A republic of southwestern Europe, metropolitan Portugal is on the Atlantic coast of the Iberian Peninsula, which it shares with Spain. Area: 92,135 sq km (35,574 sq mi), including the Azores and Madeira Islands groups/archipelagoes in the Atlantic. Pop. (1996 est.): 9,927,000. Cap.: Lisbon. Monetary unit: Portuguese escudo, with (Oct. 11, 1996) a free rate of 154.90 escudos to U.S. $1 (244.01 escudos = £1 sterling). Presidents in 1996, Mário Soares and, from March 9, Jorge Sampaio; prime minister, António Guterres.
Portugal’s Socialist government got off to a strong start in 1996, swiftly delivering a deficit-cutting budget that sought to meet Maastricht Treaty criteria for membership in the European economic and monetary union (EMU) but did not shortchange social programs. Building on the solid economic foundation left by the Social Democratic Party (PSD), the government presented an ambitious privatization program and reinforced efforts to streamline the tax-collection process and crack down on tax evaders. In January former Lisbon mayor Jorge Sampaio gave the Socialists an extra stimulus by defeating former PSD prime minister Aníbal Cavaco Silva in the presidential elections. When Sampaio took office in early March, it was the first time in Portugal’s postrevolutionary period that the president had been chosen from the same political party as the prime minister. Sampaio succeeded Mário Soares, a hero of the 1974 revolution, who closed out his two-term, 10-year presidency and started a foundation to promote democracy.
In October the government once again presented a deficit-cutting budget and declared that its primary goal was to join Europe’s proposed single-currency bloc on time in 1999. Thought of as a dark horse in the race to meet the EMU criteria by the deadline, Portugal nevertheless boasted one of the most improved economies in Europe; inflation had fallen steadily, the deficit had been trimmed consistently, exchange rates had been mostly stable, and the ratio of public debt to gross domestic product had also followed a slow downward path in recent years.
While the Socialists shined, opposition parties across the political spectrum fell into disarray. The centre-right PSD elected university professor and political commentator Marcelo Rebelo de Sousa party leader and struggled to find a unified voice in the parliament. With many of their economic policies taken over by the Socialists, the PSD found it difficult to present a clear alternative program and capped the year by saying that in order to avoid political instability, they would not oppose the government’s budget. The right-leaning Popular Party, meanwhile, suffered internal struggles for power, while the Portuguese Communist Party saw its electoral support remain stationary in opinion polls.
On the diplomatic front, Portugal achieved two major victories. In late October it triumphed over Australia in gaining a seat on the UN Security Council. Earlier in the month two activists fighting for peace and autonomy in the former Portuguese colony of East Timor--annexed by Indonesia in 1976 but not recognized by the UN--had been awarded the 1996 Nobel Prize for Peace. Portuguese officials said both events reflected hard-won lobbying success and the growth of Portugal’s influence.
In other developments work continued on the 1998 world exposition site in Lisbon, which would feature one of the world’s largest aquariums. Construction started on a new automobile bridge across the Tagus River, linking the south bank to the exposition site, while the 25th of April Bridge farther west began renovation to add a rail link. Downtown Lisbon also embarked on an ambitious exposition-related facelift, which included the extension of the city’s subway system and the renovation of a number of historic buildings.
See also Dependent States.