Opposition leader in pre-election hot water for lauding Portugal's progress

LISBON (Reuters) - Portugal's main opposition Socialist candidate for prime minister has drawn criticism within his party and ridicule by the ruling coalition after lauding the country's progress over the past four years - none of it under the Socialists.

The Socialists lead in opinion polls before the autumn general election but their support has levelled off short of a majority after a jump late last year when they picked popular Lisbon Mayor Antonio Costa as their leadership candidate.

Costa made his comments last week at an event for Chinese businessmen and they were not meant for broader audiences. But a video recording of Costa posted on Wednesday on the Facebook page of Nuno Melo, a European parliament deputy for the rightist CDS-PP party, provoked sharp reaction by Thursday.

At the event to celebrate Chinese New Year held in a casino on Feb. 19, Costa thanked Chinese investors for "making themselves present at a difficult time when many did not believe the country had the conditions to overcome its crisis".

"They came and gave a great contribution for Portugal to be in a situation in which it is today, very different from that of four years ago," Costa said.

Chinese firms - mostly state-owned giants like China Three Gorges and China State Grid - have snapped up large chunks of state property in Portugal's privatisations since 2011.

One of the Socialist Party's founders, Alfredo Barroso, said in an online post he was quitting the party over Costa's "shameful remarks that ... disrespected hundreds of thousands of unemployed and around two million Portuguese on the verge of poverty."

Despite anti-austerity talk by the Socialists, analysts expect them to continue budget consolidation if they win the election. The previous Socialist government collapsed amid a debt crisis in March 2011, when it was forced to request an international bailout to stop the country going bankrupt.

The centre-right coalition government elected in 2011 has imposed painful austerity including tax hikes, wage and pension cuts that stoked the worst recession since the 1970s. But Lisbon exited the bailout last May and the economy is growing again.

CDS-PP's Melo said that Costa acknowledged the progress "after months of criticising the government's strategy that he said had only caused unemployment, economic paralysis and emigration en masse. Better late than never."

Paulo Rangel from the main ruling Social Democratic Party said the remarks showed that Costa "has one discourse for domestic consumption and another for the outside. Enlightening."

(Editing by Axel Bugge and Mark Heinrich)

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