine the Portuguese economy’s revival after three years of recession made worse by harsh austerity imposed under a now-completed bailout. Political scientist Adelino Matlez said the Communists’ stance was a big game-changer as the party had signalled it is ready to “enter the system and become institutional” rather than remain a constant opposition force. “The possibility of a leftist government is beginning to loom,” he said. “Everything now is about the negotiations, about bargains … (centre-right leader Passos Coelho) by now knows that Costa is not just bluffing, so his next proposal should be bolder.

Reuters.

Then there is this:

Portugal’s three main leftist parties, including the Communists and an ally of Greece’s Syriza, have signaled a willingness to form a government following inconclusive elections that left the ruling centre-right coalition unable to secure a parliamentary majority. Nasdaq.

And this: Socialistas y Bloco de Esquerda acercan posturas en Portugal. El Paìs.

António Costa, Secretary General of the Portuguese Socialist Party (PS), has ended the first round of negotiations with the other leftist parties. And the possibility of a leftist government is growing. Both the PC and the Left Bloc (BE) will guarantee a stable government for the whole legislature, while the center-right seems to be on the lookout. The question remains the same as it has been for a week after the elections: a dalliance between the parties or the real possibility of a “largely sanctioning” majority as Costa himself has described it? On the morning of Monday, Costa (32% of the vote and 85 seats) met Catarina Martins, the Left Bloc (BE, 10.2% of the vote, 19 seats). Both left the encounter content. The BE requires that the PS halts the freeze on pension levels, stops the reduction of social security payments, and the reconciliation process in dismissals. “As far as we are concerned, the government of Passos and Portas ends today” were the first words of Martins, after the meeting. The Bloc leader said that they had put on the table their respect wage conditions, labour and pensions, and a lower of the rates of payments of rates under the European Budget Treaty. A journalists’ questions, she acknowledged that the Left Bloc’s election demand for a renegotiation of the country’s debt had been put back during the negotiations.

The report indicates that the Socialist leader, António Costa, was more prudent about the results of the talks. He spoke of them as “very interesting” “very constructive”, estimating that there were areas of common ground. He added that everybody knew that they came from different backgrounds, and had their own policies, but the two parties were searching for a solution that would create a stable government that corresponded to the majority of voters’ expressed wishes in the election.