Figure 1. Administrative Divisions, 1992

ON APRIL 25, 1974, scores of junior Portuguese Army officers staged a coup d'état that in a manner of hours toppled the authoritarian regime that had ruled their country for nearly half a century. The virtually bloodless coup was followed by what became known to the world as the Revolution of 1974 as Portugal's archaic and repressive governing system was swept away in a period of political and social turbulence. The young officers, members of the secret Armed Forces Movement (Movimento das Forças Armadas--MFA), wished to end the wars their country had been fighting in its African colonies since the early 1960s. Their modest aim of changing Portugal's political leadership, however, let loose long pent-up social and political energies that soon turned into a veritable revolution and kept Portugal in the headlines of the world's newspapers for the next eighteen months. A nervous Western Europe looked on as Portugal's governing and financial elites fled the country or were exiled, as a variety of forces vied for dominance and the Stalinist Portuguese Communist Party (Partido Comunista Português--PCP) seemed close to seizing power, as leading banks and businesses were nationalized, and as large estates were collectivized by landless peasants.

The revolution eventually played itself out. Many of its feared consequences, such as a communist takeover or a civil war, did not occur. Moreover, many of the actions, for example, nationalizations and collectivizations that were implemented during the revolution, had been reversed to a great extent by early 1993, and the serious damage done to the overall economy was gradually being repaired. The economy grew rapidly in the second half of the 1980s and continued to show respectable growth rates in the early 1990s. As another indication of improving economic health, Portugal's currency, the escudo, was strong enough to be placed in the exchange rate mechanism of the European Monetary System (see Glossary) in April 1992.

The revolution's legacy also had a positive side, however, and nearly two decades after the sequence of events that began in April 1974, some remarkable achievements could be seen. After centuries of isolation and backwardness, Portugal had become an fully integral part of Western Europe through its membership in the European Community (EC--see Glossary). In the first half of 1992, Portugal assumed the presidency of the EC and fulfilled the obligations of this office in a professional manner. Even more significant, perhaps, were the establishment and consolidation of a system of parliamentary democracy. After a troubled start, this democracy, watched a had given the country a strong and competent government able to bring about peaceful change.

Portugal has a glorious past. It is the oldest European nation-state, having attained its present extent by about 1200, centuries before neighboring Spain or France became unified states. In the 2000 early decades of the fourteenth century, Portugal beÍÍÍÍÍÍÍÍgan a period of exploration that within a hundred years gave it an empire that literally spanned the globe.

The wealth the empire brought mainland Portugal had woeful long-term consequences, however. The country's leaders turned away from Europe and its political and technological advances. Portugal's economy battened on the colonies, rather than developing through competition with other European countries. Because Portugal was too small a country to defend its extensive possessions, much of the empire was soon lost. Even into the second half of the twentieth century, however, enough of the empire remained that Portugal continued to exist somewhat outside the world economy. The colonies provided the mainland with foodstuffs and raw materials and were a captive market for low- quality Portuguese manufactures.

A greater threat to the long-term well-being of the Portuguese people than the country's backward economy, however, was perhaps the state of its social and political institutions. Long ruled by a tiny oligarchy supported by the military and a rigid authoritarian church untouched by the Reformation, the mass of the Portuguese population was passive and ignorant. The nation's wealth was reserved for a few, most of whom lived in Lisbon. The small middle class was docile and without experience in government.

The European Enlightenment had a powerful exponent of its ideas in the Marquês de Pombal, who attempted a thorough-going reform of Portugal in the third quarter of the eighteenth century. His reforms were paternalistically enforced from above, however, and after his fall from power were soon reversed. The early nineteenth century saw the fashioning of a constitutional monarchy, but parliamentary politics was soon a cynical rotation of public office among members of a small elite in Lisbon. Most of the population labored neglected and illiterate in the countryside.

A more serious attempt at parliamentary democracy occurred in 1910 when a republic, the so-called First Republic, was proclaimed. Suffrage was restricted, however, and most Portuguese were without the right to vote. The small urban middle class that was active in the republic's affairs formed into numerous personalistic parties that soon showed themselves incapable of governing. The dozens of inefficient governments in the republic's brief life of sixteen years did not win many Portuguese to the cause of parliamentary democracy. Anticlerical laws also alienated many, as did frequent instances of corruption.

When a coup by junior military officers in 1926 put an end to the First Republic, few regretted the death of Portuguese parliamentary democracy. But no member of the military was able to effectively direct Portugal's affairs, and a young economist, António de Oliveira Salazar, gradually came to govern the country. First as minister of finance, then as prime minister beginning in 1932, he brought a new order and stability to the country. In 1933 an authoritarian, traditionalist, statist system, the New State (Estado Novo), was inaugurated to protect Portugal from both Western liberal democracy and communism.

Salazar directed this regime until he was incapacitated by an accident in 1968. He was succeeded by Marcello José das Neves Caetano, who governed until April 1974. The governing system they ruled attempted to shield Portugal from such modern problems as labor strife, rapacious wealth, and departure from traditional concepts of personal morality. Salazar outlawed labor unions, replacing them with organizations that were supposed to bring labor and capital together in such a way that class conflict was avoided. He banned all political parties except one official party, rigorously controlled the press, and carefully supervised the country's few schools. Mindful of the social changes a modernizing economy engenders, he even attempted to arrest commercial change and stop the expansion of the country's small industrial sector. An extensive system of informants and an efficient secret police easily countered the regime's few opponents.

Portugal's authoritarian regime lasted for nearly half a century. It loosened its strictures on the economy somewhat after 1959, and the Portuguese economy grew at a very rapid rate until 1974. It permitted a few elections in which dissenting voices were heard but to no lasting effect. The press was allowed a slightly greater degree of freedom in the early 1970s, but otherwise the regime remained firmly in control.

The sudden collapse of the regime in April 1974 surprised everyone. Also unexpected were the engineers of its collapse, young officers who served in the military, long the regime's chief support. These officers were brought to their extreme action by the regime's stubborn determination to retain Portugal's African colonies. Having served on the front lines and seen the human costs of the wars firsthand, the officers knew that defeating the strong rebel movements in these colonies was beyond Portugal's power. They staged the April coup to stop further futile bloodshed. Their simple coup became a revolution.

The sudden and unexpected collapse of the regime created a political vacuum. Decades of political repression had left the Portuguese people with no practical experience of governing themselves. The widespread hatred of the regime barred the government's major figures from any active role in politics. A few younger politicians active within the regime were seen as sufficiently untainted to continue to be involved in public affairs. Their experience allowed them to assume leadership positions in several parties located on the moderate right of the political spectrum. Francisco Sá Carneiro took control of the Popular Democratic Party (Partido Popular Democrático--PPD), and Diogo Freitas do Amaral, a law professor, came to head the Party of the Social Democratic Center (Partido do Centro Democrático Social--CDS). Mário Alberto Nobre Lopes Soares, who had long opposed the regime and had endured imprisonment and exile because of his open resistance, returned to Portugal within days of the coup to lead the newly reestablished Socialist Party (Partido Socialista--PS). Communists had been active underground for decades under the leadership of the Stalinist Álvaro Cunhal, who directed the PCP from Eastern Europe. Like Soares, Cunhal also returned to Portugal immediately after the coup and plunged into the turbulent politics that filled the capital's streets and squares. Because the PCP alone among political parties had a sizeable organized infrastructure in place, it occupied a political space greater than its actual strength.

Political power was by no means limited to these parties, which in the first months of the revolution had marginal roles, but was held by a broad variety of groups. Numerous splinter groups to the left of the PCP were soon active and made themselves known through street demonstrations. The PCP- controlled labor union Intersindical emerged from its semi- underground position and worked alongside the often independent Workers' Committees, which quickly began taking control of numerous factories and businesses. The MFA, with its select military force, the Continental Operations Command (Comando Operacional do Continente--COPCON), wielded much power, as well. The most visible politician of the first months of the revolution was General António de Spínola, who became the president of the country's interim government.

Given this array of forces, there was no one center of power. Groups formed temporary alliances, giant street rallies attempted to influence the direction of politics, the PCP placed its people in many key positions in the country's public institutions, and political parties to the right of the PCP attempted to prevent a communist takeover. Given its nature as an organized and disciplined force, the military was the single most important element during the revolution, although most officers were not radicals.

A series of provisional governments was formed that with time became increasingly leftist and dominated by radic al 00 al military officers. An attempted rightist coup by Spínola in March 1975 caused a leftist countermovement, a wave of nationalizations of banks and other businesses, and the seizure of many large farms in southern Portugal. Attempts to bring the revolution to the north backfired, and that region's smallholders offered the first successful resistance to the revolutionary left's program to turn Portugal into a socialist state.

Another indication that the country as a whole did not wish a revolutionary government was the April 1975 election of the Constituent Assembly, in which parties to the right of the PCP had an overwhelming majority. The assembly had no legislative powers but had as its sole purpose the drafting of a constitution for a democratic government. It began this work against the backdrop of an increasingly radical revolution.

During the summer of 1975, splits appeared within the MFA itself. Moderate elements favoring a political program akin to Scandinavian social democracy gained the upper hand in the organization, deposed the most radical of all the provisional governments in September, and put in place the last of these six governments, one destined to last until the first constitutional government came into existence in July 1976. An attempted coup in November 1975 by extremists was put down by a counterattack led by moderates. The arrest of several hundred radical officers and the dissolution of COPCON ended the radical stage of the Revolution of 1974.

The military remained active in politics, however. Although the African wars ended when the colonies were granted independence in 1975, elements of the military were determined to defend the accomplishments of the revolution. The MFA arranged with the drafters of the constitution that the military would retain guardian rights over the new democracy, ensuring that it remained true to "the spirit of the revolution." The constitution of 1976 provided for a strong president who, with the help of a military-dominated Council of the Revolution, could veto any legislation that reversed such revolutionary actions as the extensive nationalizations of 1975. General António dos Santos Ramalho Eanes, the hero of the November 1975 countercoup, was elected the new democracy's first president in 1976. An austere man of unquestioned integrity, Eanes could be trusted to preserve the revolution's gains.

The first regular parliamentary elections were held in April 1976. The winner was the PS with 35 percent of the vote, far ahead of its competitors, but not enough for an absolute majority in the new unicameral parliament, the Assembly of the Republic. With its leader Soares as prime minister, the PS formed a minority government that governed for eighteen months. When it fell because of a motion of censure, the PS formed a governing coalition with the Christian democrat CDS that lasted another year. Enormous social and economic problems, including the return of 600,000 Portuguese settlers and demobilized soldiers from Africa, combined with factionalism and personal rivalries, were the undoing of these first two constitutional governments. Eanes then appointed a series of nonpartisan caretaker governments composed of experts and technocrats in the hope that they could better deal with pressing issues and govern until the next parliamentary elections mandated by the constitution for 1980.

Each of the three caretaker governments failed, and Eanes was forced to call for early elections in December 1979, even though parliamentary elections would still have to be held the following year. The Democratic Alliance (Aliança Democrática--AD), a coalition of the PPD--now called the Social Democrat Party (Partido Social Democrata--PSD)--the CDS, and several smaller groups, won the election, but without a majority. the coalition formed a government with the forceful and charismatic PSD leader Sá Carneiro as prime minister. The AD won the October 1980 election, as well, and governed Portugal until 1983. New elections were called that year because the AD, without the leadership of Sá Carneiro, who had died in a December 1980 plane crash, had disintegrated, and no effective government could be formed.

During its time in power, however, the AD coalition had effected some far-reaching constitutional amendments that strengthened the system of parliamentary government. With the support of the PS, which gave the AD the required two-thirds majorities, constitutional amendments were passed in 1982 that weakened the power of the president and strengthened both the prime minister and the legislature. The presidency remained an essential governing institution, but the balance of political power had shifted to favor the cabinet and the legislature, as in most other Western democracies. A further amendment ended the military's guardianship over the new democracy. The amendment eliminated the Council of the Revolution, through which the military had frequently vetoed legislation, and replaced it with the Constitutional Court that functioned in the same manner as similar bodies in other parliamentary democracies. President Eanes, easily reelected in late 1980 for a second five-year term, signed the amendments into law, although he opposed them because they reduced the president's powers and returned the military to the barracks.

After the 1983 parliamentary elections, the PS formed a coalition government with the PSD. The huge losses stemming from the many firms nationalized during the revolution, the enormous expansion of the numbers of those employed by the state, the effects of the two oil-price hikes of the 1970s, and the flight of much entrepreneurial talent from Portugal had left the economy in a desperate state. Inflation was as high as 30 percent a year, and many workers had real earnings lower than those of the early 1970s. In addition, many companies were in such financial straits that wages were often months in arrears.

No government had been able to deal with these economic problems in a meaningful way. The AD and PS combination that had effected some vital constitutional changes was not able to amend the constitutional provisions that declared the revolution's nationalizations irreversible. In addition, the country's labor laws in essence guaranteed employees jobs for life and made rational deployment of labor nearly impossible. Given these circumstances, the PS-PSD government had to make some very difficult decisions and became unpopular as the economy worsened. The alliance, troubled also by personal rivalries, collapsed in early 1985.

The PSD began its political ascent in the 1985 parliamentary elections. As the senior partner in the coalition and with its leader Soares as prime minister, the PS was blamed by voters for the failures of the fallen government it polled only 20.8 percent of the vote, compared with 36.3 percent in 1983. Despite its participation in the government, the PSD won more votes than ever before, 29.9 percent, and for the first time was the party with the most parliamentary seats. Much of the PSD's success was due to its new leader, Aníbal Cavaco Silva, who waged a clever campaign and presented his party in a new light. His personal qualities of austerity, probity, and competence appealed to many Portuguese, who saw in him, an economist and former minister of finance, someone who could deal with the country's serious problems.

Cavaco Silva formed a minority single-party government with himself as prime minister and managed to remain in power for nearly a year and a half. He was fortunate in that painful economic decisions made by the previous government began to bear fruit during his time in office. Portugal's accession to the EC at the beginning of 1986 also benefited the country the first of the organization's extensive aid packages began to improve Portugal's backward infrastructure almost immediately. When a motion of censure brought down the PSD government in the spring of 1987, Soares, elected president in early 1986, decided to call new elections in July 1987 rather than form another weak single- party or coalition government.

The improving eco nom00 nomy and the feeling on the part of many Portuguese that the PSD was taking their country in the right direction allowed the Party to win an absolute parliamentary majority in the national elections of 1987. The 50.2 percent of the vote gave the party a solid parliamentary majority, the first in the new democracy, and permitted the formation of a strong single-party government. Cavaco Silva's government also became the first to serve out the entire four-year legislative term. In 1991 Cavaco Silva led his party to a second victory in which it again won more than 50 percent of the vote and 135 seats in the 230-seat parliament.

For many observers, the PSD's electoral successes and the stability of the Cavaco Silva government indicated that Portugal's new democracy, the Second Republic as it is often called, had at last taken root. During the first decade of the new political system, there were numerous weak governments, and four national elections were called because no effective governing coalitions were available. This instability caused some observers to fear that Portugal's second attempt at parliamentary democracy might eventually prove as unsuccessful as was the First Republic.

The Second Republic was more fortunate than the First Republic in several regards, however. Despite its serious problems, Portugal had come to enjoy a much greater prosperity and a higher level of education than in the first decades of the century. As a result, the Portuguese were better able to understand public affairs than in the past. In addition, the new government possessed a greater legitimacy because it was based on universal suffrage and high rates of voter participation. Portugal was also lucky to have a number of capable politicians committed to establishing parliamentary democracy. Also vital was the willingness of the military to abide by the laws of the new republic. All of these factors contributed to the eventual success of the new political system.

However healthy Portuguese democracy was by the 1990s, it still exhibited some short comings. Factionalism, whether caused by ideology or personal ambition, was still noticeable. Strict party discipline ensured a degree of party unity, but party "barons" sometimes put personal welfare before that of their parties. Small parties centered around an individual were less common than in the past, but in the 1985 elections a big winner was a short-lived group pledged to President Eanes. The parties sometimes overshadowed the Assembly of the Republic as centers of political power, but internal reforms, increased support staff, and an evolving institutional ethos had increased that body's performance to the benefit of parliamentary democracy.

By the early 1990s, Portuguese democracy appeared to be moving to a two-party system consisting of the PSD and the PS. The two parties together won nearly 80 percent of the vote in the 1991 national elections and between them controlled 90 percent of the seats in parliament. As of early 1993, there was no reason to think this dominance would be upset in the near future.

The PSD, in power since early 1980 through coalitions with parties first to its right, then to its left, and then through both minority and majority single-party governments, gradually came to occupy a large place in the middle of the political spectrum. Generally, the PSD held views similar to those advocated by liberal Republicans in the United States. Aníbal Cavaco Silva, the party's leader since 1985, remained very popular with Portuguese voters, and the government he formed after the October 1991 elections was expected to remain in power for the entire legislative period scheduled to end in late 1995.

Portugal's other leading political party, the PS, had lost its early dominance but far outdistanced its nearest rivals, the PCP and the CDS. The PS had been troubled by leadership problems and inept campaigns Since Soares resigned as its head to campaign for the presidency in the mid-1980s. However it renamed dominant in many areas and won the 1989 local elections. The PS had gradually moved to the center of the political spectrum, having long abandoned the fierce advocacy of socialism it held in the mid-1970s. Indeed, by the early 1990s, its positions on main issues were often hard to distinguish from those of the PSD.

To the right of the PSD was the Christian democratic CDS. Long led by its founder Diogo Freitas do Amaral, who nearly won the presidency in 1986, the CDS had seen a steady erosion of support in national elections during the 1980s. The party was last part of a government in early 1983, and only a weakening of the PSD seemed likely to bring it back into power as a coalition partner.

The only major political party that was not regarded as a wholehearted supporter of liberal democracy was the PCP. Parties to its right never saw the PCP as a suitable coalition partner, however, and after the constitution of 1976 became effective, it was never part of any cabinet. The PCP had many supporters in some southern areas, both rural and industrial, but rival parties were making headway even in these traditional strongholds. The PCP remained resolutely Stalinist even into the 1990s, expelling members who sought to reform it. The PCP's share of votes declined during the 1980s, and by the 1991 election it had lost half its support. This decline and an aging membership suggested that the PCP was condemned to political marginality.

Just as the first decade of the Second Republic was marked by frequent political missteps and failures, it was also a very difficult one for Portugal's economy, and in some years there were real declines in both wages and production. This situation was a painful contrast to the accelerated rates of growth between 1960 and 1973 when the Salazar-Caetano regime had allowed partial economic liberalization and increased foreign investment. Growth ended, however, when the revolution's extensive nationalizations and the subsequent mismanagement of the government's large holdings were combined with the global recession caused by the oil price hikes of 1973 and 1979.

Austerity measures undertaken in the mid-1980s and large transfers of financial aid to Portugal by the EC led to a sustained period of growth in the latter half of the 1980s and early 1990s that was among the best among member countries of the Organisation for Economic Co-operation and Development (OECD--see Glossary). Growth was further strengthened by substantial direct foreign investment (US$15 billion in the 1989-92 period) and the government's sales of many companies nationalized during the revolution (nearly US$6 billion in the same period). However favorable these trends were, during the remainder of the 1990s the resourcefulness of Portugal's businesspeople and politicians would be seriously challenged by long-term structural problems in Portugal's economy and its complete opening by 1995 to competition from more efficient rivals in the EC.

Portugal's agricultural sector was only one-half to one- fourth as productive as those of most other EC member states, despite US$2 billion of EC funds that had been invested in modernization efforts between 1986 and the early 1990s. Although nearly one-fifth of the work force was engaged in agriculture in the early 1990s, as much as one-half of the food the country consumed had to be imported. The small fragmented farms of the north were probably too small for efficient farming. Progress had been made in introducing modern methods and equipment to the large estates in the south, many of which had been collective farms for a time, but the sector remained overstaffed and backward as a whole.

The industrial sector consisted of three components: modern foreign-owned plants that produced a large variety of sophisticated products a large, generally unprofitable state- owned sector, which was often concentrated in heavy industry and privately owned, often quite small and labor-intensive manufacturing firms that had managed to survive international competition because of protective tariffs anab and low wages. Modern high-technology companies were likely to continue to prosper in the 1990s. The nationalized sector was being privatized by the Cavaco Silva government, and those companies that appeared to have a promising future found buyers. Portugal's privately owned companies, active in textiles, shoe manufacturing, food processing, and similar activities, were likely to find the 1990s difficult. Often too small to purchase or use modern equipment and unable to learn the latest managerial methods, a good number of these firms might well not survive the decade.

Portugal's service sector was also in the throes of meeting the challenges of the European single market (see Glossary). Tourism remained vital to the country and was being upgraded. The financial sector was being transformed by many foreign firms that had set up companies in Portugal. The many banks the government had nationalized in 1975 were being sold off at a brisk rate in the early 1990s. Portuguese banking as a whole was overstaffed and underautomated, but foreign competition was forcing the sector to strive for greater efficiency.

The government also attempted to deal with legacies of both the Salazar regime and the revolutionary period when it proposed streamlining the state bureaucracy and reforming labor laws. Persistence was needed to deal with the deadening effects of a too large and unresponsive government bureaucracy, which during Salazar's rule had come to regulate much of everyday life and then was expanded in the revolutionary mid-1970s. The bureaucracy took much of the state's resources and through extensive regulation hindered ordinary citizens in their dealings with state authorities and firms in the conduct of their business. Labor laws passed during the revolution made dismissing employees very difficult. Attempts to reform employment methods had had only moderate success and foundered on union resistance. Companies circumvented some of these laws by resorting to fixed- term work contracts, but personnel management practices still had not been put on a wholly rational footing as of the early 1990s.

Portugal needed a well-trained work force in order to fare well in an increasingly competitive world economy. More Portuguese were being educated than ever before, even at the university level, which long had been reserved for a tiny elite. It was estimated, however, that in the early 1990s up to 20 percent of Portuguese over the age of fifteen were illiterate. This illiteracy rate represented a striking improvement over the 1930 rate of 68 percent but was still much higher than the European average. Even at the beginning of the 1990s, most Portuguese had had only five or six years of schooling, and the percentage of children attending school beyond the sixth grade was below the EC average by a wide margin. Morale in the teaching profession was also very low because teachers, like most state employees, were very poorly paid. EC financial transfers to Portugal to raise the standards of the country's education were significant, but much remained to be done before Portuguese schooling corresponded to that of other West European countries.

The severity of the education system's problems was matched by the serious problems found throughout Portugal's social welfare and health systems. A comprehensive social welfare system had been established by law in the second half of the 1970s but never fully realized, and benefit payments and pensions were set at a very low level. Significant progress had been made in reducing infant mortality and dealing with some other health problems, but public health care was not generally up to West European standards. The country's backwardness when measured against the rest of the EC, with the exception of Greece, was striking and could be seen as a legacy of Portugal's long isolation from Europe and the repression of the Salazar regime.

Given the advance made in the two decades after 1974, however, Portuguese had reasons to rejoice. Poverty remained, especially in rural areas, and housing was frequently inadequate, but the population as a whole lived better than ever before. The traditional necessity to emigrate to find employment that had forced millions of Portuguese to leave their country, especially in the 1960s when Paris became the second largest Portuguese city, had lessened greatly. Many Portuguese could now find employment at home, if not in rural regions where emigration was still the rule, then along the coasts where most Portuguese had come to live. The improved economy also gave young Portuguese a greater choice in occupations and a chance for social mobility.

A modernizing society also presented Portuguese with opportunities for a better life. Portuguese society was more varied than it had been during the Salazar period. The free media brought the outside world to the Portuguese and engendered a greater liberality in how people lived. Divorce was permitted in the old regime, but abortion not legalized until 1984, despite the opposition of the Roman Catholic Church, which had become less influential. More Portuguese women worked outside the home. If professional opportunities were not yet as great as those enjoyed by women in Northern Europe, Portuguese women were freer than their mothers. Until 1969, for example, Portuguese women who were not heads of households had to have the permission of their husbands or male relatives to obtain passports. In the new Portugal, in contrast, a government agency existed with the purpose of preventing discrimination against women.

The greatest achievement of the Portuguese people since 1974, however, and the one which had allowed and encouraged other positive developments and permitted confidence about the future, was the consolidation of a system of parliamentary democracy, the first successful such system in the country's history. It was hoped that a modern political system responsive to the people's needs would allow the Portuguese to prepare for the next century in a united Europe.

October 9, 1993
Eric Solsten

Data as of January 1993