Portugal in CRISIS as parliament rejects austerity measures and

Portugal’s next government looks likely to be led by the Socialist Party with Antonio Costa as prime minister, supported by the Communist and Left Bloc parties.

The country’s four left-leaning parties are expected to bring down the minority center-right government of Prime Minister Pedro Passos Coelho with a vote of no-confidence on Tuesday, newspaper Diário de Notícias reports.

His second government becomes the shortest-lived since Portugal returned to democracy in 1974.

Mr Pedro Magalhaes, a researcher at the Institute of Social Sciences in Lisbon, suggested before Tuesday’s vote that a left-wing administration could struggle to last a full mandate given the long-standing divergences and different incentives of the three parties.

And it is bound to be an uneasy coalition, given that the socialists are a pro-EU party, while communists and the Left Bloc want a negotiated exit from the Euro and a debt relief.

“It’s a odd debate because we’re discussing a government program that never was and a prime minister that soon won’t be prime minister”, Left Bloc leader Catarina Martins told lawmakers on Monday.

Regarding the PS and its ability to lead the country and how far it will distance itself from austerity policies, Costa, whose Marxist BE party is to the left of the PS, said, “The Socialist Party has to make big decisions and it has a large history of wrong decisions (on European Union austerity measures)”.

“A Socialist Party government will be obliged to respect commitments between Portugal and Brussels”. However, it lost its absolute majority in parliament to a leftist alliance.

The showdown came less than two weeks after the centre-right government was sworn in.

Portuguese media said on Wednesday that the fragility of the separate agreements signed by the BA (19 seats), the PCP and the Greens (17 seats, standing alongside the CDU coalition at the elections) with Costa’s PS (86).

Outside Parliament, demonstrators at an anti-austerity protest by labor groups shouted ‘Victory!’ as the news of the vote spread.

Yields on the country’s benchmark 10-year bond rose 15 basis points to 2.84 percent, compared to 2.29 percent before the elections.

Portugal’s President Anibal Cavaco Silva must decide either to ask the Socialists to form a new government, or to allow the incumbents to stay in charge until new elections are held.

The three left-wing parties that did amass a parliamentary majority agreed after the election to put deep ideological differences behind them and group together to oust the centre-right coalition government.