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At Lisbon's Stadium of Light last summer, the euphoria began to fade as soon as the final whistle blew. Portugal had won plaudits both for its staging of the Euro 2004 soccer championships and for making the play-off, but Greece ruined the home team's title dreams. Today, the Portuguese are back to being melancholy, their cheer dissipated less by football failure than the fact that they face elections on Feb. 20 in a land where the lights seem in danger of going out.

More than 11 million tourists a year continue to provide Portugal with some crucial cash flow, but the state of the country is less than picturesque. Its budget deficit remains outside European Union limits; hospital waiting lists grow ever longer (several years for surgery in the north). The once vibrant textile industry is shedding workers at a time when more than 400,000 Portuguese can't find jobs. Worst of all, 4.5 million people, nearly half the population, depend to some degree on the state budget.

Two men are competing for the privilege of tackling this mountain of problems: the incumbent Prime Minister, Pedro Santana Lopes, and the new Socialist leader, José Sócrates. A poll in the Portuguese weekly Visão (Vision) shows little enthusiasm for either. Only 25% of respondents considered their Prime Minister to be competent, while 42% think his challenger might be. When it comes to simpatia, the tables are turned: 26% for Sócrates, 40% for Santana Lopes. Media lawyer and commentator Francisco Teixeira da Mota says Sócrates "comes across as the party man, and very cold." Santana Lopes he describes as prone to tangents, always looking for the latest buzzword. "It's good that in their one TV debate their answers were held to about two minutes," says left-leaning Teixeira. "If you let Santana Lopes talk for five, you start to trust him."

Voters were not expecting to confront this choice anyway until next March, when elections were due. But last November President Jorge Sampaio stepped in to dissolve parliament. His move was prompted by increasing instability after the Prime Minister and leader of the center-right Social Democratic Party (PSD), José Manuel Durão Barroso, resigned to become President of the European Commission. Santana Lopes took over and had been in office for only four months when Sampaio decided to end the bickering — much of it within Santana Lopes' own ranks — in the hopes that a fresh government might focus on the job in hand.

Both parties promise to do so by tackling unemployment and long-overdue structural reforms, but — unprecedented in Portugal — sexual matters are also on the agenda. A comment by Santana Lopes while meeting a women's group has been interpreted by the Portuguese media as an insinuation that Sócrates may be homosexual. Santana Lopes quipped that while he fancies women, "others are pushed in other directions." Santana Lopes says it's a misunderstanding; the Socialists are crying foul.

This sideshow, and a Socialist promise to hold a referendum on abortion, which triggered the Catholic Church's ire, has diverted attention from tougher issues, like the fact that Portugal has the lowest workplace productivity in the European Union and one of the highest rates of secondary school dropouts. Outgoing Finance Minister António Bagão Félix calls the level of state dependency frightening. "About 95% of our tax revenues go on civil service wages, pensions and interest on public debt," he says, and some of Portugal's football clubs owe nearly j20 million in back taxes. Several of the 10 stadiums built or refurbished for Euro 2004 can't make ends meet.

Polls give a narrow lead to the Socialists but it may not be enough to forge a majority government. Santana Lopes' PSD, with 105 of the parliament's 230 seats, has been governing with the CDS/PP group, which has 14. The Socialists have 96 seats now. If Sócrates can't push them past the crucial 116 mark, he will have a tough task cutting any deal with the Left Bloc, the Greens or the Communist Party, who total 15 seats. None is likely to accept his proposal to trim the corpulent civil service by 75,000 people over four years.

Santana Lopes admitted to TIME last week that he is bitter about having to run after so little time in office. Like Sócrates, he says Portugal desperately needs a government with a majority. Would he be prepared to join his rival in a crisis government of national unity? He smiled, conceding that if nobody can govern alone, "everything's on the table." Asked if whoever wins isn't being handed a poison chalice, his smile broadened. "A lot of people have been telling me so."

• ROD USHER
• Or rather its lack thereof, is the problem. Does either candidate in next week's election have the solution?