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Socialist leader and Prime Minister Jose Socrates, who lost his absolute majority in parliament, is now faced with the choice of governing alone or building a coalition in a more fractured chamber.

Socrates hailed as "extraordinary" his party's victory on Sunday in securing 36.6 percent of the vote against just 29 percent for the center-right Social Democrats. Socrates said the win amounted to a victory for tough reforms and social justice.

The Socialists have 96 seats in the 230-seat parliament, compared to 121 previously. The main opposition party, the center-right Social Democratic Party (PSD), has 78 seats. Four more seats representing Portuguese citizens residing abroad still have to be counted. The result will be known on Oct. 7. The four seats have traditionally been split between the Socialists and the PSD.

The general elections unveiled a major lack of confidence among voters who fear losing their jobs. Portugal's unemployment rate of 9.1 percent is at a 22 year high and climbing. The public deficit is expected to hit nearly 6 percent of GDP this year.

Socrates has pledged to maintain his course and plans to talk all parties into forming a coalition. If he fails, he will have to govern with a minority cabinet and reach agreements with parties on both the right and the left on a case-by-case basis. That will be difficult. 

But who to govern with?

All opposition parties in parliament gained extra seats in Sunday's election. The biggest gainer was the Left Bloc, a relatively new party that targeted disenchanted former Socialist voters. It doubled the number of its seats to 16. The Left Bloc is the only party so far to have ruled out any post-election deal with the Socialists.

"From now on they (the Socialists) can no longer impose reforms such as cuts in pension rights, without facing a strong left opposition in parliament," said party spokesman Francisco Louca.

Then there are the Communists who secured 15 seats. But Socrates will have similar troubles introducing reforms with them.

Bildunterschrift: Großansicht des Bildes mit der Bildunterschrift:  Opposition leader Leite's party lost on Sunday, but could win big in upcoming local elections "The programs of the Communist Party and the Left Bloc make it impossible for them to reach any stable agreement" with the Socialists, said Antonio Costa, the director of the business daily Diario Economico.

"But if he chooses the Popular Party as partner, the left-wing of his party will make life very difficult," said Costa.

And will any coalition last?

The relative immaturity of Portuguese democracy – established three and a half decades ago – also means there's no tradition of stable minority governments, said political analyst Antonio Jose Teixeira, of news channel SIC Noticias.

"Both on the left and the right, no one is going to do the Socialists any favors,” said Catholic University political science professor Miguel Morgado.

Meanwhile Manuela Ferreira Leite, the opposition leader of the Social Democratic Party, has accepted responsibility for her party's defeat.  Her job is safe for now, but the party must present a united front for local elections taking place nationwide in two weeks' time. The Social Democratic Party is expected to win there thanks to its strong grassroots base.

wl/AP/Reuters/AFP/dpa
Editor: Stephanie Siek