Portugal’s minority center-right government has collapsed. It was less than two months old. Its downfall was made possible by the willingness of the Socialists, the main opposition party to form a majority with the Left Bloc, Communists, and Greens.They garnered 123 votes in the 230 seat parliament to defeat Coelho’s program. Coelho led a majority government until last month’s election that saw it reduced to a minority. 

The next step is not immediately clear. There are three general alternatives. First, President Silva can name Costa, the head of the Socialists, to form a new government. Of course this is the preference of the loose coalition he led to defeat Coelho’s program. Second, Silva could seek an alternative candidate. This does not seem to be a particularly compelling path. Third, Silva could allow Coelho to serve as a caretaker until new elections can be held, probably in Q2.This would be quite political and controversial. Yet by allowing Coelho to form a minority government without giving the left parties an opportunity to form a majority government last month draw a great deal of criticism.  

Another wrinkle is that  President Silva, prime minister 1985-1995, is due to step down in January. He was elected as President in 2006 and re-elected in 2011.  

There was ostensibly concern that a left coalition would not be stable. However, the subtext was that the left would antagonize the official creditors. There are differences among the left, but there is a joint distaste for the austerity that the creditors demanded in exchange for aid that Coelho accepted. Still, the different agendas promise to erupt, and potentially quickly. Costa wants to unwind some public sector wage cuts, and bolster family income by taxing inheritance of more than 1 mln euros, looking at changing the income tax brackets, and increasing the minimum wage. The Left Bloc wants to restructure the country’s debt while the Communists want to prepare to exit EMU.