As Aitor Hernández-Morales over at POLITICO pointed out, Santos’ concession "came as a shock to many because it was delivered at a moment when ballots were still being counted and the Socialists had secured more seats in the parliament than their center-right rivals."
On election night, the PS's leader explained the move by saying that the combined size of the center right and far right (almost 50%) made a left-wing government in Portugal impossible for the time being. He also said that "the PS will lead the opposition", meaning it won't ally with the AD to prevent CHEGA from becoming the largest party in opposition. Likewise, others in the PS pointed out later that the formation of a broad moderate coalition, whether formal or informal, would be undesirable because it would mean that the only opposition force "would be the far-right party". That's all true.
But there may be other, strategic, reasons.
On the one hand, Pedro Nuno Santos may be banking on the weakness of the AD's parliamentary group to approve next year's budget, leaving Luís Montenegro with two options: either he resigns and takes the country to the polls again hoping for a better result, or he has to negotiate piecemeal concessions from CHEGA (which would effectively make them allies). CHEGA's leader André Ventura has already said that he would be open to this approach.
If this were to happen, then Pedro Nuno Santos could convincingly argue that: 1) the AD lied to Portuguese voters when it said “No, means no” about joining forces with CHEGA; 2) a vote for the AD equals a vote for CHEGA so all those who are committed to democracy, rule of law, and fact-based politics should look elsewhere; 3) and the PS is the only party that can offer the much-needed stability to the country.
On the other hand, he may have used this as a preemptive strike against the possible accusation that the PS has sought to undermine the AD government from the get-go. If, and maybe when, the government falls, Pedro Nuno Santos can claim that he gave them the conditions to rule but they wasted them.
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