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P 231540Z SEP 09
FM AMEMBASSY LISBON
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INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
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UNCLAS SECTION 01 OF 04 LISBON 000510 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL SCUL SOCI PO
SUBJECT: PORTUGUESE ELECTIONS -- SOCIALISTS AHEAD, STILL 
TOO CLOSE TO CALL 
 
REF: LISBON 493 
 
¶1. (U) Summary:  With the September 27 parliamentary 
elections just days away, the Socialists (PS) led by Prime 
Minister Jose Socrates have a three-point lead over the 
Social Democrats (PSD) led by Manuela Ferreira Leite. 
However, a significant portion of the electorate -- 24 
percent of those intending to vote -- remains undecided and 
could sway the final result.  The campaign season has been 
rife with scandals and rumors tarnishing the images of the 
two main parties and distracting voters from substantive 
issues.  Despite a series of televised debates focused on 
issues, this election, as those in the past, will largely be 
personality-driven:  Portugal's "Iron Lady" Ferreira Leite, 
viewed as determined and credible, versus incumbent Socrates, 
regarded by some as arrogant and by others as charismatic and 
progressive.  Possible post-electoral scenarios include a 
minority PS or PSD government, or a coalition government 
including one or two of the smaller parties.  End Summary. 
 
 
Leading Parties Differ on Role of State 
--------------------------------------- 
¶2. (U) Platforms of the ruling Socialists (PS) and the 
opposition Social Democrats (PSD) generally converge in three 
key areas:  foreign affairs, defense, and European issues. 
The fundamental difference between the two parties is how 
they view the role of the State in society.  According to 
Jose Luis Arnaut, PSD International Relations Committee 
Chairman and former President of the Parliamentary Commission 
on Foreign Trade and Portuguese Communities, the PSD favors 
less state intervention, while the Socialists believe in 
greater state involvement.  The PSD favors market-based 
solutions over government subsidies. 
 
¶3. (U) Another key difference is in the area of economic 
policy.  Portugal's growth has lagged behind other European 
countries in recent years, and the economy is expected to 
contract 3.4 percent in 2009.  The PSD believes the key to 
boosting growth is to cut public spending and stimulate 
private sector investment.  PSD leader Ferreira Leite, who 
has been described as Portugal's "Iron Lady," has pledged a 
"titanic" fight against infrastructure projects to reduce 
what she calls the country's "unsustainable" debt levels, 
while the ruling Socialists have promised to launch large 
infrastructure projects.  The Socialists assert that such 
projects, including a high-speed rail-link to Spain and a new 
airport for Lisbon, are key to hoisting Portugal out of its 
worst recession in decades due to the global economic crisis. 
 
 
¶4. (SBU) PSD leader Ferreira Leite argued for suspension of 
construction of the high-speed rail-link between Portugal and 
Spain during a nationally televised September 12 debate with 
PS leader Socrates.  Her comments sparked PS criticism of the 
PSD leader as "provincial" and "isolationist."  The PSD 
defended its position, citing the need to put Portuguese 
national interests first, particularly in the face of growing 
public debt.  Arnaut acknowledges that the PSD supported 
construction of the high-speed train in 2003, when Ferreira 
Leite was Minister of Finance, but now proposes postponement 
of the project to curb public spending.  On foreign policy, 
Arnaut maintains that the Social Democrats are more 
pro-Atlantic than the Socialists, and noted that the 
trans-Atlantic relationship has been the PSD's number two 
priority in foreign affairs (after relations with the EU). 
 
¶5. (SBU) The Socialists, for their part, seek to reinvigorate 
the economy, promote employment and social policies 
benefiting the middle class, and advance same-sex marriage. 
They also seek to introduce a referendum on regionalization, 
and revise the electoral law to re-configure the current 
electoral districts.  Jose Lello, PS National Secretary for 
International Relations, characterizes the Socialist Party as 
a progressive movement that focuses on modernization, 
infrastructure, renewable energy, and export of technology. 
He stresses the success of major reforms initiated by the 
Socialist government over the past four years and the 
importance of sustaining those reforms, which the Socialists 
fear a PSD government would roll back. 
 
¶6. (SBU) Lello notes that the PS government has made a 
significant investment (1 percent of GDP) in science and 
research, as well as in education.  On the economy, he 
underscores his party's success in reducing the budget 
deficit from 6.7 percent of GDP in 2006 to 2.6 percent in 
2008, and points out that Portugal's current unemployment 
rate of 9.2 percent is below the EU average (9.5 percent) and 
significantly lower than Spain's 18 percent.  (Note: 
 
LISBON 00000510  002 OF 004 
 
 
Government spending to stimulate the stalled economy is 
projected to bring the budget deficit back up to 6 percent of 
GDP this year.  Portugal's overall debt is expected to 
increase to 75 percent of GDP from 66 percent in 2008.  End 
Note.) 
 
Smaller Parties Struggling to be Relevant 
----------------------------------------- 
¶7. (SBU) Left Bloc Deputy Luis Fazenda, currently running for 
re-election, stressed to poloff September 17 that his party 
defends workers' rights and employment.  Criticizing the 
Socialists' efforts on social security reform, he said the 
Left Bloc seeks to increase social security benefits as well 
as the minimum wage and unemployment benefits.  He observed 
that the "country is tired of the current absolute majority 
because the government is arrogant in the name of liberal 
reforms."  He claimed that Socialist reforms have adversely 
impacted society.  The PS' social reform has reduced social 
security benefits, while its labor reform has reduced 
workers' salaries, and its health reform has resulted in 
patients having to pay more for health care, according to 
Fazenda.  Currently with 8 seats in the 230-seat Parliament, 
his party hopes to increase its presence. 
 
¶8. (SBU) During a September 18 meeting with poloff, Social 
Democratic Center/Popular Party (CDS/PP) Vice President Luis 
Queiro, who served 10 years in the European Parliament until 
June 2009, described the CDS/PP as a conservative party 
supported by Christian Democrats.  In contrast, he 
characterized the PSD (which had observer status at both the 
U.S. Republican and Democratic conventions in 2008) as a 
"centrist party with elements of the right and the left."  He 
lamented that the CDS/PP has been unfairly stigmatized by a 
perceived connection with the old right-wing dictatorship and 
that no one in Portugal wants to be identified with the 
right.  He observed that to be labeled a fascist is "the 
biggest political insult in Portugal." 
 
¶9. (SBU) According to Queiro, the CDS/PP is focused on 
justice, security, and unemployment.  It favors the "Giuliani 
model" of justice with quick sanctions to deter urban crime, 
and tax reductions to give more money to families rather than 
to the State.  Like the PSD, the CDS/PP seeks to reduce 
budget deficits and to cut public spending.  On foreign 
policy, Queiro observed that there is CDS/PP consensus with 
the PS and the PSD.  The CDS/PP supports the EU and the 
trans-Atlantic relationship.  It also values Portugal's 
relations with Africa and Brazil, and is interested in 
Latin-American policies.  He said the CDS/PP, which currently 
has 12 seats in the Parliament, hoped to exert greater 
influence in the next government by gaining 2-4 additional 
seats as predicted by polls. 
 
Politics as Usual 
----------------- 
¶10. (U) The campaign season has been dominated by front-page 
scandals, rumors, and negative campaigning (e.g., a 
vote-buying scheme allegedly involving Lisbon PSD candidates 
who are also under investigation for fraud and corruption in 
a separate case; a wiretapping scandal implicating the PS 
government; and a media scandal allegedly involving the PS) 
that have tarnished the images of both major parties and 
distracted voters from substantive issues.  This year's 
elections, as in the past, will be personality-driven. 
 
Latest Opinion Polls Show Socialists in Lead 
-------------------------------------------- 
¶11. (U) With less than a week until the elections, the 
Socialists are maintaining their lead, with a three-point 
margin over the Social Democrats.  According to the latest 
poll conducted September 12-15 by private Portuguese 
marketing research company InterCampus, the Socialists have 
33 percent of the intended vote, followed by the Social 
Democrats (30 percent), the Left Bloc (12 percent), the 
Communist Party (9 percent), and the Popular Party (7 
percent).  Eleven percent of those polled do not plan to 
vote.  A survey conducted September 11-14 by private 
Lisbon-based Catholic University Center of Surveys and 
Opinion Studies (CESOP) shows a six-point spread among 
decided voters, the Socialists with 38 percent of the 
intended vote and the Social Democrats with 32 percent, and 
undecided voters at 24 percent (with a margin of error of 2.7 
percent). 
 
¶12. (U) According to political analysts, the televised 
September 12 debate between Socrates and Ferreira Leite and 
the start of the electoral campaign contributed to a small 
one-point gain for the Socialists and a slight three-point 
loss for the Social Democrats since a previous opinion poll 
 
LISBON 00000510  003 OF 004 
 
 
conducted September 4-8.  The latest CESOP poll indicates 
that a significant portion of the electorate -- 24 percent of 
those intending to vote -- is still undecided.  Regardless of 
their intention of vote, 52 percent of those polled believed 
the Socialists would win the most votes, compared to just 25 
percent who speculated that the Social Democrats would pull 
ahead.  Most voters (78 percent) predicted that the winning 
party would not obtain a clear majority.  Less than half of 
those polled believed the new government, regardless of the 
party in power, would complete its mandate. 
 
Possible Post-Electoral Scenarios 
--------------------------------- 
¶13. (U) Possible post-electoral scenarios include a PS or PSD 
minority government, or a coalition government comprised of 
one of the two main parties and one or two of the smaller 
parties.  According to the latest opinion poll, in the case 
of a Socialist victory without an absolute majority, most PS 
supporters would prefer a minority government, while 22 
percent would prefer a coalition with the Left Bloc.  Very 
few (10 percent of PS supporters polled) would support a 
coalition with the PSD.  Among Left Bloc supporters, 47 
percent would support a coalition with the Socialists to form 
a majority government.  In the event of a PSD victory without 
a clear majority, the option most preferred by voters was a 
coalition with the conservative CDS/PP. 
 
¶14. (SBU) PSD's Arnaut told poloff that the PSD would never 
form a coalition with the Socialists, but would be open to 
forming one with other parties, especially the CDS/PP.  He 
noted, however, that it was too early to speculate on this, 
as he did not anticipate any problem with the PSD forming a 
minority government.  Left Bloc's Fazenda stated that his 
party would never form a coalition with the PSD because the 
PSD is too far right.  Likewise, he said it would not likely 
form a coalition with Socrates, noting that the Socialist 
Party had moved too far to the right over the past 20 years. 
 
¶15. (SBU) PS' Lello maintained that if the Socialists do not 
win a clear majority, they could form a minority government, 
with parliamentary agreements with other parties on a 
case-by-case basis to enact legislation.  He noted that, due 
to significant ideological differences, it would be 
impossible to form a coalition with the Leftist Bloc.  He 
pointed out, for example, that while the PS strives to 
balance the public account, the leftists want to raise 
salaries without regard to the effect on the budget. 
 
¶16. (SBU) CDS/PP's Queiro predicts that the incumbent PS will 
win a plurality but not a majority, in which case the CDS/PP 
may consider forming a coalition with the PSD.  He believed 
it would be the only realistic coalition possible in Portugal 
at this time, but added that it would not be impossible for a 
minority government to rule.  He predicted that the 2010 
budget would pass (as it requires only a simple majority) 
with the abstention of other parties.  He also predicted that 
a minority government would last at least until the next 
presidential elections in early 2011 since the president 
cannot dissolve the Parliament within the first six months 
after elections or within the last six months of his term. 
The earliest that new elections could take place would be in 
mid-2011.  The stability of the new government will depend 
largely on the results of the presidential elections, he 
concluded. 
 
OSCE to Assess Elections 
------------------------ 
¶17. (SBU) An OSCE election assessment team, comprised of 
three two-member teams of legal experts, is in Portugal to 
assess the September 27 elections in seven electoral 
districts and in the autonomous regions of the Azores and 
Madeira.  During a September 18 meeting, Head of Mission 
Jean-Pierre Kingsley told poloffs that a needs assessment 
team visited in June at the invitation of the Portuguese 
Mission to the OSCE to review the political and legal 
framework for the elections.  He explained that this 
first-ever mission in Portugal was a response to Russia's 
complaint that it was being held to a high electoral standard 
while other countries had not been assessed.  Kingsley, who 
did not anticipate finding any significant problems, said 
that the assessment team would not conduct a quantitative 
assessment given its limited size and reach, but would focus 
instead on best practices, including access by the disabled 
to polling sites.  The team will assess the extent to which 
the national framework adheres to OSCE political commitments, 
and will provide a post-election assessment with 
recommendations. 
 
Comment 
 
LISBON 00000510  004 OF 004 
 
 
------- 
¶18. (SBU) With 24 percent of those polled still undecided, 
the election is still up in the air between the ruling PS and 
the opposition PSD, who won the European parliamentary 
elections in June with 32 percent of the vote (compared to 
the Socialists' 27 percent).  Regardless of which party wins, 
the next government may be unstable.  PSD leader Ferreira 
Leite has asserted that "governability" has never depended on 
the composition of the government, whether majority or 
minority; however, Portugal's political history indicates 
otherwise.  Only one minority government (1995-99) completed 
its four-year mandate, and the PSD has ruled with a minority 
government just once (1985-1987).  Regardless of the outcome 
of the elections, GOP cooperation with the U.S. and support 
for the EU and NATO will likely continue unchanged. 
 
 
For more reporting from Embassy Lisbon and information about Portugal, 
please see our Intelink site: 
 
http://www.intelink.sgov.gov/wiki/portal:port ugal 
BALLARD