New Portuguese Government Readies To Take EC Spotlight

PORTUGUESE leaders proudly display their country's membership in the European Community as a centerpiece of its economic and foreign policies.Buoyed by its Oct. 6 national election, the government of Prime Minister Anibal Cavaco Silva will take the helm of the 12-nation EC on Jan. 1, in a six-month rotation of the EC presidency. Pointing to Portugal's economic growth - the fastest in Europe - during his past four-year tenure, Mr. Cavaco Silva says voters endorsed his government's "stability, progress, and development." A Portuguese Foreign Ministry official comments that six years after Portugal joined the EC, the government is credited with raising the standard of living. The government "played on stability during the campaign - stressing that it's the first to last four full years since the revolution," he says. Compared to the rotating governments of the early 1980s, "when one coalition right after another came to power, there is a sense of continuity in economic and foreign policies today," says Scott MacDonald, an international economist at the United States Comptroller of the Currency and author of an upcoming book on Portuguese foreign affairs. With less than 30 percent of the vote, the Socialists - the main opposition party - didn't do as well as political analysts expected. Pulling in less than 9 percent, the Communist Party registered only a marginal impact on the electorate. "People were worried that the Socialists would absorb the Communists, so far less voted for the Socialist Party than we expected," says the Foreign Ministry official. The "Communists went from a real dynamic force in the 1970s to political irrelevance in 1991," adds Mr. MacDonald. The coalition-free government allows Portuguese leaders to make tougher decisions, says MacDonald. And a host of tough issues confront the government. The chief domestic challenge is to fight inflation. At 12 percent, it is double the EC average. The country's farmers want the government to redress imbalances between Portuguese agricultural producers and their European competitors. Being a member of the EC has allowed the free transfer of goods, but Portuguese farmers say they are at a distinct disadvantage. With Portuguese taxes and interest rates higher than the EC average, and Portuguese infrastructure and technology at a lower level, farmers and some Portuguese industrial producers claim they cannot compete. Cheaper and better distributed produce from EC neighbors is hurting Portugal's domestic suppliers and dampening their prospects for export markets. While Portugal's EC membership affords growth, it also highlights differences between this Southern European country and its richer partners. When Lisbon assumes the EC presidency and becomes the Community's focal point, Portugal's deficiencies will be visible to its richer partners. "The gaps in infrastructure will be obvious," says MacDonald. "The telecommunications aren't good, the transportation system isn't sophisticated. It has much catching up to do in terms of high-technology." Officials in Lisbon will push to beef up the role of the Community's 12 members rather than concentrate decisionmaking in a small group. Issues ranging from the Gulf war to the breakup of Yugoslavia and the Soviet Union now command a unified EC policy; Portugal expects to be at the center of its development. "It will be a real eye opener to the Portuguese [once they hold the EC presidency]," says MacDonald. "They haven't been in the European limelight since the 1400s or early 1500s."