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Judging from the press coverage of Europe's sovereign debt crisis, you would think that citizens of Greece, Portugal and other errant countries are in full scale revolt against the measures being imposed to get them back to solvency. But this weekend's election result in Portugal illustrates the need to separate dramatic television pictures of street protests with actual electoral results in Europe. Far from rejecting austerity and harsh IMF-inspired economic reforms, Portuguese voters elected a leader who explicitly campaigned on a promise to "do everything possible to honor the agreement established between the Portuguese state, the EU and the IMF to regain the confidence of markets."
Portuguese voters did indeed deliver a strong and well-deserved anti-incumbency message, directed against the outgoing government of Prime Minister Jose Socrates, whose sham austerity programs since May 2010 did much to undermine market confidence in Lisbon. His dithering thus helped push Portugal over the edge. Just as we saw in the Irish elections in February, however, Portuguese voters—while "kicking the bums out"—chose the most fiscally conservative, pro-reform and International Monetary Fund (IMF)—endorsed political platform in the form of the Portuguese Social Democrats (PSD) of Pedro Passos Coelho—a business man without prior political experience1.
Moreover, the main "anti-IMF" parties on the left—the Communist/Green Alliance (CDU) and the Left Block—suffered a decline in their combined share of the vote from 18 percent to 13 percent. They will get just 24 seats in the new parliament (out of 230 available seats). While there surely will be lots of demonstrations on the streets of Lisbon in the coming years, it is important to remember that the movement to protest the IMF and its reforms has failed spectacularly at the ballot box in Portugal.
Despite the dramatic television footage of recurring street protests in the low tens of thousands, it does not look like the protesters will be dictating government economic policies in the euro area today. The heyday of the protests in France in the mid-1990s, when militant labor unions forced Prime Minister Alain Juppe and President Jacques Chirac to abandon much needed pension reforms, is a distant memory, along with much of the mentality that existed before the Greece crisis of May 2010.
Moreover, it is worth remembering that the election in Portugal follows the distinct post-May 2010 electoral trend in the rest of Europe, where the most fiscally conservative political platforms have won national elections. The often repeated warning that the political pendulum would swing back soon, as it did in some emerging market crises in the past, continues to lack any empirical foundation in today's Europe.
Note
1. The PSD won 38.3 percent of the vote and 17 (including the two overseas territories) out of Portugal's 20 electoral districts against the Socialists' 28.0 percent and 3 electoral districts. The PSD's likely coalition partner, the center-right CDS-PP, won 11.7 percent. See electoral details.
