Portugal in Contemporary Settings

Portugal, an old nation-state with political frontiers unchanged since the late middle ages, was the “ideal-type” of the state envisioned by liberal nationalists. State and nation coincided in conditions of cultural homogeneity. There were no national or ethno-cultural minorities in Portugal, or Portuguese populations in neighboring countries; similarly, Portugal had no religious or ethno-linguistic minorities. Dialects were rare, found only in some areas near the Spanish border. Portugal had no territorial claims in Europe, thus the historical and cultural variables so markedly present in other cases were either negligible or absent in the case of Portugal.

Imperial Background

Portugal’s imperial and colonial past, however, is vital in understanding the country’s twentieth-century history. From the seventeenth century on, Portugal was both an imperial power and a political state in economic dependency of Britain. Tensions with Britain increased dramatically in the 1880s, Britain forced Portugal to abandon its project to unify Angola and Mozambique by threatening to invade the country. This episode gave rise to modern Portuguese nationalism; it provoked the first wave of antiBritish sentiment, cementing what was to become the mainstay of Portuguese foreign policy until the 1970s: the defense of the colonial empire.

Historically, Portugal emerged as a separate country during centuries of struggle with the Spanish provinces of León and Castile. Even hundreds of years after breaking away from Spain for the last time in 1640, fears remained in Portugal that it might one day be swallowed up by the larger and more powerful Spain, perhaps not militarily, but culturally and economically. That sentiment is expressed by the Portuguese proverb that “neither a good wind nor a good marriage ever come from Spain.” Meanwhile, Portugal’s long coast has given it an “Atlantic vocation” and propelled its historic ventures of global exploration.

Geographical Details

Portugal shares the Iberian Peninsula with Spain, although it is only about one-sixth as large as its neighbor. Including the Azores and Madeira, the country has a total area of 92,080 square kilometers. Portugal lies on the westernmost promontory of continental Europe. The rugged Pyrenees Mountains separate Iberia from the heart of the European continent, and Portugal is even further distant across the vastness of Spain. Distance and Pisolation have created in Portugal a sense that it is a part of Europe geographically but apart from it culturally, socially, economically, politically, and even psychologically. Even in the early 1990s, Lisbon was a two-to-threeday drive from Paris.

Portugal is bounded on the west and south by the Atlantic Ocean and on the north and east by Spain. The country’s shape is roughly that of a rectangle, with its short sides on the north and south and its long sides on the east and west. Portugal’s Atlantic coastline is 837 kilometers long; its northern and eastern frontiers with Spain are 336 and 839 kilometers long, respectively.

President of the Portuguese Republic

Center-right politician Marcelo Rebelo de Sousa, a former leader of Portugal’s opposition Social Democrats, is serving as the 20th and current President of Portugal since 9 March 2016. The charismatic 69-year-old law professor became a household name for his thoughtful but entertaining political punditry in the 2000s, earning him the affectionate nickname “Professor Marcelo.” He took 52 percent of the votes with 99 percent of ballots counted, storming to victory in the first round. De Sousa had consistently led in the polls in the run-up to the election. His victory follows the surprise forma tion of a l e ft-wing coalition government after a general election in which the old center-right government lost its majority in parliament.

Portugal’s outgoing president Anibal Cavaco Silva had a turbulent relationship with the new government, led by the Socialist leader Antonio Costa and propped up by the Communist, Left Bloc and Green parties. Silva initially urged Costa to support a centerright administration in return for policy tradeoffs, and subsequently resisted swearing in Costa until he provided guarantees that his government would not breach EU rules. But De Sousa has pledged to fulfill his role in a neutral manner, supporting Costa’s government and serving as a “referee” be tweenwarring pa rti e s. “Without renouncing my ideas, I’ll tr y not to discriminate,” he claimed. “I won’t create any problem, any instability, any criticism of government action.” Voters hope his tenure will bring stability back to the country’s political scene.

In common with many European countries, Portugal’s presidency is largely a ceremonial position. But the incumbent can dissolve parliament, call elections, appoint prime ministers and send legislation to the constitutional court for vetting. That means, however conciliatory his tone, De Sousa could be an important check on the power of the government. He claimed that he would be willing to dissolve parliament if the smooth functioning of Portugal’s parliament and courts is threatened, and said that while antiausterity policies seemed “fair,” they would need “balancing to avoid financial slippage.”

Prime Minister António Costa

The current Prime Minister of Portugal, António Costa took office on 26 November 2015 as the 13th Prime Minister of the Po rt u g u e s e Re p u b l ic . As h e a d o f government, the Prime Minister coordinates the actions of ministers, represents the Government of Portugal to the other bodies of state, is accountable to Parliament and keeps the President informed. The Prime Minister can hold the role of head of government with the portfolio of one or more ministries. Unlike other democracies, there is no limit to the number of terms a person can serve as Prime Minister.

Portuguese Prime Minister António Costa’s appointment comes after his alliance with Communist, Green and Left Bloc parties toppled an 11-day-old conservative minority government in a dramatic parliamentary vote – the shortest administration in Portuguese history. Portugal’s political saga slowly unfolded as the country recovered from a €78bn bailout in 2011, with Costa seeking to allay fears over his vow to “turn the page on austerity”. The centre-right bloc of the outgoing conservative prime minister, Pedro Passos Coelho won the most seats in elections but lost the absolute majority it had enjoyed since 2011. By teaming up the leftist parties managed to assemble a slim parliamentary majority that allowed them to vote out Passos Coelho’s government. The leftist alliance – the first since the birth of democratic Portugal four decades ago – seemed inconceivable as the parties struggled to work out their difficulties, with the President finally naming Costa as premier.

Costa, the former mayor of Lisbon, had insisted his government would meet international commitments on its budget and debts, a year and a half after it exited its bailout programme. He claimed that his government would r un “a soci a list programme” allowing for “a sustainable reduction in deficits and debt”, for which he had to give the President written guarantees that his government would maintain stability and respect European rules.

Costa, after taking office, ruled out leaving the euro or restructuring Portugal’s debt – but has had to negotiate risky concessions with the radical left that had significant impact on his budget. Planned measures taken included raising minimum wage, lifting a freeze on pensions and cancelling pay cuts for civil servants.

Achieving Happiness

Surveys often show the Portuguese rivaling Greeks and Bulgarians for the title of Europe’s gloomiest people. Yet since Prime Minister António Costa took office, it feels like the land of fado and saudade has been popping happy pills. Costa has overseen a return to robust economic growth after a decade of recession and stagnation. The budget deficit is the lowest since democracy was restored in 1974. Unemployment stands in single figures for the first time since the eurozone debt crisis engulfed the country in 2010. Tourism and exports are booming. T h e E u r o p e a n Commission finally removed Portugal from its excessive deficit naughty list, where Lisbon had lingered since 2009.

Adding to the party a t m o s p h e r e , t h i s football-obsessed country was crowned European champion for the first time; crooned its way to victory in the Eurovision Song Contest after 49 years of failure, and got its man placed at the head of the United Nations. The latest Eurobarometer poll had 66 percent of Portuguese expressing satisfaction with the life they lead, double the rate four years before. In fact it is amazing that columnist Miguel Esteves Cardoso wrote in the daily Público newspaper that “All this good news is starting to make me feel ill,” and that “We weren’t built to handle so much happiness.” Costa along with Finance Minister Mário Centeno insist they will continue the balancing act. “We have to continue to be extremely responsible, like we’ve been up until now,” Centeno said in response to calls for a spending spree. “If we resist certain temptations that are being spread around, we’ll end this parliament with all our economic indicators exceeding expectations,” Centeno said in a social media exchange with voters. He did throw a bone to the left in the shape of tax cuts for lowMélange 07 June 2018 Big Story income workers. The government is confident that, despite the grumbling, the far left is unlikely to provoke a crisis.

Despite the spate of good news, the government knows Portugal’s economy remains fragile and vulnerable to external shocks. With that Centeno hopes to persuade the three main international rating agencies to lift their assessment of Portuguese bonds above “junk” level, easing borrowing costs and giving the government more financial wiggle room.

It’s not just the Portuguese who are happy. German Finance Minister Wolfgang Schäuble — who barely a year ago warned that the Socialists’ fiscal laxity was pushing Portugal toward a new international bailout — now hails Lisbon’s progress and dubs Mario Centeno, the Minister of Finance of Portugal, the “Cristiano Ronaldo” of EU finance ministers. Praise from the eurozone’s fiscalhawk-in-chief had fueled speculation that Centeno was in line to replace Dutchman Jeroen Dijsselbloem as president of the Eurogroup of finance ministers, and finally, on December 4, 2017 Mario Centeno was elected as new president of the Eurogroup.

Costa, however is optimistic, and says the country can handle more good news. “There are those who say we’ve had too much good news,” Costa said while addressing a party rally. “Unfortunately, the country has been through such bad times that we need a lot of good news before the country can regain its composure and confidence.”

Economic Situation

Portugal’s financial system is well managed, competitive and healthy and since its membership of the European Union in 1 9 8 6 . A c c o r d i n g t o t h e G l o b a l Competitiveness Report for 2013-2014, published by the World Economic Forum, Portugal was placed 51st on the economic index. However, the financial crisis of 2008 does continue to affect the Portuguese economy and cause a wide range of domestic problems that are specifically related to the levels of public deficit as well as the excessive debt levels. Nonetheless, the government faces tough choices in regard to its attempts to stimulate the economy while it also seeks to maintain its public deficit around the EU average.

The Minister of Economy, António Pires de Lima displayed his proactive attitude by stating that Portugal has technically emerged from recession, but they must continue to be very persistent so this recovery can be consolidated. He also added that the Portuguese economy is experiencing a turning point, and the data confirms that. Portugal continues to grow and expand mainly due to their improved international trade contacts. It is also home to a number of notable leading companies with worldwide reputations, such as Grupo PortucelSoporcel, a major world player in the international paper market; Sonae Indústria, the largest producer of wood-based panels in the world; Corticeira Amorim, the world leader in cork production; and Conservas Ramirez, the oldest operational canned fish producer.

Other main industries contributing to the economy, include oil refineries, cement production, plastic products, textiles, construction, steel, footwear, leather, wine production and of course tourism. The tourism industry is becoming increasingly important to the Portuguese economy especially in the Algarve. A large part of the national income is generated by tourism which is also a valuable source of foreign currency. Although a substantial amount of Portugal is dedicated to agriculture, exports in farming do not make up the majority of the economy as they once did. The country has now become more focused on commerce and the service sector, which includes public service, wholesale and retail trade, real estate, banking and finance. The Portuguese government has put a lot of effort into raising the standard of living and according to the 2014 index of Numbeo, the world’s largest database of countries worldwide, Portugal was placed in the top 25 in terms of quality of life ahead of countries like Spain, Italy, Hong Kong and China.

Data for the first quarter signals that economic growth, while still strong, likely moderated slightly from last year’s rate; in 2017, it shot up to a 17-year high on the back of soaring exports. The most notable signs of a moderation came from a slower pace of expansion in industrial output in the first two months of the year compared to the final quarter of 2018, along with a discernible fall in retail sales growth in February. Surveybased data reinforced the view of a cooling trend; economic sentiment continued to slide throughout the first quarter. Nonetheless, the economy remains resilient, alongside a record-low budget deficit. Finance Minister Mário Centeno presented a 2018–2022 program aimed at fiscal stability, projecting a budget surplus in 2020 that if achieved would end 25 years of uninterrupted deficits.

According to studies, economic growth is projected to remain above 2% in 2018 and 2019, driven by both domestic demand and exports. Consumption growth will remain solid in response to further declines in the unemployment rate and stronger wage growth. Investment will be supported by a pick-up in major export market growth and increased public investment. Increased exports will be matched by higher imports as a result of the pick-up in domestic demand, leaving the current account balance relatively unchanged. The stance of fiscal policy is projected to be mildly expansionary in 2017 and 2018. Any further fiscal expansion should be avoided given the need to reduce public debt, but there is scope to make fiscal policy more growth-friendly by adjusting the composition of spending and taxes. Productivity-enhancing reforms that ease entry barriers to professional services would reinforce the strength of the recovery. The private sector, especially corporations, remains heavily indebted despite having deleveraged over the past four years. This adds to the vulnerability of the banking system which continues to suffer from weak profitability and non-performing loans. Po l i c y me a s u r e s t h a t s u p p o rt t h e development of distressed debt markets would reduce financial vulnerabilities, support long-term growth and bolster fiscal stability.

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Amna Malik
About Amna Malik 48 Articles
Author is the President, Center of Pakistan and International Relations (COPAIR) and Editor-in-Chief of ‘Mélange int’l Magazine’ and ‘ The Asian Telegraph’.