Anyone who thinks that Europe’s sovereign debt crisis has been resolved should take a closer look at Portugal. The country’s increased signs of political dysfunctionality, coupled with its extraordinarily high debt levels, suggest that it is only a matter of time before the markets turns their attention to Portugal’s shaky political and economic fundamentals.
Portugal’s indecisive election earlier this month confirmed the continuation of the disturbing political deterioration across the European periphery, which has in recent years seen electoral support move steadily away from establishment political parties in favor of political parties opposed to Brussels-dictated budget austerity and structural economic reform. As an indication of that deterioration, the ruling Portugal Forward Party, which in the previous election had garnered 52 percent of the vote, was now only able to win 38 percent of the vote. Meanwhile, those parties on the left, which are opposed to budget austerity and structural reform, won as much as 62 percent of the vote.
In the wake of Portugal’s recent election, the country is now almost certain to suffer from a prolonged period of political uncertainty. António Costa’s Socialist Party has made it clear that it will not cooperate with the minority Portugal Froward Party government that Prime Minister Pedro Passos Coelho has been allowed to form. Under Portugal’s constitution, new elections may not be held before June 2016. This almost certainly means that the country now faces at least nine months of policy paralysis. It also means that the country could very well have to operate without a budget over the next year.
Full text of this article is available at TheHill.com.
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