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Portugal (08/02)


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For the most current version of this Note, see Background Notes A-Z.

PROFILE

OFFICIAL NAME:
Portuguese Republic

Geography
Area: 92,391 sq. km., including the Azores and Madeira Islands; slightly smaller than the State of Indiana.
Cities: Lisbon (capital, pop. 1.9 million), Oporto (1.7 million), Faro.
Terrain: Mountainous in the north; rolling plains in the central south.
Climate: Maritime temperate, average annual temperature is 16�C (61�F).

People
Nationality: Noun and adjective--Portuguese (singular and plural).
Population (2001): 10.1 million.
Population density: 105 per sq. km. (272 per sq. mi.).
Annual growth rate: 0.18%.
Ethnic groups: Homogeneous Mediterranean stock with small black African and Eastern European minorities.
Religion: Roman Catholic, 97%.
Language: Portuguese.
Education: Years compulsory--9. Literacy--90%.
Health: Birth rate--11.51/1000. Death rate--10.21/1000. Infant mortality rate--5.94/1, 000. Life expectancy--76 years.
Work force (4.7 million): Government and services--56%; industry--32%; agriculture--12%.

Government
Type: Republic.
Constitution: Effective April 25, 1976; revised October 30, 1982, June 1, 1989, November 25, 1992, and September 3, 1997.
Branches: Executive--president (head of state), Council of State (presidential advisory body), prime minister (head of government), Council of Ministers. Legislative--unicameral Assembly of the Republic (230 deputies). Judicial--Supreme Court, district courts, appeals courts, Constitutional Tribunal.
Administrative subdivisions: 18 districts, 2 autonomous regions.
Major political parties: Social Democratic Party (PSD), Socialist Party (PS), Popular Party (CDS/PP), Portuguese Communist Party (PCP/CDU), Left Bloc (BE).

Flag: flag of Portugal

Economy
GDP (est. 2001): $110.3 billion.
Annual growth rate: .5%.
Per capita GDP (est. 2001): $10,890.
Avg. inflation rate (2000): 2.9%.
Natural resources: Fish, tungsten, iron, copper, tin, and uranium ores.
Agriculture: Products--forestry, fisheries, cork, wine.
Industry: Types--textiles, clothing, footwear, wood and cork, paper, chemicals, manufacturing, food and beverages.
Services: Commerce, government, housing, banking and finance.
Trade: (2001): Exports--$24.4 billion; clothing, footwear, machinery, cork and paper products, petroleum, textiles.
Imports--$38.9 billion: machinery, petroleum, textiles, agricultural products, chemicals. Export partners--European Union (83%), United States (5%). Import partners--European Union (78%), United States (3%), Japan 3%.
Trade (U.S., 2001): Exports--$1.62 billion; textiles; valves, tubes, transistors, semiconductors; cork; petroleum oils; footwear; alcoholic beverages; pottery; office machine parts; men's apparel; nonelectric machinery parts. Imports--$1.25 billion: valves, tubes, transistors, semiconductors; aircraft and associated equipment; oil seeds and oleaginous fruits; animal feed; vehicle and tractor parts; telecommunications equipment and parts; engines; automatic data processing machines; coal; fish.

GOVERNMENT
Portugal moved from authoritarian rule to parliamentary democracy following the 1974 military coup against dictator Marcello Caetano, himself a continuation of the long-running dictatorship of Antonio Salazar. After a period of instability and communist agitation, Portugal ratified a new constitution in 1976. Subsequent revisions of the constitution placed the military under strict civilian control, trimmed the powers of the president, and laid the groundwork for a stable, pluralistic liberal democracy, as well as privatization of nationalized firms and the government-owned communications media. Portugal joined the European Union in 1986, and has moved toward greater political and economic integration with Europe ever since.

The four main branches of the national government are the presidency, the prime minister and Council of Ministers (the government), the Assembly of the Republic (the parliament), and the judiciary. The president, elected to a 5-year term by direct, universal suffrage, also is commander in chief of the armed forces. Presidential powers include appointing the prime minister and Council of Ministers; dismissing the prime minister; dissolving the assembly to call early elections; vetoing legislation, which may be overridden by the assembly; and declaring a state of war or siege.

The Council of State, a presidential advisory body, is composed of six senior civilian officers, former presidents elected under the 1976 constitution, five members chosen by the assembly, and five selected by the president.

The government is headed by the presidentially appointed prime minister, who names the Council of Ministers. A new government is required to present its governing platform to the assembly for approval.

The Assembly of the Republic is a unicameral body composed of up to 230 deputies. Elected by universal suffrage according to a system of proportional representation, deputies serve terms of office of 4 years, unless the president dissolves the assembly and calls for new elections. The national Supreme Court is the court of last appeal. Military, administrative, and fiscal courts are designated as separate court categories. A nine-member Constitutional Tribunal reviews the constitutionality of legislation.

The Azores and Madeira Islands have constitutionally mandated autonomous status. A regional autonomy statute promulgated in 1980 established the Government of the Autonomous Region of the Azores; the Government of the Autonomous Region of Madeira operates under a provisional autonomy statute in effect since 1976. Continental Portugal is divided into 18 districts, each headed by a governor appointed by the Minister of Internal Administration. Macau, a former dependency, reverted to Chinese sovereignty in December 1999.

Current Administration
In December 2001 voters gave a decisive victory to the center-right Social Democratic party (PSD) in municipal elections, forcing Socialist Prime Minister Guterres to resign on December 17, 2001. National elections took place on March 17, 2002, 2 years ahead of schedule. The PSD returned to power after a 6-year absence, winning a plurality of the vote and legislative seats. The new prime minister, Jose Manuel Durao Barroso, formed an alliance with the conservative Popular Party (CDS/PP), giving the ruling coalition an absolute majority in the parliament. The new government has committed itself to public-sector austerity and business incentives to promote growth, trade, and productivity.

Principal Government Officials
President of the Portuguese Republic--Dr. Jorge Sampaio
Prime Minister--Jose Manuel Durao Barroso
Minister of Foreign Affairs--Antonio Martins da Cruz
Minister of State and Defense--Paulo Portas
Minister of State and Finance--Manuela Ferreira Leite
Ambassador to the United States--Pedro Manuel dos Reis Alves Catarino
Ambassador to the United Nations--Gon�alo Aires de Santa Clara Gomes

Portugal maintains an embassy in the United States at 2125 Kalorama Road, NW, Washington, DC 20008 (tel. 202-328-8610); consulates general in New York City, Boston, San Francisco, and Newark, NJ; consulates in Providence, RI and New Bedford, MA; and honorary consulates in Honolulu, Los Angeles, Houston, New Orleans, Chicago, Philadelphia, Miami, San Juan, and Waterbury. The Portuguese National Tourist Office in the United States is located at 590 Fifth Avenue, New York, NY 10036 (tel: 212-354-4403).

ECONOMY
Membership in the European Union (EU) contributed to stable economic growth, largely through increased trade ties and an inflow of funds to improve the country's infrastructure. After a recession in 1993, the economy grew at an average annual rate of 3.3%, well above EU averages. In order to qualify for the European Monetary Union (EMU), Portugal agreed to cut its fiscal deficit and undertake structural reforms. The EMU brought to Portugal exchange rate stability, falling inflation, and falling interest rates. Falling interest rates, in turn, lowered the cost of public debt and helped the country achieve its fiscal targets.

Household debt has expanded rapidly. The European Commission, OECD, and others have advised the Portuguese Government to exercise more fiscal restraint. Portugal's public debt exceeded 3 % of GNP in 2001, the EU's self-imposed limit, and left the country open to either EU sanctions or tighter financial supervision. The overall rate of growth slowed in late 2001 and into 2002, making fiscal austerity that much more painful to implement. Portugal will be forced into greater self-sufficiency when EU funds are likely to be discontinued in 2006. In addition, EU expansion into eastern Europe also will erase Portugal's key competitive advantage, low labor costs.

Portugal's economy is based on traditional industries such as textiles, clothing, footwear, cork and wood products, beverages (wine), porcelain and earthenware, and glass and glassware. In addition, the country has increased its role in Europe's automotive sector. Services, particularly tourism, are playing an increasingly important role in the economy.

Portugal has made significant progress in raising its standard of living to that of its EU partners. GDP per capita on a purchasing power parity basis rose from 51% of the EU average in 1985 to 78% in early 2002. Unemployment stood at 4.1% at the end of 2001, which is low compared to the EU average. Real wages are flexible, but high social costs and severance packages raise fixed labor costs and make new job creation difficult.

FOREIGN RELATIONS
Portugal has been a significant beneficiary of the European Union and is a proponent of European integration. Portugal held the presidency of the European Union for the second time during the first half of 2000. Portugal used its term to launch a dialogue between the EU and Africa and to begin to take steps to make the European economy dynamic and competitive. In 2002, the Euro began to circulate as Portugal's currency.

Portugal was a founding member of NATO; it is an active member of the alliance by, for example, contributing proportionally large contingents in Balkans peacekeeping forces. Portugal proposed the creation of the Community of Portuguese Language Countries (CPLP) to improve its ties with other Portuguese-speaking countries. Additionally, Portugal has participated, along with Spain, in a series of Ibero-American summits. Portugal was a strong advocate of independence for East Timor, a former Portuguese colony, and has committed troops and money to East Timor, in close cooperation with the United States, Asian allies, and the United Nations.

Portugal holds the chairmanship of the Organization of Security and Cooperation in Europe (OSCE) for the year 2002. The chairman-in-office is Portuguese Foreign Minister Antonio Martins da Cruz.

U.S.-PORTUGUESE RELATIONS
Bilateral ties date from the earliest years of the United States. Following the Revolutionary War, Portugal was the first neutral country to recognize the United States. On February 21, 1791, President George Washington opened formal diplomatic relations, naming Col. David Humphreys as U.S. minister.

Contributing to the strong ties between the U.S. and Portugal are the sizable Portuguese communities in Massachusetts, Rhode Island, New Jersey, California, and Hawaii. The latest census estimates that 1.3 million individuals living in the United States are of Portuguese ancestry, with a large percentage coming from the Azores. There are about 16,000 Americans living in Portugal.

The defense relationship between the U.S. and Portugal is excellent, centered on the 1995 Agreement on Cooperation and Defense (ACD). Lajes Air Base in the Azores has played an important role in supporting U.S. military aircraft engaged in counter-terrorism and humanitarian missions. Portugal also provides the U.S. and other allies access to Montijo Air Base and a number of ports.

Portugal defines itself as "Atlanticist," emphasizing its support for strong European ties with the United States, particularly on defense and security issues. Portugal sees its role as host of NATO's Southern Regional Command (Southlant), located near Lisbon, as an important sign of alliance interest in transatlantic security issues. As a staunch NATO ally since the founding of the organization, Portugal is a participant in NATO peacekeeping. It has used its chairmanship of the OSCE to advance U.S. and European security objectives.

U.S.-Portuguese trade is relatively small, with the U.S. exporting $1.25 billion worth of goods in 2001 and importing an estimated $1.62 billion. While total Portuguese trade has increased dramatically over the last 10 years, the U.S. percentage of it--both exports and imports--has declined. The Portuguese Government is seeking to increase exports of textiles and footwear to the United States and is encouraging greater bilateral investment. U.S. firms play a significant role in the automotive, pharmaceutical, computer, and retailing sectors in Portugal. The advent of a more pro-business government after the March 2002 elections offers increased possibilities for U.S. trade and investment, especially in services and high technology.

Principal U.S. Officials
Ambassador--John Palmer
Deputy Chief of Mission--William McGlynn
Political/Economic Affairs--Robert Blau
Consular Affairs--Luis Espada-Platet
Administrative Affairs--Anthony Spakauskas
Public Affairs--Jeff Murray
Commercial Affairs--Robert Shipley
Defense and Air Attach�--Col. Jerald Folkerts
Army Attach�--Col. Anita Domingo
Navy Attach�--Commander Claude Galluzzo
Office of Defense Cooperation--Capt. Robert McDonough
Consul, Ponta Delgada--William Meara

The U.S. Embassy is located at Avenida das Forcas Armadas, 1600 Lisbon, Portugal (tel.: 351-21-727-3300). The embassy homepage is located at www.usia.gov/posts/lisbon.html.

The Ponta Delgada consulate is located at Avenida Infante D. Henrique, Ponta Delgada, Sao Miguel, Azores 9502 (tel.: 296-282216). The consular agent in Funchal, Madeira is Edgar Potter (tel.: 291-741088).



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