- Associated Press - Sunday, January 23, 2011

LISBON (AP) — Portugal’s financial crisis weighed heavily in the country’s presidential election Sunday, with opinion polls indicating an emphatic victory for the conservative incumbent after the Socialist government enacted deeply unpopular austerity measures.

Though the head of state has no executive powers, the re-election of Anibal Cavaco Silva, who is supported by the main opposition Social Democratic Party, would add to political pressure on the embattled minority government as Prime Minister Jose Socrates scrambles to restore confidence in Portugal’s ailing economy.

Portugal’s political and economic fortunes are important for the rest of Europe because the collapse of its government would add fresh momentum to the Continent’s debt crisis.

Many analysts predict Portugal’s economic woes sooner or later will force it to accept a bailout like the ones provided to Greece and Ireland last year.

Crucially, the president possesses the power — known as his “atomic bomb” — to dissolve parliament and call an early election if he feels the government is going down the wrong path.

Such an extreme measure is uncommon, however. A key role of the head of state, which Mr. Cavaco Silva has said he will respect, is to ensure political stability.

Recent polls have predicted around 55 percent of the vote for Mr. Cavaco Silva, an economist who was a center-right Social Democrat prime minister from 1985 to 1995. The center-left Socialist Party’s candidate, Manuel Alegre, is forecast to collect about 25 percent. Results were expected by 11 p.m. (6 p.m. EST).

“Voters will take this opportunity to punish the ruling Socialist Party for the country’s economic difficulties,” said Antonio Barroso, an analyst with Eurasia Group in New York.

The government insists it doesn’t need a bailout. Instead, it has cut public-sector pay and welfare entitlements and increased taxes to reduce a debt load that threatens to wreck the economy.

The austerity measures prompted dozens of strikes last year, including a 24-hour general strike that shut down many public services. Public transport and mail services are due to be hit again in strikes next month.

Mr. Cavaco Silva has backed the government’s belt-tightening program and says he doesn’t want to worsen the country’s plight by provoking conflicts with the ruling party.

However, he already has spoken out against government plans to jolt the economy through costly public works projects, including a high-speed rail link to neighboring Spain, because he says the country can’t afford them. He also has indicated the government should have spared the less well off from tax increases.

The government doesn’t face a general election until 2013, but right-of-center opposition parties have warned they may call for a vote of no confidence in parliament if the government’s policies fail and it resorts to a bailout.

Years of feeble growth have made Portugal one of the 17-nation eurozone’s weakest members and deepened Portuguese fears about their country’s economic future. Unemployment has surged to more than 10 percent over the past year.

A heavy defeat for his presidential candidate may persuade Mr. Socrates, the prime minister, to fire members of his government perceived as weak and replace them with new names in a bid to bolster public support.

Further difficulties lie ahead. The European Commission and the International Monetary Fund forecast Portugal will enter recession in 2011 for the second time in three years.

During the two-week campaign many comments on phone-in programs and news websites expressed voter anger at how politicians — both the Socialists and the Social Democrats — have managed the economy over the past decade.

Manuel Vasques, a retired engineer voting in Lisbon, said he blamed politicians for leading Portugal into crisis, “but Cavaco (Silva) is the least bad choice” because he understands international financial issues.

Four other candidates are running, and the winner must get 50 percent plus one vote or a runoff will be held Feb. 13 for the two top finishers.

Disaffection with political leaders could translate into a high abstention rate. By 4 p.m. (11 a.m. EST), four hours before polls were due to close, just over 35 percent of the country’s 9.6 million registered voters had turned out.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide