How This Leader Is Giving Europe an Alternative to Austerity - OZY | A Modern Media Company

How This Leader Is Giving Europe an Alternative to Austerity

How This Leader Is Giving Europe an Alternative to Austerity

By Carl Pettit


Because there’s more than one path out of a financial crisis.

By Carl Pettit

António Luís Santos da Costa is a successful loser. He’s a loser because he was defeated in Portugal’s 2015 national election, yet he somehow turned that defeat into a resounding victory for his Socialist Party (Partido Socialista) — while claiming the title of prime minister for himself. And then he set to work on Portugal’s economic woes.

The Portuguese term desenrascanco essentially means “to pull a MacGyver,” or cobble together a last-minute solution from whatever is lying around, which is a skill the Portuguese value and excel at. In Costa’s case, this talent came in handy when he “negotiated the support of the two extreme-left parties in the parliament to form a minority government,” Tiago Silva, an academic fellow at the United Nations University Operating Unit on Policy-Driven Electronic Governance, tells OZY.

By seating “the socialists at the same table with Communists [Partido Comunista Português] and members of the Left Bloc [Bloco de Esquerda],” Silva continues, Costa accomplished something no leader in Portugal had ever done before. He united the Left and then stabilized this apparently fragile government, and even helped it prosper.

Many in the opposition believe Costa is merely reaping the benefits from (and taking credit for) the sacrifices imposed by the previous government.

Costa’s circuitous route to power traces back to 2007, when he became mayor of Lisbon — seen by many as a wise move that allowed “the socialists to win the capital and Costa to distance himself from Prime Minister José Sócrates,” explains Shrikesh Laxmidas, deputy editor of Portugal’s Jornal Económico. Costa spent eight years as mayor, isolating himself from the unpopular EU financial bailout the country agreed to in 2011 and turbulence brewing in the national government.


But he generated his own turmoil by ousting the leader of his party, António José Seguro, in 2014, and he followed that move with an uninspiring national election run, which he lost in October 2015. Laxmidas says Costa seemed “unable to capitalize on the mass frustration with the center-right and right-wing parties,” which had saddled Portugal with harsh austerity measures to mollify the nation’s “troika” lenders (the European Commission, the European Central Bank and the International Monetary Fund).

Yet Costa turned a disappointing loss into a win when he was named prime minister just weeks after the general election plunged the country into political limbo. And then came the task of governing. His approach? According to Isabel Camisão, assistant professor at the University of Évora in the Economics Department, Costa departed from his predecessors by rejecting the EU’s “official” recipe for resolving the financial crisis, which included large doses of austerity and fiscal discipline.

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Costa marching during a political rally in Lisbon days before the October 2015 election, when he was secretary general of the Socialist Party.


“Costa’s approach emphasized the importance of having economic incentives in order to stimulate growth, jobs and competitiveness,” Camisão says. Even so, the prime minister’s leftist coalition government never questioned that the nation had to honor its fiscal responsibilities — by paying down its debts. But Costa and his ministers, notably Finance Minister Mario Centeno, believing severe austerity was not the way forward, undertook measures that included raising the minimum wage, lifting a freeze on pensions and canceling pay cuts for civil servants. And while many commentators poked fun at Costa’s seemingly jury-rigged government by labeling it a geringonça, which refers to a contraption built out of leftover parts, his government’s continued success and a rebounding economy has tempered the political mockery.

“Costa has delivered on many anti-austerity promises,” Laxmidas says, includingreversing taxes and wage and pension cuts imposed by the troika,” and reducing the public deficit, allowing Portugal to leave the “Euro Zone’s ‘punishment corner.’ ” The economy, chugging along nicely, has posted growth rates not seen in a decade. By relieving the country of its deficit burden and putting the economy back on track, this new economic narrative has given Portugal more credibility and negotiating leverage in the EU, while proving that the prescribed “magic formula” of austerity isn’t the only game on the continent.

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Costa speaking to journalists after meeting with the Portuguese president in the wake of the 2015 election, as his Socialist Party sought to cobble together a leftist coalition to form a minority government. Six days later, he was sworn in as prime minister.


The news on October 1 that Costa’s Socialist Party had gained in national municipal elections, taking 38 percent of the vote, was another boost, coming halfway through his government’s four-year term. Still, the political landscape isn’t all rosy for Costa. Rumors that his campaign tried to sway influential bloggers by offering them monetary incentives to post favorable content during his party’s primaries in 2014 could hurt him down the road. And many in the opposition believe Costa is merely reaping the benefits from (and taking credit for) the sacrifices imposed by the previous government — or that he’s shifting austerity measures onto the public sector without effecting long-term structural changes. But despite the criticism, Costa’s party is still well ahead of the opposition, according to opinion polls.

Of course, the winds of political fortune can shift quickly — Prime Minister Sócrates showed a lot of promise before running headlong into a financial crisis, the bailout, the fall of his government in 2011 and, later, corruption allegations that landed him in prison. But if Costa can keep his geringonça coalition together — relying on his impressive negotiating skills — and forge a robust economy that can withstand future dips and turns in the financial markets, Costa just might manage to stick around long enough to show Portugal, and the world, what a successful loser is capable of. 

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