Letter from Lisbon: A writer takes stock of Portugal’s bust-and-boom years following the financial crisis, and wonders whether the current recovery will be the one that sticks

YANN CŒURU

When the financial crisis hit Portugal in 2010, it marked the end of the idea that we were on the same economic footing as northern Europe. I was born during a time of “fat cows,” which began when Portugal joined the European Union in 1986. For the next 14 years, it was easy for the Portuguese to access credit for vacations or houses or cars, or, really, anything else. Then, in 2011, the country nearly defaulted on its debts, we received an $83-billion bailout from the European Union, and the age of austerity set in. The government slashed public-sector pay, pensions, and benefits. In 2013, unemployment peaked at nearly 18 percent. Members of my generation, the “most educated in Portugal’s history,” moved abroad or worked for minimum wage—less than $600 a month. My parents had always wanted me to live nearby, but one day they told me it was time for me to leave. Not long after, I went to the U.S. to study. When I returned home to visit in 2015, it seemed as if the country was on the brink of change. Serious political conversations were taking place in the streets, and, fed up with austerity, people spoke anxiously about the upcoming election.

Fast forward to now: Portugal is enjoying a kind of renaissance. Unemployment is below 10 percent, and our year on year GDP growth has outpaced the eurozone average. Tech startups are mushrooming, more than 11 million tourists visited this year, and areas that were previously abandoned are being revived. Madonna, John Malkovich, Monica Belluci, Michael Fassbender, Eric Cantona, and Christian Louboutin all recently bought property in Portugal. (Madonna’s complaints about the difficulties of finding a house in Lisbon were even relayed to the public via breaking news alerts.) Portugal has “turned the page on austerity,” said Prime Minister António Costa, whose Socialist party now holds a 10-point lead over the center-right opposition.

Pundits on the left have cited anti-austerity politics as the reason behind this change in fortune. As many social democratic parties across Europe struggle for votes, the Portuguese Socialist Party’s political success is the result of an uneasy partnership between normally warring left-wing parties, who in 2015 called a truce to prevent a minority right-wing coalition from taking office. The gambit worked: The economy steadied, and Costa is enjoying a 65.8 percent approval rating. Local and international politicians are even toying with the idea that the Portuguese model could be exported. Last summer, the country hosted delegations of European leftists, including former French presidential candidate Benoît Hamon, Italian EU parliamentarian Gianni Pittella, and members of the Dutch Labor Party. “I believe the Portuguese political solution is both specific and exportable,” João Galamba, a socialist parliamentarian, told World Policy Journal. “Even if the Portuguese circumstances are somewhat unique, the meaning of this experience is a lesson for others.”

Yet not all economists are convinced that the coalition is responsible for Portugal’s economic boom. Nor do locals see it as a long-term fix. At dinner parties, people talk of a “honeymoon period,” suggesting the glory days won’t last. There are self-deprecating jokes about affected Portuguese attempts at cosmopolitanism and our infamous tendency to accrue debt. Portugal’s coalition remains fragile at best, raising the questions: Is the economic revival sustainable? And if it is, to what extent does it depend on politics?

In 2000, social democratic or socialist parties helped make up the ruling coalitions in 10 of the then-15 European Union countries. Then, the financial crisis forced most social democratic parties in Europe to shift right and embrace austerity. In 2017, center-left parties lost power in all but six countries. The waning of the center-left across Europe has meant that many establishment parties have become less significant in countries like Greece...