From The Sunday Times February 14, 2010
Portuguese look to Brazil, not Brussels, for help
Faced with a Greece-like situation, people are relying on Latin linksMatthew Campbell in Lisbon
Outside the Brasilia sandwich bar in a poor part of Lisbon one afternoon last week a group of men leaned against the wall, chatting and smoking cigarettes. One of them whistled at the black prostitute touting for business over the road. A beggar in a threadbare coat swigged from a bottle.
Welcome to sunny Portugal.
Known for its seaside resorts and soulful fado music, the unassuming country on the western frontier of Europe is just as much in the mire as Greece as it struggles with soaring debt and rising unemployment, which have pushed a naturally melancholic people to the brink of despair.
Any mention of the word “work” provokes sniggers outside the sandwich bar. “There’s no jobs round here,” says Dario, 30, a bricklayer. “I’d go to Brazil if I could afford the air fare.”
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Jose Socrates, Portugal’s socialist prime minister, finds himself in a corner. Having lost his majority in September’s elections, he is struggling to keep order. He insists that his country does not need help from the European Union, let alone the International Monetary Fund, to restore fiscal health.
The markets, however, do not seem convinced by assurances that spending cuts alone will bring the deficit — which reached 9.3% of GDP last year — to below 3% by 2013.
It takes a lot to stir the introspective Portuguese, but a giant demonstration has been called for March 4 to vent anger against a promised publicsector wage freeze and job cuts.
Like neighbouring Spain, the country has taken great strides from the days of dictatorship, emerging with optimism and relief into the sunny upland of paved roads and democracy after joining the EU in 1986.
Socrates boasts that in the five years he has been in office Portugal has become one of Europe’s leaders in renewable energy and electronic government, allowing more and more citizens to pay their bills over the internet.
He has won plaudits for guaranteeing every schoolchild a laptop computer and English lessons from the age of six. Although they may not find a job at the end of it, 35% of Portuguese people now go to university.
What sustained Portugal before, though, was not the dynamism of its politicians but its low labour costs. Eastward expansion of the EU and the loosening of trade barriers with Asia were disastrous for Portugal. It found it could not compete with the likes of the Czech Republic and Slovakia. The economy stopped growing a decade ago.
“We must learn to adapt, to diversify and rediscover the dynamism of our ancestors,” said Antonio Monteiro, a former foreign minister and ambassador to Paris, referring to the golden era of the great 15th-century navigators. “We must learn to compete in a globalised world.”
People are sceptical, though, about the government’s chances, and for many a voyage of discovery seems preferable to sitting out an economic meltdown at home: the “brain drain” has accelerated in recent months as unemployment has crept up to almost 11% — it is double that for the young — with signs of worse to come.
The promised budget cuts, casting doubt over muchvaunted projects such as a high-speed rail link to Madrid and a new airport in Lisbon to replace the tiny one on the edge of the city, have heightened the sense of uncertainty.
By contrast, Brazil, a Portuguese-speaking power in the tropics, seems a land of opportunity. “We feel closer to Brazil than to Germany or other European countries,” said Luis Barbosa, a telecommunications company director who spent 15 years running businesses there. “We have the same, easy-going temperament.”
He talks about the reemergence of a “golden triangle” binding Portugal, Brazil and Angola, another former colony, which has become one of Africa’s largest oil producers.
“It will never replace Europe,” he said. “But it’s a useful card to have up our sleeve.”
The balance of power may have shifted, though, in this age-old alliance, and some refer to “reverse colonisation” to describe the way newly rich Angolans are buying up chunks of the Portuguese economy, not to mention the goods in the Louis Vuitton store on the Avenida da Liberdade in central Lisbon.
Others talk of the “Latin-Americanisation” of Portugal, not just because of the influx of Brazilian money. About 20% of Portugal’s population is estimated to be living below the poverty line, and the contrast between the weed-choked immigrant slum on the edge of Lisbon known as Cova da Moura, or “Moor’s den”, and the poolside villas, gated communities and luxury hotels on the coast at Cascais reflects the greatest gap between rich and poor in any European country.
BMW unveiled its latest 5-series model at a glitzy event in a Cascais hotel last week. But not even this opulent enclave is safe from the storm: the Casino Estoril, a cathedral of gleaming marble and neon owned by Stanley Ho of Macau — another former Portuguese colony — recently laid off 100 workers.
Expensive cars gleamed in the car park on Wednesday night but the atmosphere inside suggested a funeral parlour: there was not a high roller in sight as a group of bored-looking retired people stared in silence at a turning roulette wheel.
Cova da Moura, considered the most sordid slum in the country, is by no means as desperate as the rag-strewn slums around Rio de Janeiro, but taxi drivers are not happy to go there. African youths sitting in doorways glare menacingly at drivers who venture in.
The more worrying part of “Brazilification”, perhaps, is Portugal’s apparent powerlessness against South American drug-trafficking gangs that have taken root with impunity on its soil. Police say about a third of Europe’s cocaine comes in by sea through Portugal.
For some the pull of Latin America is an example of life imitating art: in The Stone Raft, a 1986 novel by Portugal’s Nobel laureate Jose Saramago, the Iberian peninsula breaks off from Europe and floats westward out into the Atlantic.
Portugal insists that it has no intention of leaving Europe, let alone reinstating the escudo. “That will never happen,” says Monteiro, the former diplomat. “We are in Europe and will stay there.”
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