By Shrikesh Laxmidas
LISBON, March 23 (Reuters) - Portugal's parliament is expected to reject the government's latest austerity measures on Wednesday, setting the stage for the possible collapse of the minority Socialist administration.
Prime Minister Jose Socrates has said he will resign if the plan is defeated. He has said its rejection would force the debt-laden country to follow Greece and Ireland and seek an international bailout, which he opposes.
Following are possible scenarios for Portuguese politics in the next few months:
PARLIAMENT REJECTS AUSTERITY MEASURES
Opposition parties have complained about not being consulted about the measures before their presentation to Brussels on March 11 and have said the additional spending cuts and a levy on pensions would mean severe sacrifices for the Portuguese.
All opposition parties have proposed resolutions calling for the rejection of the measures which means, barring any surprise last-minute talks to avert the crisis, the government's plan will be blocked.
The Socialists have 97 of parliament's 230 seats and now have no allies on whom they can rely. The plan needs at least 116 votes to pass.
LAST-MINUTE TALKS AVERT CRISIS
The Socialist government says it wants to negotiate the measures with the opposition to prevent a damaging crisis, but the other parties have so far rejected the offer.
Analysts say there has been limited room for dialogue with the main opposition Social Democrats (PSD), who lead in opinion polls and are seen as using the chance to come to power.
President Anibal Cavaco Silva said his ability to negotiate a compromise was limited by the government's sudden presentation of the measures and rapid harsh reaction by the other parties.
PM SOCRATES RESIGNS AFTER MEASURES REJECTED
Socrates, in a second term that was set to end in 2013, has threatened to resign if the opposition rejects the measures.
Many analysts speculate he will present his resignation to Cavaco Silva on Wednesday at their weekly 1900 GMT meeting.
Some analysts say he will only quit after attending the crucial European Union leaders' summit starting on Thursday, while others say the president would only be likely to accept Socrates' resignation after the summit.
In either case, the president is likely to call the state advisory council and the heads of the political parties next week to discuss the next steps to solve the crisis.
Cavaco Silva could ask the parties to agree on a new prime minister and a coalition government without calling an election, but consensus is unlikely to be reached as Socrates and PSD leader Pedro Passos Coelho have indicated a general election would be the most legitimate solution to the stand off.
SNAP ELECTION AND CARETAKER GOVERNMENT
Seen as the most likely outcome, the president calls a snap election and dissolves parliament. An election can be held 55 days after it is called at the earliest, meaning the country would not go to the ballots before late in May.
According to Portugal's constitution, the government would have to stay on as a caretaker administration, its functions reduced to acts strictly necessary to manage public matters.
Parliament would remain in place until after an election.
Political analysts say a caretaker government would be unable to take major initiatives on its own without consulting the parliament.
Many economists see Portugal's record-level bond yields as unsustainable and say the debt-laden country will have to resort to the rescue mechanism.
Market sources say they are concerned about a period of inaction until a new government takes over, but add the political volatility caused by the row over austerity has already been priced in to a certain degree.
The PSD has been ahead in opinion polls for several months now, with around 35-38 percent of voting intentions, but rarely nearing the threshold needed to win an absolute majority.
The centre-right party is broadly committed to cutting the budget deficit and has not ruled out requesting an international bailout.
Analysts say the Socialist election machine should not be underestimated. Socrates, an experienced and fierce campaigner, has said he would stand in a new election. His party still has around 25-30 percent of voting intentions in recent polls and could still thwart PSD's plans. (Additional reporting by Andrei Khalip; Editing by Axel Bugge and Sophie Hares)