PORTUGAL HANDBOOK

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00891A001300060001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 45
• Document Creation Date: December 12, 2016
• Document Release Date: May 17, 2001
• Sequence Number: 1
• Publication Date: December 1, 1972
• Content Type: REPORT

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~~~~~~~~
~~.~~ll~~~l~
Secret
~1? ~85
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`T`his document contains information affecting the national
defense of the United States, within the meaning of ~'itle
1F3, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
ceipt by an cznauthorized pexsoza is prohibited by law.
Warning Notice
Sensitive Intelligence Sources
and Mothods Invo{ved
Classified by 62-0001, exempt
from general declassification
schedule of E.O. 11652
exemption category 5B(1),(2),(3`
declassified only on approval
of the Director of Central
Intelligence
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Page
Location
1
Area
1
Climate
1
-topography
2
Natural resources
2
Human resources
3
Growth trends and income distribution
1
Agriculture and manufacturing
2
Tourism
3
Transportation and telecommunications
3
Government economic policy and the financial system
. 4
Foreign trade
5
Balance of payments
6
History
1
Structure and functioning of the government
2
Political dynamics
5
Political parties
5
Electoral system
7
.
8
Defense organization and manpower 1
Military budget 2
Logistics 2
Portugal i
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VII. FOREIGN RELATIONS
VIII. US INTERESTS
Investment and trade 2
Portugal
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Although metropolitan Portugal is small in size and population and
endowed with few natural resources, its strategic location in the northeastern
Atlantic near the Mediterranean and its control of the Azores in the mid-
Atlantic have made it an important European country. Its assets are sup-
plemented by the resources and the strategic location of Portugal's African
territories. In 1961 native nationalists rebelled, however, and since then
Lisbon has devoted much of its economic and military strength to putting
down the Africans' drive for independence. The Portuguese have succeeded
in reducing the rebellion to manageable proportions, but have been unable to
stamp it out completely.
Staunchly pro-Western, Portugal is a charter member of the North
Atlantic Treaty Organization, but it is unable to maintain its NATO-
committed force because of its military action against the African insurgents.
Lisbon argues, however, that it is aiding the alliance by fighting against a
"Communist take-over in Africa." In addition to its NATO ties, Lisbon bases
its defense policy on the Iberian Pact with Spain and on bilateral arrange-
ments with the United States. Under a 1951 defense agreement renewed
periodically, which again comes up for renewal in February 1974, the US
retained the right first granted during World War II to use of air and naval
facilities in the Azores. Lisbon has continued the defense relationship in
spite of Portuguese unhappiness over Washington's refusal to endorse Portu-
guese African policies and over the arms embargo which restricts US-supplied
military equipment to the NATO area, thereby forbidding its use in Portu-
guese Africa. The Portuguese, however, have dragged their feet on renewing
the agreement and required an economic quid pro quo for the 1971 exten-
sion of the Azores' agreement.
1~he authoritarian government of Portugal, which was the outgrowth of
a military coup in 1926 against a parliamentary republic, sacrificed personal
liberty to preserve order in reaction to the extremely unstable government
that preceded it. Repressive political measures and conservative economic
policies during the 40-year rule of Prime Minister Salazar, who was replaced
in 1968 because of ill-health, brought stability but stifled economic growth.
When Dr. Marcello Gaetano, a former protege, took over from the stricken
Salazar, the new prime minister initially relaxed some of the political and
economic restrictions in an effort to overcome the inertia of the Salazar era.
But pressures from the ultraright and Caetano's own conservative beliefs,
coupled with his unwillingness to permit reforms at the cost of government
Portugal iii
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control, have slowed the pace of reform. The cabinet reshuffle in August
1972, which replaced Caetano's two leading technocrats pushing economic
reform, appears to be a concession to right-wing critics.
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Portugal, the southwesternmost country in Europe, is of strategic
importance in the North Atlantic area because of its proximity to the
shipping lanes between Europe, Africa, and the Western Hemisphere.
Situated in the southwestern part of the Iberian Peninsula on the West
European mainland, Portugal is bounded by the Atlantic Ocean on the south
and west and by Spain on the north and east. Isolated from Spain by a
mountainous and barren interior, Portugal has been traditionally oriented
toward the sea. The Portuguese include their Atlantic possessions of the
Azores and Madeira Islands as part of the metropole. The Azores are about
840 nautical miles southwest of the Portuguese mainland, and the Madeiras
are off the west coast of Africa- about 485 nautical miles southwest of
Portugal.
Metropolitan Portugal has an area of 36,400 square miles (including
890 square miles in the Azores and 310 square miles in the Madeiras). This is
approximately the size of Indiana. The mainland is about 360 miles long
from north to south and is approximately 70 to 135 miles wide from east to
west. The Azores' nine islands extend over an area of 200 miles north-south
and 345 miles east-west. Sao Migues, the largest island, is about 290 square
miles. The Madeira Islands, which extend east-west for about 60 miles and
north-south for approximately 50 miles, include the island of Madeira (285
sq. mi.), Porto Santo (17 sq. mi.), and several islets.
Portugal's climate is generally comparable to that of California inas-
much as both lie in the same latitudes and are on the west coasts of their
continents. Porto, on Portugal's northern coast, has about the same winter
temperatures as northern coastal California and only slightly less rainfall. In
summer, however, Porto is as warm as San Diego, but it has more rainfall.
Lisbon in winter is similar to San Francisco; in summer, however, it is
somewhat warmer than San Diego. Extreme southern Portugal is in all
seasons still warmer and drier. Upland areas near the coast cause surface
winds to rise and more rain to fall, and the northern interior mountains
receive snow. All interior regions of Portugal are drier than coastal areas, and
they have higher seasonal and daily temperature ranges.
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The Azores and Madeira Islands have a maritime climate, characterized
by high humidity, moderate to pronounced cloudiness, moderate rainfall
heaviest in winter, and mild temperatures throughout the year.
Topography
Portugal is a land of great variety. The most noticeable contrast is
between the moist, mountainous and hilly north and the dry, level south.
The regions are divided by a central range of mountains, the Serra da Estrela
and its associated uplands, which lie diagonally across Portugal from north-
east to southwest. These mountains contain the highest peak in Portugal,
6,530 feet. The Tagus, Portugal's largest river, flows along the southeastern
edge of this central range and empties into the Atlantic Ocean near Lisbon.
Most of the Azores and Madeira Islands are rugged and mountainous,
with precipitous slopes in many places rising abruptly from the water and
with deep gorges and valleys. Lakes are common in the high volcanic cones
and ridges in the Azores.
Agriculture-Although about half of the land area is arable, much of it
is too rugged to have much agricultural potential. Prolonged droughts
frequently plague crops and livestock. Despite its diminishing importance in
contributing to gross domestic product (GDP), agriculture continues to play
a major role in the economy. It occupies nearly a third of the total labor
force. The most important crops are cereals, potatoes, olives, tomatoes, and
wine grapes. Wine, particularly port and Madeira, and fish and cork products
are valuable agricultural exports. Forests, most of which consist of pine,
eucalyptus, and oak trees, cover a third of the country. About 30% of the
forest land is devoted to cork oak orchards.
Metals and minerals-Portugal has a wide variety of mineral deposits,
but few are sufficiently large or rich to be economically significant to the
GDP. Portugal, however, is a leading world exporter of tungsten (wolfram)
and is a source of iron ore (providing 5% of West Germany's import
requirements and a slightly lesser share of those of Belgium and the United
Kingdom). Other metal ores mined are gold, silver, tin, uranium, and copper.
Salt and construction materials, including marble, are quarried. Mining
output is rising, with iron ore expected to become a primary mineral export
in 1972. Tin and tungsten production is expanding, and substantial uranium
deposits have recently been discovered but remain unexploited.
Portugal
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Fuels and power-Domestic supplies of fuel wood, coal, and hydroe-
lectric power satisfy less than a fourth of energy requirements. Imports
provide the entire supply of crude petroleum, which is the most important
primary source of energy, and bituminous coal. Eight coal mines produce
roughly half of the coal consumed. Hydroelectric stations provide most of
Portugal's growing electric power, which reached a total installed capacity of
2.7 million kilowatts in 1970. Only about 18% comes from thermal sources.
Spain shares the output of three stations on the international portion of the
Rio Douro. During dry years in Iberia, Portugal secures electric power from
France, West Germany, and Switzerland, via its link to the Spanish grid.
Metropolitan Portugal (including the Azores and the Madeira Islands)
had 8,668,000 inhabitants, according to preliminary returns from the 1970
census. This figure represents only about 2% of the population of Europe
(excluding the USSR). Portugal's population density is 238 persons per
square mile, compared with the Western European average of 386 persons.
The 1970 census disclosed that Portugal had a 2% population decline since
1960, reflecting large-scale emigration, almost half of which was clandestine.
Government restrictions introduced in the 1960s to reduce emigration
only increased the number of clandestine departures, so the more onerous
restrictions were relaxed. Efforts were made to legalize the status of illegal
emigrants in order to encourage their return home. More realistic annual
quotas of Portuguese laborers were also established for the major labor
importing countries. Until economic conditions improve in Portugal, how-
ever, emigration is likely to remain a drain on population,
The Madeiras and the Azores have 6.5% of Portugal's total population,
but only 3.4% of the land area. The population density of the islands is 495
persons per square mile. This is an extremely high figure for predominantly
rural districts.
The Portuguese people form a relatively homogeneous society. Those
who have settled in the country at one time or another during its history
have been so thoroughly assimilated that nowhere in the metropole are there
ethnological distinctions that diverge markedly from the national norm.
Portugal I - 3
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Despite an average 6% growth of real gross domestic product (GDP)
annually between 1955 and 1970, Portugal remains the poorest and least
developed country in Western Europe. Economic development has been
hampered by a meager natural resource base, an inadequately skilled working
force, managerial indifference, and expensive military campaigns in the
African provinces,
After nearly two decades in which real growth averaged only 3%
annually, measures were adopted in the mid-1950s to spur growth and
develop a broader industrial base for the economy. Implementation of an
economic development plan in 1953 expanded budget appropriations for
investment in infrastructure and provided unprecedented fiscal incentives for
private investment. These actions, along with Salazar's decision to allow
Portugal to enter the European Free Trade ASS~Clatlon (EFTA) in the late
1950s, contributed to the subsequent acceleration of economic growth.
Portugal's evolving economic priorities were reflected in changes in the
country's expenditure pattern. Gross investment's share of GDP has in-
creased from 14% in 1955 to around 18% in recent years, largely reflecting
the substantial increases in outlays for plant and equipment. The share of
private consumption dropped from nearly 80% to a still relatively high 75%.
Over the same period, the government's current expenditures increased from
about 11% of GDP to 13%, primarily as the result of sharp increases in
military spending incurred combating insurrections in Portuguese Africa.
The success of Portugal's drive to industrialize is shown by the growing
importance of manufacturing to the economy, increasing its relative con-
tribution to the GDP from 26 to 35 percent between 1955 and 1970. At the
same time, as in other developing countries, the share of domestic output
originating in agriculture, fishing, and forestry has declined markedly-from
30% to 17%. Nevertheless, nearly one third of the total population still is
employed and underemployed in this sector. A large but inefficient service
sector has gradually become more responsive to the needs of Portugal's
growing industries, more sophisticated consumer tastes, and the dynamic
tourist sector. By 1970, services accounted for 27% of domestic output.
Because the population has not grown since 1965-largely as the result
of workers finding employment abroad-per capita GDP has increased more
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rapidly than total GDP. At slightly more than $700, however, it remains well
below the per capita GDP elsewhere in Western Europe, and leaves the
Portuguese consumer well behind his European counterpart. Urban slums,
substandard rural housing, and an over-all housing shortage are continuing
problems in spite of the government's declared intention of providing
adequate housing.
Agriculture and manufacturing
Portuguese agriculture, accounting for about 17% of the country`s GDP
and employing almost one third of its labor force, remains the most back-
ward and least productive in Western Europe. During the 1960s, growth of
output averaged less than 1% annually. Topographical and climatic con-
ditions and poor land utilization account for much of the country's low
agricultural productivity. About one half of the land is arable, but even
much of this is too rugged and rocky to have much agricultural potential.
Moreover, prolonged droughts frequently diminish crops and livestock, and
centuries of traditional cultivation and soil erosion have seriously depleted
the fertility of the soil. There has not been enough public and private
investment to offset some of the natural deficiencies in agricultural
resources; indeed, agriculture's total fixed investment increased only from
$47 mil-ion in 1963 to $60 million in 1969 in constant terms.
An archaic system of land ownership further limits agricultural produc-
tivity and profitability. Two thirds of the total farm population is con-
centrated in the north, where holdings often are too small and fragmented to
permit either mechanization or efficient use of the farmer's time. The south
is characterized by large estates, which-although less than one percent of
the number of farm units-cover a third of the country's arable land. Neither
the tenant farmers nor the absentee landlords of the estates have had the
incentive to preserve or enhance the land's fertility.
The pattern of agricultural production has changed somewhat over the
last decade. Wheat and corn still are the major grains, accounting for over
two thirds of cereal output, but farmers have shown a growing interest in
proven cash crops such as tomatoes. The fastest growing area of agricultural
production, however, has been livestock products. Output of Portugal's
traditional products, wine and olive oil, has suffered substantial declines.
Manufacturing is characterized by the coexistence of traditional
industries such as textiles with newer ones such as petrochemicals and steel.
The most dynamic and largest sector of the economy, manufacturing ac-
counts for close to 40% of GDP. Prior to World War I I, this sector consisted
Portugal I I - 2
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of a few relatively simple processing industries producing canned foods,
wines, cork, and cotton textiles. World War II forced Portugal to begin
producing some intermediate and capital goods, a development encouraged
ti~rough protective tariffs. The six-year development plans, begun in 1953,
gave impetus to an industrialization process still under way. The government
helped expand the basic infrastructure and provided incentives to encourage
greater private investment; membership in EFTA in the early 1960s provided
a further stimulus. Today, the newer industries outperform many of the
traditional ones, and the metal, machinery, and chemical industries rank
among the most important branches of manufacturing, along with the
traditional textile and food-processing industries.
An increasing number of foreign visitors have been attracted to Portugal
in recent years. The number of foreign tourists rose from about one half million
in 1963 to almost four million in 1971, and tourism has become an
important source of income. Foreign exchange received from tourists ranks
only behind exports and remittances from Portuguese workers employed
abroad among sources of foreign exchange.
The popular tourist areas in Portugal are concentrated along the coastal
regions of the south and in the vicinity of Lisbon. The opening of the Salazar
Bridge over the Tagus River establishes a direct motor route to the relatively
uncommercialized and scenic Setubal Peninsula south of Lisbon. Despite a
fE;w notable tourist-oriented projects suci~ as this, however, Portuguese
efforts to expand tourist facilities have not proceeded rapidly. But Portugal
has now made the development of its potentially rich tourism sector a major
part of its third economic plan for 1968-73.
Transportation and telecommunications
Portuguese transportation and telecommunications facilities are, in
general, inferior to those of other West European countries. The railroads-
the principal means of domestic transportation-suffer from a lack of
modern equipment and low personnel efficiency. Highways, which provide
complementary feeder service, lack alternate and connecting routes. Inland
waterways and coastal shipping are of relatively little importance, and air
transport lags well behind surface modes. The merchant fleet is small and
carries only about 30% of Portugal's foreign trade. The fleet, however, does
provide the vital link between continental Portugal and the Azores, the
Madeira Islands, and the overseas provinces.
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Development plans call for improved transportation facilities. Extensive
railroad renovation and electrification, and substantial dieselization, are
planned. A major highway modernization program also is under way.
Telecommunications facilities are concentrated in the western, coastal
region of the country and generally are adequate for government, com-
mercial, and public users. A network of cables, radio relays, multiconductor
cables, and open-wire lines provides domestic service. The minister of com-
munications and public works is responsible for most communication func-
tions in continental Portugal, the Azores, and the Madeira Islands. The
minister for overseas administers the telecommunications affairs of the
overseas provinces. The office of the prime minister controls radio and
television broadcast facilities through subordinate agencies, and -the
ministries permit private firms and other government elements to provide
some public and private telecommunications services.
Government economic policy and the financial system
Governmental influence permeates Portugal's economic system despite
predominantly private ownership of the means of production and distribu-
tion. Partly as a result of deliberate governmental policy and partly as a
result of the lack of entrepreneurial initiative, the numerous official com-
missions that oversee the highly organized corporative structure have
gradually assumed regulatory authority over virtually all economic decision-
making. The economic power elite, who had formed along-time coalition of
interest groups with the military in support of Salazar, have maintained a
close tacit understanding with the government. The leading financiers and
industrialists have accepted extensive bureaucratic controls in return for
assurances of minimal public ownership and operation of economic enter-
prises, and certain monopolistic privileges. As a result, only the domestic
telephone and telegraph system and certain plants manufacturing military
equipment are owned outright by the government. In addition, the govern-
ment partially owns the hydroelectric power plants, the railroads, the na-
tional airline, some petroleum, chemical, and other industrial enterprises.
Through a series of long-term development plans, the government has
helped to improve infrastructure and to encourage investment in all major
sectors of the economy. Government funds have provided a substantial share
of the capital required for the implementation of these plans through direct
government participation with private firms in private-sector projects, and
through easy-term government loans.
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Soon after taking office in September 1968, Prime Minister Caetano
made extensive use of fiscal and monetary policies to promote stable
economic growth. Expansionary budget policies in 1969 and 1970 were
largely responsible for the revival of economic growth during those years.
The Caetano government is also looking more to fiscal measures to
encourage and abet greater private investment. Although monetary policy is
still not as widely used to manage demand as is fiscal policy, the government
has intensified its efforts to overcome institutional shortcomings of the
money and capital markets. The various six-year development plans have
more recently been used to establish ambitious goals for the whole
economy and have included appropriate investment programs.
The Portuguese banking sector still is underdeveloped, although bank
financing has played an especially important role in business activity. The
Ministry of Finance has the responsibility for directing and overseeing bank
policies and operations but has delegated most of its authority to the Bank
of Portugal, the country's central bank. The bank performs the usual central
banking functions, including serving as the sole bank of issue for metro-
politan Portugal, the- banker for the treasury, and custodian of all gold and
foreign exchange reserves for the entire escudo area. It also provides discount
and rediscount facilities for Portugal's banking system and, in agreement
with the minister of finance, sets liquidity ratios. Because of the high level of
liquidity maintained by the banking system, the effectiveness of central bank
restraints, even when applied, has been very limited. The banking system
comprises 24 commercial banks, three public credit institutions and several
public funds, 22 private savings banks, and over 125 credit cooperatives.
With the exception of six private banking houses, the commercial banks are
joint-stock companies and only four have headquarters outside of Lisbon or
Porto. About two thirds of the savings banks have their headquarters located
in other cities; most of the credit cooperatives are associated with local
agricultural societies and are widely dispersed. Commercial banks form the
backbone of the banking system, accounting for almost 80 percent of total
deposits and 70 percent of total credit in 1970. Other important financial
institutions in the Portuguese system include the National Development
Bank and the Portuguese Finance Corporation.
Foreign trade
With more rapid growth, the Portuguese economy has become in-
creasingly dependent on foreign trade. Between 1960 and 1971, total trade
more than tripled, rising to $2,808 million. Imports grew at an average
annual rate of 12.8%, reaching $1,776 million in 1971, while exports grew at
12.1%, reaching $1,032 million. The trade deficit reached $744 million in
1971.
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Heavy machinery and transportation equipment to support a rapidly
developing industrial sector have been Portugal's largest and fastest growing
imports. Petroleum imports also rose rapidly over the same period; other
major imports included foodstuffs, beverages, textile yarn, iron and steel,
and chemicals. The range of Portugal's exports has broadened considerably
over the last decade. Exports of manufactured goods, especially light
consumer-oriented products, increased dramatically, although textiles con-
tinued as the single most important export item. Machinery and transporta-
tion equipment, as well as canned fruits and vegetables, have contributed
significantly to export earnings. Traditional exports such as cork, wines, fats
and oils, and canned sardines have not increased so rapidly as other newer
products.
Lisbon's chief trading partners have been the EFTA and EC countries
and the nation's overseas territories, Angola and Mozambique. The EC
countries, particularly West Germany, were Portugal's leading suppliers of
machinery, transportation equipment, iron and steel, and chemicals. Never-
theless, prior to EFTA's demise, the EC declined in relative importance as
substantial trade was diverted to EFTA countries by preferential treatment.
The entry of the United Kingdom, one of Portugal's major trading partners,
in the EC is likely to be minimally disruptive because of the special
treatment the EC accords EFTA members not applying to the Community.
Portugal's major import items from Angola and Mozambique are raw cotton
and other raw materials, which return to the overseas territories in the form
of finished goods.
Balance of payments
Portugal's balance of payments has been in overall surplus since 1965,
primarily as a result of a strong invisibles account. Large net receipts from
private remittances and foreign tourism have more than offset a chronic and
worsening trade deficit. Net private capital inflows also rose substantially
throughout most of the 1960s, although they have ebbed somewhat in
recent years. Nevertheless, a record balance-of-payments surplus of $246
million was achieved in 1971 as a result of further increases in tourism and
remittances.
Despite an adverse trend in the trade account, the current-account
balance improved substantially in the 1960s as a result of considerable
inflows of private transfer payments from Portuguese emigrants and of
foreign tourist expenditures. Private remittances from the more than two
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million Portuguese laborers who have been attracted by the higher wages and
greater opportunities in other countries have become the second largest
earner of foreign exchange for Portugal, following merchandise exports.
Much of the increase in private capital inflows during the 1960s
represented short-term commercial credit to finance the increase in trade,
but a rising share can be attributed to foreign investment. Portugal's
.favorable investment climate-low wages, membership in a free trade area, a
protected domestic market, and stable currency and government-offers
considerable incentive to the foreign investor.
The overseas provinces contribute substantial foreign exchange to the
escudo area and have helped keep the overall balance-of-payments of the
area in surplus since 1962. The surplus on current account of the overseas
territories stems primarily from a large surplus on invisibles account with
third countries, largely transportation earnings and unspecified invisible
earnings from Macao. These invisible surpluses have more than offset the
deteriorating trade deficit of the overseas territories with third countries.
Transactions within the escudo area have resulted in a large surplus for
Portugal. However, this does not add directly to the Portuguese foreign
reserve position, since all commercial dealings between Portugal and the
overseas territories are denominated in escudos. International settlements are
effected through a payments system, established in 1963, which sets up a
monetary fund for the escudo area and provides for monthly balancing of
debit and credit positions among the various parts of the area through
transfers to or from reserve accounts of the respective territories held at the
E3ank of Portugal.
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II1. POLITICAL SITUATION AND TRENDS
History
The present authoritarian regime reflects the forms and problems of its
various predecessors, which were for the most part controlled by an elitist
group of politicians more interested in intriguing to remain in office than in
coping with national problems. The devastation of the Peninsular War from
1807 until 1811, when a French invasion caused the royal family to flee to
E3razil, left Portugal with lasting serious economic problems. These were
compounded by the loss of Brazil in 1822. After the costly civil and dynastic
Miguelite War from 1828-34 and various uprisings in the 1840s, a parliamen-
tary system was established in 1852 under the monarchy. However, this
form of government was also unable to cope with mounting economic
problems. Anticlerical and antimonarchical sentiment grew and in 1910 a
long-expected revolution overthrew the monarchy.
The Republic, which was proclaimed in October 1910, faced mounting
political and economic problems. Its constitution placed the executive at the
mercy of the legislative power. This led to a multiparty system, dominated
by rivalries that made it difficult for democratic government to function.
Anticlerical measures earned the hostility of the Roman Catholic Church.
The government's decision to enter World War I was unpopular among the
lower classes, and wartime restrictions brought about a series of strikes and
other demonstrations. There were insurrections from both left and right
before and after the war. Ina military coup in 1926, General Oscar
Carmona, after a brief rule by a military junta, took over the presidency. To
deal with the chaotic economic situation, which was compounded by the
debts incurred during World War I, an obscure economics professor, Dr.
Antonio Oliveira Salazar, was appointed finance minister with extraordinary
powers over governmental revenue and expenditure. He introduced
budgetary stringencies which soon brought fiscal solvency. In 1932, Salazar
was appointed prime minister, a post he held until his incapacitation caused
his removal in September 1968. Under his direction, a new constitution was
drawn up and approved by plebiscite in March 1933. By then, the permanent
nature of the regime-now referred to as the New State-and Salazar's
position as its effective leader had been recognized. Except for several revolts
that were suppressed in the early years of the dictatorship, the regime
established under Salazar has not been seriously threatened by political
opposition.
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The trauma of government instability and fiscal problems under the
parliamentary republic influenced Salazar to install an authoritarian system
dominated by the prime minister and to use economic controls to achieve a
stable currency with a large accumulation of reserves at the expense of
stifling economic growth, The regime's principal problem, however, was the
rebellion by native, independence-seeking African nationalist groups which
broke out in Portuguese Africa in 1961, To counter the rebellion, Lisbon
sent the greater part of its military forces to the African territories and
undertook major political, social, and economic reforms designed to improve
'the lives of the natives and to answer world criticism of Portuguese deter-
mination to retain its holdings in Africa.
When Salazar was incapacitated by ill-health in 1968, he was replaced
by Marcello Gaetano, a former protege. Gaetano initially relaxed some
authoritarian controls on censorship and on labor organizations and
instituted reforms to modernize the economy and improve social welfare and
education, all of which had lagged under Salazar. In addition, he pushed
through a constitutional reform to grant some autonomy to the overseas
provinces in running their internal affairs, but he has been slow to implement
the change. When student and labor unrest broke out, the premier clamped
down. Opposition from the far right forced him to proclaim as categorically
as had Salazar that he had no intention of giving up the African provinces.
Caetano's dismissal of his two chief economic reformers in the cabinet
reshuffle in August 1972 suggested that his initial efforts to modernize the
economy will proceed at a slower pace.
Structure and functioning of the government
The present constitution, approved in a national plebiscite on 19 March
1933, proclaims that Portugal is a unitary republic organized on corporative
principles. These involve a hierarchy of social and political associations from
the family to occupational corporations. The system is characterized by a
strong centralized control of the government by the executive branch. The
president (chief of state) is elected for aseven-year term by a government-
controlled Electoral College. In theory, the president is the top man because
he has the constitutional duty of appointing and dismissing the prime
minister (head of government), who presides over an 11-member Council of
Ministers (cabinet). In practice, however, power is concentrated in the hands
of the prime minister. He selects the members of his cabinet, who are in turn
directly responsible to him, Cabinet appointments and dismissals do not
require legislative approval.
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The bicameral legislature consists of the National Assembly and the
advisory Corporative Chamber. The number of deputies in the National
Assembly was raised from 130 to 150 in 1971. They are directly chosen to
four-year terms in government-controlled elections in metropolitan and
overseas districts. The members of the Corporative Chamber are chosen by
the government or by the various economic, administrative, and cultural
components of the corporative system. The chamber, with 216 members at
present, gives its opinion on form and content of all bills to be presented to
the assembly, as well as on many decree laws. The legislature's lack of
authority to oust the executive, coupled with the executive's power to issue
decree laws and to dissolve the assembly, reduces this body to a secondary
status. Although deputies may introduce bills, the assembly's effective
legislative function is largely confined to ratification of government bills or
decree laws. There is little, if any, chance of the assembly's passing a bill
opposed by the government in view of the executive's control over the
selection of deputies. Theoretically, the assembly has the right to override an
executive veto of any law it has approved, but this has never happened.
The judicial system is independent in principle but tends to be dom-
inated by the executive. The Council of Ministers exercises this domination
by controlling the appointment and dismissal of the Supreme Tribunal's
president, who in turn controls the appointments to the regular judiciary.
Supporters of the regime or those who will not upset the present system are
usually chosen for judiciary posts. There are three types of courts: (1)
regular or ordinary, with competence in civil and criminal cases; (2) adminis-
trative, with jurisdiction in all administrative or fiscal matters involving an
agency of the government; and (3) special, such as juvenile, military, and
labor courts. In all of these courts, the prosecutors and defense lawyers
present their cases to the judge or judges, who hand down a decision. Trial
by jury has not been used since World War II. The highest court is the
Supreme Tribunal, located in Lisbon. It has only appellate and review
jurisdiction and may not pass on the constitutionality of laws.
Although the constitution and legislative statutes grant citizens such
guarantees as inviolability of domicile, habeas corpus, and freedom from
arrest without warrant except in certain specified instances, these guarantees
are often deprived of effect by limiting qualifications and exceptions.
Mainland Portugal is divided into 18 administrative districts, each
headed by a civil governor. He is appointed by the government to see that its
policies are carried out, and is the supreme authority in the district. The
governor is assisted by an indirectly elected district council and a district
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board, both of which play purely advisory roles. The Azores and the Madeira
Islands-known as the Adjacent Islands-are considered integral parts of
metropolitan Portugal. They are divided into four autonomous districts
(three in the Azores and one in the Madeiras). Each district has a civil
governor and a general board which has administrative and financial responsi-
bilities similar to those of the continental district councils and boards.
The 22 districts of the mainland and the adjacent islands are further
divided into 304 townships (concelhosJ and these are subdivided into 4,022
parishes (freguesiasJ. With the exception of Lisbon and Porto, each township
is governed by a council and a chamber, both elected indirectly and presided
over by a mayor appointed by the minister of interior. Lisbon and Porto
have only a municipal chamber to assist the mayor. These two cities are
sub-divided into boroughs (barriosJ, each of which includes several parishes.
The parish, the smallest unit in the local government, comes under the
direct supervision of the township government or, in the cases of Lisbon and
Porto, under the borough administrators. Each parish has a board of three
members, elected for four-year terms by heads of families.
Portugal has seven overseas provinces: Angola, Mozambique, Portuguese
Guinea, the Cape Verde Islands, and Sao Tome and Principe Islands
(offshore from Gabon) in Africa; and Macao and Portuguese Timor in Asia.
They are represented in the 150 member National Assembly by 43 deputies,
elected by Portuguese citizens in the overseas provinces on the same basis as
those elected in mainland Portugal.
Administration of the overseas provinces is highly centralized under the
minister for overseas. His direct representative and the highest authority in
each of the provinces is agovernor-general in Angola, Mozambique, and
Portuguese Guinea, and a governor in the other provinces. These officials are
appointed for four-year terms by the Council of Ministers on the recom-
mendation of the minister for overseas.
In the July 1971 constitutional revisions, provision was made to grant
more autonomy to the overseas provinces for directing their own affairs.
Lisbon, however, retained control over international affairs and other
matters, such as the naming of provincial governors, national defense,
administration and finance, and economic integration. When the constitu-
tional law was implemented by the revised Organic Law for the Overseas
Provinces of April 1972, the names and some of the functions of the
overseas legislative and administrative bodies were changed, but Lisbon kept
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its veto power. The provinces of Angola and Mozambique were designated
states, apparently a mere cosmetic device. The governors-general of Angola
and Mozambique were accorded the rank, though not the title, of minister of
state with the right to attend cabinet meetings in Lisbon; but they remain
subordinate to the Ministry for Overseas.
Political dynamics
Political life in Portugal under Prime Minister Caetano has been only
mildly innovative and is still guided by the fundamental authoritarian
principles, established during Salazar's rule, which ensure the dominance of
the prime minister over all branches of government. Caetano's changes are
more a matter of style and flexibility in exercise of power than an alteration
in the power structure. Caetano likes to consult the people-both those
closest to him and in all parts of the nation-before making his decisions, and
he has clearly encouraged more expression of opinion than did Salazar. But
he remains convinced that all political activity must be channeled through
one officially recognized organization which the executive branch merely
consults. The official political organization, however, plays a limited role in
determining government policy, and on major issues the government is more
influenced by opinions of the military and the financial and business
interests whose support is a key factor in the stability of the regime.
A possibly significant new force- was introduced into the Portuguese
political system in October 1970 when Caetano personally authorized the
creation of the Society for the Study of Economic and Social Development
(SEDES). Its creation is the result of a search for a vehicle to move the
stagnant economy and society into the 20th century. Technocrats who were
brought into the government by Caetano felt the need of an organization to
promote their ideas of modernization of the economy, and politicians
wanted a vehicle which could have legal existence, confront problems, and
have contact with the people. Since Caetano also wanted modernization, he
agreed to authorize SEDES, which is intended to work as a pressure group
within the system. Its activities will undoubtedly give SEDES a political
image in spite of the fact that it is specifically denied a "political character"
by its statutes.
Political parties
In an effort to give a new image to the official political organization,
the old National Union became the National Popular Action (ANP) at the
group's fifth national congress in February 1970, and Caetano was acclaimed
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president of the Central Committee, Like its predecessor, the ANP remains
an instrument of the government designed to propagate the objectives of the
Estado Novo, ensure popular electoral support, and maintain in elective
offices persons who will actively promote the existing political and social
institutions. Entrance requirements are very liberal, and the government has
sought with some success to include prominent citizens whose views do not
entirely coincide with those of the regime. Despite these newer, relatively
liberal, aspects, the ANP's centralized control and internal discipline prevent
any member who disagrees with the basic concepts of the administration
from exercising any lasting influence within the organization.
The ANP membership is said to be slightly more than one percent of
the metropolitan populace. Yet the ANP consistently holds all of the seats in
the National Assembly, highlighting the authoritarian nature of the regime.
There are a number of democratically oriented political groups which,
though tagged as subversive by a suspicious regime, advocate the use of legal,
peaceful means to change the government. Generally known as the tradi-
tional opposition, they consist of remnants of the older Republican party,
several Socialist groups, and a number of liberal Catholics-by and large
composed of intellectuals and professional men. Police harassment has
prevented them from achieving any real degree of organization and, together
with press censorship and tightly controlled elections, has curtailed their
political activity over the years. Their chief tactic has been to address protest
petitions to the government. Although these groups are declared illegal, they
are in fact openly tolerated for brief periods preceding elections to the
National Assembly. However, the Communist Party and other radical groups
also declared illegal are not allowed to take any part in national political life.
The Republicans are largely elderly persons whose principal activity is
the publication of a newspaper, The Republic (A Republica). In 1963 some
Republicans and active Socialists joined forces to form the Social
Democratic Action (ADS), which for several years formed the largest ele-
ment of the non-Communist opposition. Young Socialists who became
dissatisfied with ADS' general inactivity broke away in mid-1966 to form the
Portuguese Socialist Action (ASP}, This group is headed by Mario Soares, an
able lawyer who has been in exile in France since 1970. The Socialists have
especially provoked the government by calling for peace in the African
territories by negotiated political solutions, including the recognition of the
principle of self-determination.
The Portuguese Communist Party (PCP), an illegal group under
constant police suppression, operates clandestinely at home with most of its
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leadership residing abroad. With only an estimated 2,000 members, it has
never become strong enough to be a threat. The pro-Soviet PCP opposes
terrorism in favor of joint political action by all "anti-Fascist forces" to oust
the regime. It has had limited success in obtaining the cooperation of other
political groups.
A number of more liberal Catholic laymen from the ranks of the
essentially conservative Catholic Action, a secular organization of the Cath-
olic Church, have publicized their opposition to the regime and their hope
for a change in government. This group could serve as the nucleus for a
Christian Democratic party at a future date under a more liberal regime.
Some monarchists still exist. Most of them support an organization
called the Monarchist Cause (Causa MonarquicaJ, which was permitted to
function under Salazar and has continued in an even less active role under
Gaetano. It favors the eventual restoration of the monarchy under the one
serious pretender to the throne, Dom Duarte Nuno, Duke of Braganca.
Electoral system
Elections in Portugal are based on two types of representation, one
popular and direct, the other corporative and generally indirect. The
members of the National Assembly and of the parish boards are chosen by
direct, though not universal, suffrage. The elected members of the Corpora-
tive Chamber and the municipal chambers are chosen on a corporative or
"organic" basis, that is, by and from specific social, economic, administra-
tive, cultural, and religious institutions or activities. The central government
maintains absolute control over both procedures; even in elections by direct
popular suffrage, it controls the electoral machinery from the time the voter
is registered until the final counting of ballots.
A new voting rights law, approved in December 1968, gives women the
same voting rights as men. The new law grants the vote to all Portuguese who
have reached majority (emancipados, i.e., at least 21 years of age or free
from parental control), who are able to read and write Portuguese and who
are in full possession of their political and civil rights. Illiterates who had
previously voted if they paid annual taxes may continue to vote.
The most serious obstacle to free elections is the general prohibition on
the formation of political parties. Although campaigning by independents is
permitted for a period of approximately 30 days before National Assembly
elections, opposition parties as organized entities are not allowed to enter a
slate of candidates.
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In the 1969 elections, electoral committees in support of lists of
candidates were permitted for the first time. But strict rules limited
campaign meetings and publicity. The opposition soon split into separate
tickets, a move that killed any small chance it might have had to win a few
seats.
Candidates of the National Union-as the government organization was
then called-again won all seats in the National Assembly, with the sup-
porters of Prime Minister Gaetano winning a majority over far right factions
of the regime. In the metropole (which includes adjacent islands), the
National Union obtained 87.7% of the total vote of 1.04 million. This total
vote was not quite 58% of the 1.8 million registered voters. This was an even
lower participation than in 1965, when 73.7% of the registered voters
participated. There is evidence that some voting fraud was practiced to
ensure the overwhelming vote that government candidates received, although
the regime did not need to do so to win.
In local elections there is very little competitive interest, and the
government organization ticket is generally unopposed. The three-member
parish boards (juntas de frequesiaJ are elected by heads of families, listed in a
special electoral register controlled by the government. Parish elections are
held every four years, but the schedule is arranged so that local elections do
not occur in the same year as National Assembly elections. The last local
elections took place in October 1971.
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The smooth passage of power from Salazar to Gaetano in 1968 reduced
the possibility of instability and subversion. Nevertheless, if the new govern-
ment does not respond to a deepening desire for national modernization,
including a marked improvement in living conditions, the public tranquility
may well be threatened. Since the liberal and leftist opposition groups will
probably remain under tight control for the foreseeable future, the more
immediate threat to the regime comes from among its most conservative
supporters-the diehard Salazarists who want no policy changes and some
high-ranking military officers. Caetano's ability to know when to respond to
pressure from this element is valuable to keeping it in line.
Only those political groups that seek change by other than democratic
means are of real concern to the government. Among these is the Portuguese
Communist Party (PCP), which operates as an underground and exile organi-
zation. The party is kept under control by constant police surveillance and
frequent arrests of members. While not a threat at present, the PCP has had
some success in penetrating non-Communist opposition groups and plays a
dominant role in student organizations and in promoting student unrest.
Various dissident Communist groups include the pro-Peking Popular Action
f=ront (FAP), which is believed to be moribund as a result of police
suppression, and the Patriotic Front of National Liberation (FPLN) with
headquarters in Algiers. There are several terrorist groups which since 1970
have resorted to sporadic bombing of military, police, and NATO installa-
tions to dramatize opposition to the government. The Armed Revolutionary
Action (ARA), which is suspected of links with the PCP, has claimed credit
for some of these incidents. Two or three "revolutionary brigades" have
sought public credit for other incidents. The brigades appear to be linked to
the FPLN but could be a Communist party ploy to divert police attention
from the ARA. Although the terrorist groups are more of a nuisance than a
threat to the Mgovernment, they are a cause for concern. The police have
made numerous arrests in a continuing effort to stamp then out.
An important factor in the subversive picture is the rise of Portuguese
African nationalist organizations based in sympathetic African countries and
aimed at forcing Portugal to give up its African provinces. The initial threat
posed by these organizations stirred the Portuguese Government to increase
greatly its developmental as well as security efforts in the African provinces.
As a result the nationalist movements have made little headway in more
recent years in stirring up native support. The African nationalists could pose
a critical threat to Portugal's hold on the provinces or to the Lisbon regime
only if they substantially increased their propaganda efforts and their armed
attacks.
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Defense organization and manpower
The president of the republic is commander in chief of the armed and
security forces. Actual control is exercised by the prime minister through the
minister of national defense and army, minister of the navy, minister of the
interior, minister of finance, and the secretaries of state for army and air.
Any prime minister of Portugal is dependent upon the support of the
military leaders for his continuance in office, but the prime minister in turn
usually appoints his supporters to the key positions. Prime Minister Gaetano
has raised military pay and increased expenditures for military equipment to
win support of the military. He has changed some of his policies in deference
to military wishes, but he dismissed a general who publicly criticized his
policies.
The president and the prime minister are advised by a Superior Council
of National Defense. In wartime, this council would assume the powers and
duties of the Council of Ministers in matters relating to the strategic
direction of the war and the efficiency of the armed forces and would
control priorities. The ministers with a major interest in defense and the
chief of the general staff are members of this council. The prime minister
also is advised by a Superior Military Council on armed forces training,
armament, and allocation of funds for equipment and training, and in time
of war on the preparation for and conduct of military operations. Member-
ship includes the minister of national defense and army, who presides in the
absence of the prime minister, minister of the navy, the secretaries of state
for army and air, the chief of the general staff of the armed forces; the three
service chiefs of staff; and an assistant secretary of national defense who acts
as non-voting secretary. The General Secretariat of National Defense, which
is headed by the chief of the general staff of the armed forces, is the
executive body which transmits instructions and directives from the minister
of national defense and army to the three services and coordinates matters
with the internal security forces.
The armed forces consist of a 180,000-man army (including 48,700 in
the metropole and 131,300 overseas, mostly in Africa); an 18,000-man navy
(including 3,200 marines, of whom 2,100 are on duty in Africa) with 12
major combatant ships; and a 19,000-man air force (including 3,500
paratroopers, of whom about 2,000 are on duty in Africa) with 714 aircraft,
of which 128 are jets. There are three paramilitary organizations-the
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8,000-man National Republican Guard, 5,700-man Fiscal Guard (also known
as Customs Guard), and 24,800-man Public Security Police (of whom only
12,500 are in metropolitan Portugal) which have primary responsibility for
maintaining internal security. The Portuguese Legion, aparamilitary-type
force which claims 60,000 members, assists the security forces by main-
taining surveillance over potentially subversive elements.
IVlilitary budget
Although rising in absolute terms, Portugal's military appropriations
have been declining as a percentage of the central government budget and
the gross national product (GNP). This percentage, however, remains the
highest in Western Europe. From 1968 to 1970, defense budgets averaged
38.7% of the central government budget and 5.9% of the GNP; during the
period 1965-1967, they averaged 43.7% of the central government budget
and 7.6% of the GNP. Portuguese military appropriations include funds for
the overseas military forces stationed primarily in Angola, Mozambique, and
Portuguese Guinea. Since 1968, annual overseas military budgets have been
announced at a level equivalent to US$139,130,000, about 40% of the total
defense appropriation.
Logistics
Logistic efforts are concentrated on support of the forces in Africa,
primarily the army, which has the predominant role in the counter-
insurgency. Logistical funds for the three services are allocated by the
minister of national defense and army with the advice of the Third Bureau of
the staff of the Secretariat General of National Defense. In addition to
providing its own support, the army also performs a number of logistical
functions for the other armed forces. It is responsible for making uniforms
and for the procurement, storage, movement, and issue of common-use
supplies, including subsistence items, medical supplies, small arms and their
ammunition, and petroleum, oil, and lubricants (POL). Subsistence and POL
supplies are procured and handled by the Military Support Organization, a
military production facility that has branches throughout the metropole,
Portuguese Africa, and Timor. For the overseas forces, many food items are
bought in Western Europe and shipped directly to the overseas provinces,
while combat rations and foods such as wine and olive oil are shipped from
the metropole. Probably half of the canned food products, milk, and fruits
used by the forces in Africa are obtained now from South Africa. Lines of
communication have been strengthened in Angola and Mozambique to
facilitate supply movements. Storage facilities for all classes of supplies are
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now adequate in the African provinces; most items of equipment are also
repaired and overhauled in Africa.
Portugal produces transport vehicles, wheeled armored personnel
carriers, small arms, ammunition, aerial bombs, military telecommunications
and electronics equipment, and incendiary, smoke, and tear agent munitions;
it also produces naval ships as large as modified destroyer escort class. Other
military equipment is imported from other NATO countries.
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The departure of Salazar from the political scene made possible some
adjustments in Portuguese foreign policy in response to changing pressures in
the outside world. Lisbon's decision to seek closer integration with Europe,
followed by its decision to reactivate an earlier application for association
with the European Communities, contains the most significant long-term
possibilities for change. Gaetano has also sought to revitalize Portugal's
relations with Spain, certain African states, Brazil, and the United States.
Along with these initiatives, the Gaetano government has continued to
maintain the fundamental objectives of Salazarist foreign policy: the main-
tenance of Portugal's separate identity on the Iberian Peninsula (i.e.,
avoidance of absorption by Spain), the defense of the overseas provinces,
and the preservation of Portugal's international prestige. Actually, the
security of the African provinces has been of overriding importance,
requiring at times a de-emphasis on closer relations with the Western alliance
and even a change of emphasis on relations with the major members of this
alliance. Although recognizing its need to rely on US leadership in Western
defense matters and valuing traditional ties with the West, the government
has deplored what it considers acquiescence by the US and the United
Kingdom in African and Asian nationalist movements.
Portuguese apprehension lest its national sovereignty be compromised
has made Lisbon at best a reluctant partner in some of the world and
regional bodies it has joined. Lisbon's participation in such organizations as
-the United Nations and its specialized agencies and NATO has been further
affected by the opposition of various member nations to Portugal's policies
toward its overseas territories. With the disbanding of the European Free
Trade Association, Portugal-along with other EFTA members not joining
'the European Communities in January 1973-signed a free trade area agree-
ment with the EC in July 1972.
Friendly relations with Spain have been a key element in Portuguese
foreign policy under both Salazar and Gaetano. The relationship was
formalized in the "Iberian Pact," the name applied in 1942 to the 1939
Treaty of Friendship and Nonaggression, which has been renewed every ten
years. In May 1970 Gaetano made an official visit to Madrid to continue the
top-level personal contact that Salazar had established with Franco.
Cordial relations with France are aided by the strong francophile
tendencies of educated and influential Portuguese. For the past two cen-
turies, French culture has had a marked influence on Portuguese intellectual
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life and institutions. Under a bilateral agreement signed in 1964, Portugal
provided France with amissile-tracking site and related facilities on Flores
Island in the Azores. French shipyards and the French aviation industry have
sold ships, submarines, and aircraft to Portugal.
For centuries before World War II, the cornerstone of Portuguese
foreign policy was- the alliance with the United Kingdom, originally con-
cluded in 1386 as protection against the emergent Kingdoms of Castile and
Aragon. The treaty has never been repudiated, but the alliance has several
times been under severe strain. Among the strains were the British failure to
support Portugal during -India's take-over of Goa in 1961, the coming to
power of the "anti-Salazar" British Labor government in late 1964, and
economic sanctions imposed by the United Nations on Rhodesia-enforced
in part by British warships patrolling off Beira in the Mozambique Channel.
Since the Conservative government in Britain came to power in 1969,
London and the Gaetano government have sought ways to improve relations.
The British have agreed to assist Portugal in improving the terms of the
Portuguese agreement with the EC negotiated in 1972.
The special place of Brazil in Portuguese foreign relations is based on
bonds of common language and culture between Portugal and its former
possession. Lisbon has long sought to build a Luso-Brazilian Community and
to improve trade and political and military cooperation for the defense of
the South Atlantic. Lisbon also wants Brazil's support in the United Nations.
While Brazil has agreed to cultural ties and improved trade, it has not
supported Lisbon's African policies or a South Atlantic defense pact. In
1971, an agreement was signed granting equal special rights to the citizens of
both countries.
Portugal's relations with African states have been greatly influenced by
the rebellion of black nationalists in the Portuguese African provinces. In the
case of white-ruled South Africa and Rhodesia, the struggle has brought
some cooperation in the intelligence and defense fields and in economic
projects among the three countries in spite of cultural and political dif-
ferences.
Despite Lisbon's policy of recognizing emerging new nations, its rela-
tions with the black-ruled states that border its African territories have been
complicated by the fact that the majority of these neighbors give material
support and refuge to the anti-Portuguese rebels. Without the bases and the
access to arms from abroad permitted by the neighboring states, the
insurgents could not continue to be a real challenge to the Portuguese.
Portugal VII - 2
No Foreig~gn~DFi~ssem
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Lisbon has sought to reduce such support from these countries through
tactics ranging from denying them use of rail facilities in Angola and
Mozambique to mounting cross-border attacks on rebel camps outside the
territories. Portuguese officials have also supported dissidents from various
neighboring African countries for use in paramilitary operations against these
countries. The Portuguese have from time to time tried a conciliatory
strategy, notably by initiating talks with various black African governments.
But the ideological commitment of these states to ending the colonial status
of the Portuguese African territories has made it difficult to reach any
long-term modus vivendi.
Portugal has no diplomatic relations with any of the Communist coun-
tries except Cuba. It does, however, carry on trade with Communist China,
the Soviet Union, and all other Communist countries in Eastern Europe
except Albania. In the case of China, Portugal has modified its strongly
anti-Communist policy and propaganda, largely because its overseas
possession-Macao-is a virtual hostage of the Peking government,
In spite of its hostility to Communism and lack of diplomatic relations
or official cultural or educational agreements with Communist countries,
Lisbon since the late 1960s has permitted private Portuguese entrepreneurs
to sponsor performing artists and films from Communist nations. Thus there
appears to be a minor trend toward mutually acceptable, commercially based
cultural exchanges.
Portugal VII - 3
No Foreign Dissem
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US interest in Portugal stems largely from the value of the air and naval
facilities in the Azores Islands to the US commitment under NATO to
protect the southern tier of free European nations. The US presence in the
Azores dates from a November 1944 agreement, which was followed by two
subsequent agreements modifying and extending US rights to 1951. The use
of these bases during any war in which Portugal and the United States are
involved within the NATO framework was granted for as long as the NATO
treaty is in effect. But peacetime use by the United States, authorized by the
1951 agreement for five years, has been subject to periodic renegotiation.
After two extensions,' the base rights agreement on peacetime use expired at
the end of 1962, after Salazar recessed the renegotiations to show disap-
proval of US unwillingness to support Portuguese policy toward their over-
seas provinces. The US was permitted to use the base without cost, however,
pending the conclusion of negotiations for base rights extension. Extension
until February 1974 was finally agreed upon in December 1971. Although
not formally linking it to the extension, the US agreed to provide economic
assistance for development programs in metropolitan Portugal. This quid pro
quo was $1 million for. educational assistance; the cost-free -ease of an
oceanographic vessel; $5 million drawing rights for non-military excess
equipment; waiver of the Portuguese annual contribution of $175,000 to the
US Military Assistance Advisory Group for two years; and a PL-480 program
for FY 1972 and 1973 of $15 million per year. Primarily for Portuguese
public relations purposes, the agreement included a statement by the
Export-Import Bank that the bank would give favorable consideration to
Portuguese applications for financing US exports to Portugal.
The United States had 1,589 men stationed at the Azores base as of
March 1972. It also contributes about 70 men to the complement of 200
(drawn in almost equal proportions from Britain, Portugal, and the United
States) to NATO's Iberian Atlantic Command (IBERLANT), a subordinate
NATO headquarters for which Portugal provides facilities near Lisbon. The
United States also has access to Portuguese facilities in Angola and
Mozambique. Since current US policy forbids US naval vessels from calling
at South African ports, the US Navy considers such access, especially in
Mozambique, to be essential. The US Air Force and NASA overfly Portu-
guese Africa in staging air-sea rescue missions or in providing coverage for
space missions.
The United States during 1946-62 made available to Portugal some
US$3?_4.5 million in military assistance and around $152.1 million in
Portugal Dec 72
No Foreign Dissem
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No Foreign Dissem
economic aid. By the late 1960s this assistance was reduced to about $1
million annually for military aid and economic assistance limited to loans
under a PL-480 program. In FY 1970 US aid to Portugal was $5.6 million, of
which $1.3 million was military aid. Lisbon considered that this assistance
was essentially in support of its NATO role and not in payment for the
Azores base rights.
US direct investment in Portugal is modest, with a book value of only
some $119 million at the end of 1970. The Portuguese Government
welcomes foreign investment, not only for the new jobs it creates, but also
for the technology that generally accompanies such outlays.
The United States accounts for a relatively small share of Portugal's
foreign trade. Imports from the United States have remained constant at
about seven percent since 1960, while Portuguese exports to the US con-
stitute less than nine percent of the total. Trade consists of relatively small
quantities of a wide range of products. The most important imports from the
US are machinery and transport equipment. Exports to the US include wine,
cork, and textile products.
Portugal VIII - 2
No Foreign Dissem
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 proved F
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PemcM1i
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e varai;
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PORTUGAL
Statute Mlles
0 )5 100
Kilomiacera
Intarnationel bountlary ., -~~ Railroad
-~-~- platrict Doundery Oivitletl highway
? National capital Road
Calm_ plstrict capital ,j, Major port
+' Airfield
POpulatetl places
Ovar 250,000 0 10,000 to 50,000
? 50,000 to 250,000 ? Untler 10,000
Oisk~ch a mad otter ehei respec capitols
rc S-oe .l.wNaaa in balk
Scale 1:1,500,000
25 50 ]5 l00
Glb~rla(
Algacirae4~
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ECONOMIC ACTIVITY
I(in'a"irpt: nia:i,?m?tanurcv.
electrical, pet~oebemice0
0 CprM pmtluctlpn
Q Wi epmtluctlon
w all prptlumipn
['/ Nlnpr wonpmlc agivlb
M Fiabprausaing polar
LAND UTILIZATION
NONCULTIVATEp AREAS
fOwrso^p, ?(land ??rh.. ea?akd)
- F?reet Peature
CUIiIVATEO AREAS
fOwrso?e elleed:v,hw ?mpiedl
- Cmpa antl livertpcF
Iprimarlly corn, beans, cattle)
~ aareaa.ptle.Raablea
(mimedly rye entl pomNeal
h._~~ m"~mea~6rw.?l..repa,.aii..el
Tco~imartlvfigaaae.Imaeae~
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Secret
No Foreign Di.crerrt
Secret
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