Portuguese Prime Minister Antonio Costa resigned yesterday, hours after prosecutors detained his chief of staff in an investigation into alleged corruption in his administration’s handling of lithium mining and hydrogen projects.
Costa, who prosecutors said was the target of a related investigation, announced the decision in a televised statement after meeting President Marcelo Rebelo de Sousa.
He said his conscience was clear, but he would not stand as candidate for a fourth time as premier.
“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.
It is up to the president now to decide whether to allow Costa’s Socialists, who have a majority in parliament, to form a new government or to dissolve parliament and call an election.
Parliament was due to vote on the 2024 budget bill later this month.
“It is inevitable that there will be elections after the sudden death of the government,” said political scientist Adelino Maltez. Antonio Costa Pinto of Lisbon University, did not rule out another Socialist premier taking over, but also said that a snap election was the most likely option.
Portuguese stocks fell about 3% and the closely-watched gap between its 10-year government bond yield and that of euro zone benchmark German Bund widened to 69 basis points from 65 bps on Monday.
The prosecutor’s office said in a statement earlier yesterday that five people had been detained as part of the investigation, including Vitor Escaria, Costa’s chief of staff, whose offices had been searched along with several government buildings.
It also said Infrastructure Minister Joao Galamba and the president of the environment agency APA, Nuno Lacasta, were formal suspects and will appear before a judge.
Galamba’s office and APA did not reply to a request for comment.
Prosecutors are investigating alleged corruption and influence peddling in the Barroso and Monatelgre lithium exploration concessions in northern Portugal, a project for a hydrogen plant in the port of Sines and a mega data centre investment there.
They said they had become aware that the suspects used Costa’s name and authority to “unblock procedures” related to the deals and the Supreme Court would look into Costa’s possible role in the deals.
Costa said he was “fully available to cooperate” with the justice system.
“At stake may be...facts capable of constituting crimes of malfeasance, active and passive corruption of politicians and influence peddling,” the prosecutor’s office said.
With more than 60,000 metric tonnes of known lithium reserves, Portugal has been seen central to Europe’s efforts to secure more of the battery value chain and cut reliance on imports.