A few months ago, the Portuguese Prime Minister, António Costa, was having dinner in Lisbon flanked by the German Chancellor, Olaf Scholz, and the former prime minister of Spain Felipe González. They were celebrating half a century of the Socialist Party of Portugal, founded in exile by Mário Soares and 100 dissidents of the Portuguese dictatorship. Costa was then a leading light for the international left, and he was compared at a rally in Porto by Stefan Löfven, president of the European Socialist Party, with “a beacon of hope.” Spain’s Prime Minister Pedro Sánchez, also president of the Socialist International organization, defined him as “a bastion” in the middle of “a neoliberal decade in Europe.” With Costa’s resignation as prime minister, the left has lost one of its safest values. He was the only socialist to govern with an absolute majority in Europe, apart from Labor’s Robert Abela in Malta.
The Portuguese are still stunned by Costa’s resignation and the abrupt end of a political era built with a smile and an iron fist for eight years. The only way out for the socialist leader that was being considered in Portugal before this scandal involved some kind of position in the European Union. In Brussels — where he had been received with suspicion when he came to power in 2015 in partnership with two parties that were more leftist than his own (the Left Bloc and the Portuguese Communist Party) — he built a respectable image based on his capacity for dialogue in international politics and for his efforts to reduce public debt and deficits back home. His name was being considered to preside over the European Council. The only exit for the prime minister was going to be through the front door.
No one in their right mind could have anticipated on Tuesday, when they woke up to go to work, that after lunch they would find themselves thinking about who will succeed Costa in government. But the announcement that the Supreme Court was going to investigate him for his role in approving energy projects related to green hydrogen and lithium mines triggered Costa’s untimely departure. “I want to say, looking into the eyes of the Portuguese, that my conscience is not weighed down by any illicit or reprehensible acts,” he declared as he announced his departure.
Medina, the replacement?
The constitutional power leaves in the hands of the president of the Republic, Marcelo Rebelo de Sousa, the decision to hold early elections or to complete the term by allowing the appointment of a socialist substitute. Among the current members of the cabinet, Fernando Medina, who is the minister of finance and one of Costa’s most appreciated advisors, is the best positioned to replace him. Medina has in his own favor his management of the public accounts, which will close this year with a surplus.
The unexpected political crisis has also coincided with the processing of the national budget bill, which includes a historic fact for 2024: public debt will be below 100% for the first time (98.9% is expected), moving Portugal away from the club of the most indebted members of the European Union. Medina has been a good executor of the policy of contas certas (correct accounts) that Costa has turned into the backbone of his terms in office. If something has remained unchanged in his eight years in government (and only two with an absolute majority) it has been his obsession with keeping spending under control and preventing the country from suffering another traumatic bailout like the one in 2011.
The brakes on spending prevented major reforms or investments; that is, until the manna of the European Next Generation funds arrived. Much of this money was linked to energy projects aimed at decarbonizing European economies. Costa embraced the cause, to the extent that his main political legacy will be the green revolution. Portugal has become the fourth country in Europe with the highest renewable energy production, only behind Austria, Sweden and Denmark, according to Eurostat data.
In this race towards emissions neutrality, scheduled in the country for 2045, environmental requirements were simplified so that companies can develop their projects more quickly. And licenses were granted to highly controversial proposals such as the lithium mine in Covas do Barroso, despite it being a site of exceptional environmental, agricultural and community values, recognized by the FAO as part of the World’s Agricultural Heritage. This is one of the suspicious projects in the eyes of the Prosecutor’s Office, along with the lithium exploitation in Montalegre and a green hydrogen project in the southern town of Sines.
As part of this operation, which began in 2019, two people from the socialist leader’s closest circle, his chief of staff Vítor Escária, and his friend and businessman Diogo Lacerda Machado were arrested, along with three other people. Furthermore, the minister of infrastructure, João Galamba, has been named arguido (an official suspect). It was precisely the scandals that surrounded his management this year that caused the rupture in the cordial relationship that Rebelo de Sousa and Costa had always maintained. Against the opinion of the president of the Republic, the prime minister insisted on keeping Galamba despite the unlikely events that took place under the latter’s tenure, which included intimidation, scuffles, the theft of a laptop and the intervention of the secret services.
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