Portugal's centre-right Democratic Alliance (AD) won Sunday's general election by a slim margin and is preparing to govern without an outright majority as the far-right Chega warned of instability if it is not included in government.
With 99.1% of the vote counted, the AD won 79 seats in the 230-seat legislature, followed by the Socialists with 77 seats, prompting the latter to concede defeat.
Chega, meaning "enough", came third, quadrupling its parliamentary representation to 48 lawmakers after campaigning on a clean governance and anti-immigration platform.
AD leader Luis Montenegro told reporters on Sunday that he expected President Marcelo Rebelo de Sousa to formally invite him to form a government.
Rebelo de Sousa, who will meet with political parties from Tuesday until March 20, told Expresso newspaper on Friday he would do everything he could to prevent Chega from gaining power. Those remarks drew criticism as the head of state is mandated to remain neutral.
Chega's leader Andre Ventura told reporters the vote clearly showed that the country wants a government of the AD with Chega.
The outcome was broadly in line with pre-election opinion polls but the AD's victory was significantly smaller and Chega's growth was larger than predicted, political scientist Andre Azevedo Alves told Reuters.
Alves, a professor at Lisbon's Catolica University and St. Mary's University in London, added that the fragility of an AD government due to its reliance on either the PS or Chega to pass legislation made it unlikely to last for several years.
Javier Rouillet from rating agency DBRS Morningstar warned that if the new government was unable to pass legislation, another round of elections could be held later this year or in early 2025.
Chega's surge was boosted by widespread dissatisfaction with the mainstream parties and Ventura's communication skills, he said, factors that could help it garner even better results in the European Parliament (EP) elections.
"Political disaffection was brewing for a very long time," said political scientist Pedro Magalhaes, at the Lisbon's Institute of Social Sciences (ICS). "But there was no political supply to address this political demand."
Marina Costa Lobo, who heads ICS, said she believed Montenegro would keep his word and not strike a formal deal with Chega but there might be "piecemeal" agreements between the two going forward.
"It's difficult to predict Chega's behaviour because they're an anti-system party," she said, adding the far-right's success in Portugal was a harbinger of what can be expected in the EP election in June.
'OUT OF THE SYSTEM'
Eurointelligence consultants said the result marked a new political chapter in Portugal after alternate governance by two mainstream parties for the past 50 years.
"We don't know who'll be in charge of the country, the far-right has little or nothing to offer," PhD student Jorge Catanheira, 29, told Reuters.
The election result underscored a political tilt to the far right across Europe and a dwindling of Socialist governance.
Chega has since 2020 been part of the European Parliament's Identity & Democracy group, which is expected to see gains in June.
Spain's far-right VOX and Matteo Salvini, who leads Italy's co-ruling party Lega, congratulated Ventura.
Portugal's PSI (.PSI20) stock index fell 0.3% at open, in line with a decline by European peers, before flattening out.
"The impact of the elections on the market turned out to be nil," XTB analysts said in a note.
Under Socialist leadership since 2015, Portugal has grown at solid annual rates above 2%, except for the pandemic-induced slump of 2020, but many struggle to make ends meet due to low salaries and a housing crisis.
Voter turnout was 66.23%, the highest in nearly three decades.
Magalhaes said it was possible turnout reached such levels because voters who had been "out of the system" came back to support the radical right.
