Portuguese PM Guterres resigns

Guterres is widely credited with returning the Socialists to power in 1995

LISBON, Portugal -- Portugal's Socialist prime minister Antonio Guterres has tendered his resignation to President Jorge Sampaio after a drubbing in local elections, paving the way for early national polls.

"I requested this audience to present my resignation from the post of prime minister," Guterres told journalists on Monday after meeting Sampaio.

He declined to say whether his resignation had been accepted, though Sampaio was expected to do so.

Portuguese electoral law provides for the president to dissolve parliament and call for a vote within 60 days, after prior talks with political parties and the holding of a council of state.

The local elections were a triumph for the Social Democrats, headed by former foreign minister Jose Manuel Durao Barroso.

They took mayoral offices in most of Portugal's biggest cities on Sunday, including the capital Lisbon, the northern industrial city of Porto and the Lisbon suburb of Sintra.

Partial results showed Guterres' socialists won just 98 of 308 councils in Sunday's elections, compared to the 141 won by the main opposition Social Democrats, according to the National Electoral Commission.

"This defeat is my defeat," Guterres told a news conference earlier. Sunday's ballot had been seen as a test of his popularity as prime minister.

Guterres is widely credited with returning the socialists to power in 1995 after 10 years in the opposition. But the opposition had profited from waning support for the governing party midway through its second consecutive term in power.

"The country has voted for change," Social Democrat leader Jose Durao Barroso said.

Following Guterres' resignation, it is not clear whether the centre-left socialists would elect a new leader as prime minister, or whether the president would call an early general election. The election is now scheduled for 2003.

Observers say the two parties have few differences. They both support free-market policies, further European Union integration and the war on international terrorism.

However, voters had been expected to punish the ruling socialists for their perceived economic mismanagement and clumsy handling of recent high-profile issues.

The government twice had to amend this year's state budget after embarrassing economic miscalculations. It recently revoked a tough new law on drink driving, retreating amid broad protests and losing credibility.

The socialist government has taken the blame for inflation, which has risen to 4.3 percent from 2.9 percent last year, obliging the government get tough on demands for public-sector pay raises.

Portugal's track record in the European Union has also hurt the socialists.

The government had promised to make up the gap in living standards between Portugal and its wealthier EU partners within a generation.

Yet productivity is just 55 percent of the EU average, still the lowest in the 15-nation bloc, according to EU statistics.

The socialists also faced allegations of patronage and corruption.