a

1

special
feature

the

Sunday

doily

on
the problems
of Portugal

Number 70 Page Four Sunday, Dtcember 10

, 1972

Portugal
big pro

today: A little

country with

blems

and

an

identity

crisis

By CHARLES VANHECKE

Lisbon
"PORTUGAL is a small country," say
the Portuguese, "but it has big prob-
lems." A few statistics suffice to indi-
cate the modest condition of Europe's
land's end: 9,500,000 inhabitants, an
area of 35,000 square miles, and a stand-
ard of living only a quarter of the aver-
age for the six-member Common Mar-
ket.
Portugal's problems are out of all
proportion to its size. The African wars
use up 42 per cent of the budget and
keep 150,000 men, in the prime of their
lives, away from the country for four
years. While emigration had fallen con-
siderably by 1970, when only 54,000 peo-
ple left, Portugal has nonetheless lost
more than 800,000 in ten years.
This has correspondingly weakened
its productive capacity. Unlike its two
southern European cousins, Spain and
Italy, it has experienced no "economic
miracle." In view of its initial low level
it ought, surely, to have achieved a
growth rate higher than that of recent
years. This averaged 6.3 per cent during
1964.1969 and slipped to about 5 per cent
in 1971. Present indications are that 1972
will hardly be any better.
The Portuguese still say that "even
our millionaires are small: they're vest-
pocket millionaires." The jibe is aimed
mainly at the timidity of business execu-
tives rather than at the actual dimen-
sions of business firms themselves. For-
ty years of protectionism under Antonio
de Salazar created entrenched monopo-
lies which had an intimidating effect on
employers. But Salazar is dead. And
former Secretary of State for Industry,
Rogerio Martins, had reason to be
pleased-before the August 10 Cabinet
reshuffle ousted him from the Gov-
ernment - at having put through a
new industrial law this year, designed to
liberalise the economy.
It needed liberalising, too, for it was
subject to stifling "industrial condition-
ing." Setting up a new business involved
a long procedure which enabled compa-
nies in the sector concerned - in other
words; competitors - to fight it. The
Government had the final say, but the
borderline between Government and
vested interests was, and remains, all
too vague.
During the first phase of industrialisa-
tion, perfectionism of this kind was prob-
ably necessary. Mr. Martins used to say
that "Salazar gained power in a coun-
try with a backward agriculture and a
non-existent industry." But there is wide
agreement nowadays that the protection-
ist phase lasted too long, and that the
father of the "Estado Novo" died "ten
years too late."
"The growth model should have been

Harvesting grain with siciles in the Caldeirao Mountains

changed as from 1960," people say, "and
the country should have opened its doors
to domestic and foreign competition."
Salazar's overriding interest was the
currency: "Balancing the books." He
made the escudo one of the world's
strongest currencies, yet he also set up
the paradoxical situation of a nation
hoarding its gold while poverty stalked
the country.
LISBON TODAY still has currency re-
serves of some 54,000 million escu-
dos (about $2,000 millions), equivalelnt
to more than a year's imports, whereas
many countries are satisfied with re-
serves covering three months.
The banks siphon off nearly 20 per
cent of the national product in savings,
but invest scarcely any of it. Portugal
has practically no financial market. The
State controls two institutions, a general
deposit bank and a development bank,
which are intended to aid industry. But
businessmen prefer to go to the com-
mercial banks, which draw some 80 per
cent of all savings and are not adapted
to granting long-term loans.
The slow pace at which the Portu-
guese economy is getting off the ground
may be at least partly attributed to the
existence of undercapitalised enterprises
dependent entirely on the banks, whose
directors are reluctant to offer public
shares "through fear of losing some of
their power"; to employers who look to

the states as the ultimate provider be-
fore making up their minds to invest;
and to an economy "lacking not so much
money as projects," that is to say, pri-
vate enterprises. As one high-ranking of-
ficial in the present regime put it, "We
suffer from the fact that our capitalists
are not capitalistic enough."
One factor braking overall growth is
the poor (1 to 1.5 per cent) annual ex-
pansion rate of agriculture, due to its
productivity being a quarter of that of
industry. Thebnorthern part ofthe coun-
try, fragmented into "minifundios" --
small farms - and deserted by its inha-
bitants, is short of labour. The south,
where the "latifundio - the large ranch
-- predominates (especially in the Alen-
tejo), is insufficiently worked. Emigra-
tion has led to a certain amount of me-
chanisation, but women wearing their
traditional black hats to shield them
from the sun and wind may still be seen
harvesting with scythes.
Industries cling to the coast, thereby
dividing the country into a developed
seaborn region and an empty hinterland.
Portugal had for centuries been turned
towards the sea. The coming of the
steamship, however, spelled an end to its
seapower because it had no coal.
YET Portugal has now rediscovered
its maritime vocation. It is helped
by its geographical position at Europe's
western extremity, on the sea-routes to
the Cape and South America. Lisbon to-
day has one of the biggest ship repair
yards in the world, Lisnave, on the left
bank of the Tagus: its dry-docks will be
able to take the new million-ton oil tank-
ers.
A shipyard capable of making two
250,000-ton vessels a year is due to be
inaugurated in 1974 at Setubal, on the
north bank of the Sado. The tongue of
land between the estuaries of these two
rivers illustrates the country's industri-
alisation effort. Salazar was able to see
one of his greatest projects finished be-
fore he died: the enormous suspension
bridge bearing his name and spanning
the Mar de Palha, the "sea of straw."
Other projects are under way. The
Matozinhos oil refinery, near Porto, is
to be developed; a new airport is on
the drawing boards (this, when built,
could mean that jet aircraft will cease
flying over Lisbon day and night); the
railways are to undergo a much-needed
modernisation; and between now and
1981 international consortia are to work
with Portugal on the construction of 256
miles of toll roads.
But the most ambitious programme is
being devised for Sines, a small Alen-
tejo seaside resort. It is to be dredged
and equipped as a deep-water harbour
capable of handling oil tankers of up to
500,000 tons. Meanwhile a refinery with
an annual capacity of 10 million tons, a
petrochemical plant, and an industrial
complex should make Sines Portugal's
third-ranking industrial centre by 1980,
after Lisbon and Porto.
rOrHE BIG business groups remain all-

All this makes a mockery of student
protest against the technocratic charac-
ter of educational reforms (although
they are intended to modernise teaching
programmes), especially at a time when
Education Minister Ceiga Simao is fac-
ing a barrage of criticism from the
Right.
This leads one to wonder whether the
big business groups have a policy of
their own or not. Two rival groups con-
front each other at the top. On the one
hand are the conservatives, the parti-
sans of protectionism who favour con-
tinuing the African wars; and with them
the overseas import-export companies,
the Angola and Mozambique sugar, dia-
mond, and coffee companies.
On the other hand there are the
"European," the "modern." They want
to be rid of the African burden once and
for all, well aware that Lisbon, ultimate-
ly, is working for a Rhodesian-style "in-
dependence" for its southern African
provinces. In their view this would do
more for South Africa than it would for
Portugal. The "moderns" want to pre-
pare their country for integration into
the European Community, and give the
economy the dynasism it needs by step-
ping up development of industrial areas
and enlisting support from a working
class intent on bettering its condition.
They would appear to be ready to go
further in this direction than the Span-
ish technocrats. In' 1969, the Marcello
Caetano Government seemed, ready to
follow them. For the first time, workers
were able to elect their union represen-
tatives without the usual hindrances,
while the labour tribunals set up to ar-
bitrate conflicts over worker-employer
agreements were genuinely representa-
tive.
The result of this was a swift rise in
claims, especially from the powerful
bank-employees' union. The employers'
reaction was so sharp that the Govern-
ment stripped many union leaders of
their powers and arrested a number of
them on charges that they belonged to
the clandestine Communist Party .
From then on, the Minister of Cor-
porations and Social Security appointed
the labour tribunals' president himself,
with some effect on their impartiality.
Strikes remain illegal and collective bar-
gaining between management and em-
ployees does not exist: employers and
workers negotiate through their respec-
tive unions. But the scarcity of qualified
labour and dizzily soaring prices are
spurring more and more Portuguese
workers who once seemed capable of re-
signing themselves to anything, into a
social and economic confrontation which
repression may not succeed in heading
off.
LONG used to the monetary stability
that was the pride of the regime,
Portugal has had to live since 1964 with
an inflation rate which soared alarming-
ly last year: from 11 to 13 per cent ac-
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Agriculture is still primitive

L4

are doing a roaring trade. Rents in Lis-
bon shot up 39 per cent last year. Prop-
erty is the soundest investment.
Farm wages weren't the only wages
to go up. The scarcity of skilled labour
has helped some industrial employees,
like the metal-workers, whose wages
went up 30 per cent this year. Generally
speaking, the benefits of the last dec-
ade's relative progress have been con-
fined to engineers, senior technicians,
specialist workers, and employees of
firms and managements in the up-to-
date sectors of industry or the subsidi-
aries of foreign companies.
But for the bulk of unskilled workers,
publicservants,tand people in the small-
er trades or the traditional business
sectors, buying power has been station-
ary. The Government is indeed trying
hard to raise the general level of educa-
tion throughout the country so as to
meet the economy's need for specialists.
It has accordingly undertaken a praise-
worthy attempt to reform education by
extending obligatory school attendance
from six years to eight. Unfortunately,
however, many children continue to drop
out of school at 12 because there just
aren't enough teachersto go round.
Some of the Government's most worth-
.....'r:":*...l::.*:?; ..: J:'ff:":Y..ni J:L"..::$ ...... SS ,."J:e l

Strikes remain illegal and collective bargaining does not
exist . . .. dizzily soaring prices are spurring more and
more Portuguese workers, who once seemed capable of
resigning themselves to anything, into a social and eco-
nomic confrontation which repression may not succeed
in heading off.
r7 ..Y }-v.1: IWE#ny,.}'M" n r i.;}{S":{jti 4' ..}. rgaW i m itirw 'YfL.}^., nso}"."a mimS r'r} ".v hy°y,;"; SSui:4":i""}r.. .

ent of the Government, "that if a refer-
It was Salazar who propagated the
idea, or rather the feeling, that Portu-
guese Africa's lot was not negotiable,
for "You don't negotiate your mother's
or your sister's life." For all its famil-
iarity, that old cry still retains all its
stirring appeal in a country which hasn't
yet shed its imperial nostalgia, a coun-
try where the walls are still covered
with slogans such as "The Army, the
People's Sword" or "We don't want to
die, but we're not afraid of death." Only
a growing social challenge, set off by
inflation and the economy's organisa-
tional delays, will probably blow away
some of the nostalgia.
A STRAW in the wind is the fact that
Portugal is beginning to welcome
foreign capital. Legislation voted in 1965
to put an end to a long period of pro-
tectionism began to take eret a few
years ago. The Government's aim is to
"import" technologically advanced busi-
nesses prepared to help train local la-
bour, instead of taking advantage only
of its cheapness. It therefore allows in-
vestors to take their profits out of the
country freely.
Wholly foreign - owned and foreign-
managed companies may be set up, and
they are also granted considerable tax
exemptions. Foreign investment, which
shot up 91 per cent last year, accounts
for a quarter of the country's total in-
vestmen. Its volume would be consid-
erably higher if it did not have to con-
tend with an outmoded administration.
Lisbon has good reason to be jubilant
over the agreement it signed on July 22
in Brussels with the EEC. For the ac-
cord gives Portugal many advantages
which will in part make up for the loss
of trading privileges it enjoyed in Bri-
tain and Denmark through membership
in EFTA. These privileges will come to
an end when Britain and Denmark en-
ter the Common Market on January 1
next year.
Concentrated tomato juice and canned
fish, two of Portugal's principal export
items, entered EFTA countries duty-
free, because they were classed as man-
ufactured products. Britain alone took
uD three-quarters of Portugal's exports
of concentrated tomato juice at a cost of
$40 million annually. After January 1,
1973, Britain would have had to subject
these items, regarded as farm pro-
duce by the Common Market to the cus-
toms t'riffs applicable to imports from
non-EEC countries.
The Common Market ruling will still
apply to Portuguese tomato jiice and
canned fish, but the tariff will be slash-
ed by 30 to 40 ner cent. These two items
will no doubt become less competitive
in the British and Scandinavian markets,
but Portugal has the consolation of
knowing that the accord with the EEC
nfl,..nnAne , c n ., . rniwbnto market for

.3

cording to official estimates, from 11 to
17 per cent according to Professor Pere-
ira de Moura, a well-known economist.
The Government contributed to this by
adjusting the prices of some items -
water one of them - to their "real"
cost. In some respects it was an "im-
ported" inflation, caused by increased
consumption of goods and services from
highly industrialised countries in Europe
and North America.
But the primary cause of the increas-
ed prices was spending by tourists and
the money sent home by Portuguese na-
tionals working abroad. This had the ef-
fect of creating a volume of monetary
circulation far in excess of the coun-
try's oroductive caoacity.

while projects can't get off the drawing
board because funds are being diverted
into Portugal's African war. The war
has been holding up modernisation and
also tends to break up the relationship
between social classes, which provides
the Government with a pretext for main-
taining censorship and controlling the
trade unions.
How then to change attitudes and at
the same time learn to rationalise work
in a country in which, there is liberty of
neither speech nor assembly? "The most
backward political plans may not be
challenged openly," said a leader of
SEDES, an economic and social develop-
ment research body. "So they continue
to be forced even on the neonle who