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Monday, February 26, 2024

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Portuguese PM Resigns Over Probe In Lithium Mining & Hydrogen Production

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Antonio Costa, the prime minister of Portugal, resigned on Tuesday, only hours after his chief of staff was arrested by prosecutors for suspected wrongdoing in the way his government handled deals involving lithium mining and hydrogen production.

After meeting with President Marcelo Rebelo de Sousa, Costa—who the prosecution said was the subject of a parallel investigation—announced the decision in a broadcast statement.

He said that he had a clear conscience but that he would not run for prime minister a fourth time.

“The dignity of the functions of prime minister is not compatible with any suspicion about his integrity, his good conduct and even less with the suspicion of the practice of any criminal act,” Costa said.

The president will now have to decide whether to dismiss parliament and hold fresh elections, or to enable Costa’s Socialists, who hold a majority in parliament, to establish a new government.

Carlos Cesar, the president of the Socialists, declared that his party was ready for “any scenario,” while Luis Montenegro, the head of the main opposition Social Democrats, declared that an early election was something he was ready for.

“The degradation of the government necessitates that no more time is wasted,” Montenegro said.

Later this month, parliament was scheduled to vote on the budget measure for 2024. There are concerns that the political unrest may affect both the adoption of the budget and the start of the privatisation process of TAP, the national airline of Portugal.

Political analyst Adelino Maltez stated, “It is inevitable that there will be elections after the sudden death of the government.” Lisbon University’s Antonio Costa Pinto acknowledged that a sudden election was the most likely scenario, but he did not rule out another Socialist prime assuming power.

The highly observed yield differential between Portugal’s 10-year government bond and the benchmark German Bund for the euro zone increased to 69 basis points from 65 bps on Monday, while the country’s equities experienced a roughly 3% decline.

Vitor Escaria, Costa’s chief of staff, was among the five individuals held as part of the inquiry, according to the prosecutor’s office, which had earlier on Tuesday disclosed that various government buildings and his offices had been searched.

Additionally, it stated in a statement that Nuno Lacasta, the president of the environmental agency APA, and Joao Galamba, the minister of infrastructure and former energy secretary, were formal suspects and would appear before a judge.

Prosecutors are looking into claims of influence peddling and bribery in the lithium exploration concessions of Barroso and Montalegre in northern Portugal, as well as a mega data centre investment and a hydrogen plant project in the port of Sines.

They said that the Supreme Court will investigate Costa’s potential involvement in the agreements and that they had learned that the suspects had “unblocked procedures” connected to the deals by using his name and power.

“Fully available to cooperate” with the legal system, Costa declared.

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