Political Turmoil in Portugal: Family Business Causes Government Downfall

Portugal, long perceived as a stable European nation, has suddenly found itself engulfed in a political crisis that raises serious concerns, particularly for international observers, including those in Germany. The conservative minority government led by Prime Minister Luís Montenegro has collapsed due to questionable dealings linked to his family's business.

In a dramatic turn of events, the Prime Minister faced mounting pressure from the opposition, which accused him of conflicts of interest and favoritism. This culminated in a no-confidence vote in the Assembléia da República in Lisbon, where the Prime Minister lost decisively with 144 votes against 88.

The fallout from this parliamentary defeat means that Portugal is likely heading towards early elections, anticipated in May. President Marcelo Rebelo de Sousa has the option to appoint another member from the ruling coalition, the Democratic Alliance (AD), or the opposition leader, Pedro Nuno Santos of the Socialist Party (PS), to form a new government. However, it is widely expected that he will opt for elections on either May 11 or 18.

In light of the situation, the President has hastily summoned party leaders for consultations and is set to meet with the State Council, a body that has advised Portuguese presidents during crises since 1845. The outcome of these discussions is expected by Friday, but regardless of the decision, the political landscape in Portugal appears uncertain.

Many are concerned that the political instability might benefit the far-right party Chega, which is currently positioned as the third-largest party in parliament. Chega's leader, André Ventura, has already branded the situation as a "theater," while commentators predict that this political turmoil could solidify Chega's standing in the upcoming elections.

This unexpected crisis is particularly troubling for Germany, as Montenegro was viewed as a reliable partner in Brussels. The caretaker government, now with limited authority, is expected to halt many initiatives, including the planned privatization of the national airline TAP, which has attracted interest from Lufthansa.

Only a short time ago, Portugal was experiencing economic growth and record-low unemployment rates, following a successful transition of power in the spring of 2024. However, the recent allegations against Montenegro have quickly transformed the political climate.

The Prime Minister founded a consultancy and real estate firm, Spinumviva, in 2021, which has been accused of gaining contracts through his position. Montenegro has denied any wrongdoing, asserting that the company is now owned by his sons and has not disclosed further details about its clients.

Despite surviving two previous motions of no confidence, Montenegro chose to pose the trust question to the parliament as the opposition pushed for a formal inquiry into the allegations. He referred to the upcoming elections as a "necessary evil," suggesting that a period of instability is preferable to a prolonged decline.

Political analysts believe that Montenegro's decision to pursue elections may stem from a desire to avoid a lengthy investigation, especially since current polls indicate that his coalition might perform better than in the previous elections. Nevertheless, many observers question whether he can achieve a successful political comeback.

This would mark the third parliamentary election in just over three years, following the resignation of former Socialist Prime Minister António Costa in March 2024 amid corruption investigations. Although Costa has since been cleared of wrongdoing, his departure initiated a series of political upheavals.