Portugal's opposition Socialists, far-left to hold coalition talks
By Andrei Khalip LISBON (Reuters) - Portugal's Socialists opened the door to talks with the hard left on a majority left-wing government on Wednesday, complicating efforts by the outgoing centre-right coalition to form a minority administration. Prolonged political uncertainty threatens to derail a fragile economic recovery in the euro zone country, which endured years of deep spending cuts and big tax hikes after being bailed out by its European Union partners and the International Monetary Fund. Prime Minister Pedro Passos Coelho's centre-right coalition won most votes in Sunday's national election but fell well short of a parliamentary majority. However, Passos Coelho can still lead a minority administration, seeking periodic support for legislation from the Socialists even if they do not join his government formally. The coalition could pass laws provided the Socialists abstain. Passos Coelho, now serving as caretaker prime minister, invited Socialist leader Antonio Costa to talks earlier on Wednesday. But Costa said his party would not enter a formal coalition government with the centre-right. Instead, in a departure for his moderate party, he said he would hold talks with the leaders of two anti-austerity far-left parties. Together with the Socialists, they could muster a parliamentary majority. "I don't think it would be healthy for the main political forces to share government responsibilities, except in emergency situations, like if Martians invade," Costa told reporters, adding: "We have the mandate to talk to all political forces without exception." Costa was due to meet Communist leader Jeronimo de Souza later on Wednesday and Left Bloc leaders on Thursday. Analysts said the Socialists were still most likely ultimately to back Passos Coelho, even though the party is deeply divided after its election defeat. Many lamented its inability to capitalise on the pain of austerity. "The Socialists will talk on the right and left because they want to be seen as the boss of the political wheel," said political analyst Antonio Costa Pinto. "That could lead to long talks and some uncertainty about a formal agreement. But ultimately the Socialists will support the government, even if there's no formal deal," he said. In Portugal's new parliament Passos Coelho's centre-right grouping holds 104 seats in the 230-seat assembly, the Socialists 85 seats, the Left Bloc 19 and the Communists 17. The Socialists want to ease austerity but back budget goals agreed with the European Union. Both the Communists and the Left Bloc back a renegotiation of Portugal's debt load, but the Left Bloc has dropped its opposition to the euro currency. President Anibal Cavaco Silva, who on Tuesday gave Passos Coelho the mandate to form a new government, has urged all political parties to show a spirit of compromise. Passos Coelho said he hoped to hold talks with Costa later this week. (Editing by Axel Bugge and Ruth Pitchford)
