Cavaco Silva's leadership

ANIBAL Cavaco Silva -- just ending his first official visit to Washington as Portugal's prime minister this week -- is the Reagan administration's kind of man. In his first year as leader of the minority Social Democratic government, Dr. Cavaco Silva has been attempting to modernize Portugal's economy by promoting private enterprise and trimming public spending. He has acted boldly and assuredly in parliamentary maneuvers, despite his party's minority position. He is remarkably popular, winning the approval of 3 out of 4 Portuguese citizens, even surpassing President M'ario Soares, the Socialist with whom Cavaco Silva shares authority under the Portuguese version of ``cohabitation.''

It would help Portugal's political stability if next year's planned revision of the Constitution produced a form of proportional representation -- perhaps along the West Germany model -- that would permit an effective politician like Cavaco Silva to form a majority government.

As it is, Portugal has been doing some things right. It has been making the most of its opportunity as a new member of the European Community. The $70 million a year it has begun to receive from the EC is helping with the modernization of agriculture. Partly because it is starting from behind, its anticipated 4 percent GNP growth for this year and next year will be the best among the EC nations. Inflation, which had been running 30 percent before Cavaco Silva took charge, is now in the 10 percent range: The prime minister, a trained economist, says it will drop to the EC average of 4 or 5 percent within two years. A key asset in the inflation fight -- and here the prime minister departs from Reagan economic philosophy -- is the prospect of forming a social contract among government, industry, and labor.

Portugal also needs more foreign investment, which is now running at $250 million a year. And this requires both political stability and the encouragement of private institutions to take the lead.

All in all, in his grasp of these issues the Portuguese prime minister is showing an impressive pragmatism among the new generation of European leaders.

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