ANALYSIS: Portugal re-elects economist Cavaco to tackle crisis

By Sinikka Tarvainen Jan 24, 2011, 10:28 GMT

Lisbon - Portuguese voters Sunday re-elected a president representing economic know-how and continuity in a vote overshadowed by financial turmoil and the threat of an international bailout.

Conservative incumbent Anibal Cavaco Silva, 71, won a second presidential term with a resounding first-round majority of about 53 per cent, according to preliminary results.

Cavaco's main challenger was leftist poet Manuel Alegre, who had the backing of Prime Minister Jose Socrates' Socialists and the more radical Left Bloc. He took nearly 20 per cent of the vote.

However, the president's victory was watered down by record-low turnout of about 47 per cent.

The elections took place against the backdrop of what some analysts describe as Portugal's worst economic crisis since the 1974 Carnation Revolution ended a decades-long corporatist dictatorship.

The economy rose out of recession in 2010, growing at a rate of 1.3 per cent, but will contract again this year, according to the Bank of Portugal's forecast.

The Socrates government has adopted tough austerity measures, including a 5-per-cent cut in public salaries and a hike in value- added taxes, in an attempt to bring down the budget deficit from about 7.3 per cent of gross domestic product in 2010 to 4.6 per cent this year.

The government is trying to ward off what many Portuguese would regard as a humiliating bailout by the European Union and the International Monetary Fund.

The austerity policies, however, have hit the Portuguese hard. They even have prompted people living in border areas to shop for petrol and some foodstuffs in neighbouring Spain, where prices are lower.

The austerity is seen as penalizing the poor and middle classes rather than the rich. Rampant unemployment - expected to rise from the current rate of nearly 11 per cent - will deepen class differences even more, analysts said.

'We have 2 million poor people in a population of 10 million. It is unthinkable,' philosopher Jose Gil complained.

Alegre, who campaigned on promises of a fairer society against what he depicted as the reactionary policies of the right, tried to tap into that discontent.

Yet his chances were undermined by the differences between the two leftist parties backing him, as well as the splitting of the anti- Cavaco vote among a field of five challengers.

The president's reputation was tarnished by allegations that he committed irregularities when selling shares of a holding company of the troubled BPN bank in 2003, and when buying a holiday home in the Algarve region.

Many voters, nevertheless, saw Cavaco Silva as the best candidate to help to strengthen the economy, even if the president's role is largely ceremonial.

The uncharismatic former economics professor is credited with a good economic performance while he was prime minister from 1985-95, though critics say he laid some of the foundations for the current crisis.

Cavaco Silva was helped by Portugal's tradition of allowing presidents to serve consecutive terms.

His big victory was seen as yet another blow to Socrates' already beleaguered minority government, which the president blamed for the country's economic woes during the electoral campaign. Those comments were expected to make Cavaco Silva's already bumpy coexistence with the Socialist government even more difficult.

However, Cavaco has said he will not use his power to dissolve Parliament and call early elections, despite calls for such a move if Socrates is forced to seek an international bailout.