Geography
Area: 92,391 sq. km., including the Azores and Madeira Islands; slightly smaller than the State of Indiana.
Cities: Lisbon (capital, metropolitan area pop. 1.9 million), Porto (metro. area 1.7 million), Faro.
Terrain: Mountainous in the north; rolling plains in the central south.
Climate: Maritime temperate, average annual temperature is 16°C (61°F).

People
Nationality: Noun and adjective--Portuguese (singular and plural).
Population (2004): 10.56 million.
Population density: 113 per sq. km. (275 per sq. mi.).
Annual growth rate (2003): -1.3%.
Ethnic groups: Homogeneous Mediterranean stock with small black African and Eastern European minorities.
Religion: Roman Catholic, 97%.
Language: Portuguese.
Education: Years compulsory--9. Literacy (2004)--93.3%.
Health (2004 est.): Birth rate--10.82/1,000. Death rate--10.43/1,000. Infant mortality rate--5/1,000. Life expectancy--77.53 years.
Work force (5.48 million): Government and services--60%; industry--30%; agriculture--10%.

Government
Type: Republic.
Constitution: Effective April 25, 1976; revised October 30, 1982, June 1, 1989, November 5, 1992, and September 3, 1997.
Branches: Executive--president (head of state), Council of State (presidential advisory body), prime minister (head of government), Council of Ministers. Legislative--unicameral Assembly of the Republic (230 deputies). Judicial--Supreme Court, district courts, appeals courts, Constitutional Tribunal.
Administrative subdivisions: 18 districts, 2 autonomous regions.
Major political parties: Social Democratic Party (PSD), Socialist Party (PS), Popular Party (CDS/PP), Portuguese Communist Party (PCP), Left Bloc (BE).

Economy
GDP (2005): €147.8 billion (approx. $175 billion).
Annual growth rate: 1.4%.
Per capita GDP (2005): €14,100 (approx. $16,700).
Avg. inflation rate (2006): 2.5%.
Natural resources: Fish, tungsten, iron, copper, tin, and uranium ores. Agriculture: Products--forestry, fisheries, cork, wine.
Industry: Types--textiles, clothing, footwear, wood and cork, paper, chemicals, manufacturing, food and beverages.
Services: Commerce, government, housing, banking and finance.
Trade (2005): Exports--$38.14 billion: vehicles (not railway), electrical machinery, machinery, knit apparel, mineral fuel/oil, footwear. Imports--$61.17 billion: mineral fuel/oil, vehicles (not railway), electrical machinery, machinery, plastics, iron and steel. Export partners--Spain (25.8%), France (13.0%), Germany (11.7%), U.K. (7.9%), United States (5.4%), Italy (4.2%), Netherlands (4%). Import partners--Spain (28.9%), Germany (13.4%), France (8.5%), Italy (5.2%), Netherlands (4.3%), U.K. (4.6%).
U.S. trade (2005): Exports--$1.13 billion: aircraft/spacecraft, electrical machinery, grains, seeds, fruits, optical/medical, wood. Imports--$2.34 billion: machinery, electrical machinery, mineral fuel/oil, textiles, cork, beverages, footwear.

HISTORY
Portugal is one of the oldest states in Europe. It traces its modern history to A.D. 1140 when, following a 9-year rebellion against the King of Leon-Castile, Afonso Henriques, the Count of Portugal, became the country's first king, Afonso I. Afonso and his successors expanded their territory southward, capturing Lisbon from the Moors in 1147. The approximate present-day boundaries were secured in 1249 by Afonso III.

By 1337, Portuguese explorers had reached the Canary Islands. Inspired by Prince Henry the Navigator (1394-1460), explorers such as Vasco da Gama, Bartolomeu Dias, and Pedro Alvares Cabral made explorations from Brazil to India and Japan. Portugal eventually became a massive colonial empire with vast territories in Africa and Latin America (Brazil) and outposts in the Far East (East Timor, Macau, Goa).

Dynastic disputes led in 1580 to the succession of Philip II of Spain to the Portuguese throne. A revolt ended Spanish hegemony in 1640, and the House of Braganca was established as Portugal's ruling family, lasting until the establishment of the Portuguese Republic in 1910.

During the next 16 years, intense political rivalries and economic instability undermined newly established democratic institutions. Responding to pressing economic problems, a military government, which had taken power in 1926, named a prominent university economist, Dr. Antonio Salazar, as finance minister in 1928 and prime minister in 1932. For the next 42 years, Salazar and his successor, Marcelo Caetano, appointed prime minister in 1968, ruled Portugal as an authoritarian "corporate" state. Unlike most other European countries, Portugal did not play a combatant role in World War II. It was a charter member of NATO, joining in 1949.

In the early 1960s, wars with independence movements in Portugal's African territories began to drain labor and wealth from Portugal. Professional dissatisfaction within the military, coupled with a growing sense of the futility of the African conflicts, led to the formation of the clandestine "Armed Forces Movement" in 1973.

The downfall of the Portuguese corporate state came on April 25, 1974, when the Armed Forces Movement seized power in a nearly bloodless coup and established a provisional military government.

GOVERNMENT AND POLITICAL CONDITIONS
Portugal moved from authoritarian rule to parliamentary democracy following the 1974 military coup against dictator Marcello Caetano, himself a continuation of the long-running dictatorship of Antonio Salazar. After a period of instability and communist agitation, Portugal ratified a new Constitution in 1976. Subsequent revisions of the Constitution placed the military under strict civilian control; trimmed the powers of the president; and laid the groundwork for a stable, pluralistic liberal democracy, as well as privatization of nationalized firms and the government-owned communications media. Portugal joined the European Union in 1986, and has moved toward greater political and economic integration with Europe ever since.

The four main branches of the national government are the presidency, the prime minister and Council of Ministers (the government), the Assembly of the Republic (the parliament), and the judiciary. The president, elected to a five-year term by direct, universal suffrage, also is commander in chief of the armed forces. Presidential powers include confirming the prime minister and Council of Ministers; dismissing the prime minister; dissolving the assembly to call early elections; vetoing legislation, which may be overridden by the assembly; and declaring a state of war or siege. The Council of State, a presidential advisory body, is composed of six senior civilian officers, former presidents elected under the 1976 constitution, five members chosen by the assembly, and five selected by the president.

The government is headed by the prime minister, who is nominated by the assembly for confirmation by the president. The prime minister then names the Council of Ministers. A new government is required to present its governing platform to the assembly for approval.

The Assembly of the Republic is a unicameral body composed of up to 230 deputies. Elected by universal suffrage according to a system of proportional representation, deputies serve terms of office of four years, unless the president dissolves the assembly and calls for new elections. The national Supreme Court is the court of last appeal. Military, administrative, and fiscal courts are designated as separate court categories. A nine-member Constitutional Tribunal reviews the constitutionality of legislation.

The Azores and Madeira Islands have constitutionally mandated autonomous status. A regional autonomy statute promulgated in 1980 established the Government of the Autonomous Region of the Azores; the Government of the Autonomous Region of Madeira operates under a provisional autonomy statute in effect since 1976. Continental Portugal is divided into 18 districts, each headed by a governor appointed by the Minister of Internal Administration. Macau, a former dependency, reverted to Chinese sovereignty in December 1999.

Current Administration
Parliamentary elections on February 20, 2005, gave the Socialist Party a comfortable majority for the new Prime Minister, Jose Socrates. Socrates’ government formally assumed power March 12, 2005.

The Socialist Party’s 2005 victory followed a period of transition after center-right (PSD) Prime Minister Jose Manuel Durão Barroso resigned to accept the nomination as President of the European Commission. Durão Barroso, elected in 2002, committed his government to public-sector austerity and business incentives to promote growth, trade, and productivity. It faced rising unemployment, meeting euro-zone fiscal requirements, and adapting to European Union and NATO enlargement. After Durão Barroso’s resignation, President Jorge Sampaio asked the former mayor of Lisbon, Pedro Santana Lopes, to form a new government. Sampaio lost confidence in that government by the end of 2004, dissolved parliament, and called for new parliamentary elections.

Social Democrat Anibal Cavaco Silva, a center-right candidate and former Prime Minister, won the Portuguese presidential election on January 22, 2006 with 50.6% of the vote. He was sworn in on March 9, 2006, replacing outgoing Socialist President Sampaio.

Principal Government Officials
President of the Portuguese Republic--Anibal Cavaco Silva
Prime Minister--Jose Socrates
Minister of Foreign Affairs--Luis Amado
Minister of Defense--Nuno Severiano Teixeira
Minister of State for Internal Administration--Rui Pereira
Minister of the Presidency of the Council of Ministers--Pedro Silva Pereira
Minister of State and Justice--Alberto Costa
Minister of Finance--Fernando Teixeira dos Santos
Minister of Economy and Innovation--Manuel Pinho
Minister of Parliamentary Affairs--Augusto Santos Silva
Minister of the Environment--Francisco Nunes
Minister of Culture--Isabel Pires de Lima
Minister of Agriculture--Jaime Silva
Minister of Public Works--Mario Lino
Minister of Labor and Social Security--Jose Vieira da Silva
Minister of Science, Technology and Higher Education--Jose Mariano Gago
Minister of Education--Maria de Lurdes Rodrigues
Ambassador to the United States--Joao de Vallera
 

Portugal maintains an embassy in the United States at 2012 Massachusetts Avenue, NW, Washington, DC 20036; Tel. 202-350-5400; Fax 202-462-3726 and consulates general in New York City, Boston, San Francisco, and Newark, NJ; consulates in Providence, RI and New Bedford, MA; and honorary consulates in Honolulu, Los Angeles, Houston, New Orleans, Chicago, Philadelphia, Miami, San Juan, and Waterbury. The Portuguese National Tourist Office in the United States is located at 590 Fifth Avenue, New York, NY 10036 (tel: 212-354-4403).

ECONOMY
Portugal's membership in the European Union (EU) contributed to stable economic growth, largely through increased trade and an inflow of EU funds for infrastructure improvements. Until 2001, average annual growth rates consistently exceeded those of the EU average. Due to slow economic growth, Portugal has lost ground relative to the rest of the EU since 2002. Portugal's per capita GDP dropped from 80% of the EU-25 average in 2001 to 71% in 2006, causing the country to drop three places to 18th in purchasing power parity, behind Greece, the Czech Republic, and Slovenia.

In order to enter the European Monetary Union (EMU) in January 1999, Portugal agreed to cut its fiscal deficit and undertake structural reforms. The EMU brought exchange rate stability, lower inflation, and lower interest rates. Falling interest rates, in turn, lowered the cost of public debt and helped the country achieve its fiscal targets. However, private sector borrowing increased dramatically. By 2001, the economy was in serious external imbalance, with a large current and capital account deficit. Portugal was the first country to breach the Eurozone's Stability and Growth Pact budget deficit target of 3%. The Government of Portugal met the 3% target from 2002-2004, but the deficit surged to an all-time high of 6% in 2005. The government reduced the deficit to 4.6% in 2006 mainly through revenue generating measures. The 2007 budget aims to reduce the deficit to 3.7% through spending cuts and structural reforms.

Helped in part by a wider EU recovery, the Portuguese economy grew by 1.4% in 2006, up from a 0.3% the year before. The Portuguese Government predicts the growth rate will accelerate to 1.8% in 2007. Unemployment was 7.6% in 2006.

Portugal's economy is based on traditional industries such as textiles, clothing, footwear, cork and wood products, beverages (wine), porcelain and earthenware, and glass and glassware. In addition, the country has increased its role in Europe's automotive sector and has a world-class mold-making industry. Services, particularly tourism, are playing an increasingly important role. Portugal’s EU funding will be cut by 10%, to 22.5 billion euros, during the 2007-2013 period. EU expansion into eastern Europe has erased Portugal's historic competitive advantage and relative low labor costs. The government is working to change Portugal's economic development model from one based on public consumption and public investment to one focused on exports, private investment, and development of the high-tech sector.

FOREIGN RELATIONS
Portugal has been a significant beneficiary of the European Union and is a proponent of European integration. Portugal will hold the presidency of the EU Council for the third time during the latter half of 2007. During its upcoming presidency, Portugal hopes to focus on EU relations with North Africa and the Middle East, hold a second EU-Africa summit, revitalize the Lisbon Agenda, and develop a common EU approach toward migration flows.

Portugal was a founding member of NATO; it is an active member of the alliance by, for example, contributing proportionally large contingents in Balkans peacekeeping forces. Portugal proposed the creation of the Community of Portuguese Language Countries (CPLP) to improve its ties with other Portuguese-speaking countries. Additionally, Portugal has participated in a series of Ibero-American summits. Portugal was a strong advocate of independence for East Timor, a former Portuguese colony, and has committed troops and money to East Timor, in close cooperation with the United States, Asian allies, and the United Nations. Portugal contributed a small gendarme force to Iraq that it withdrew in February 2005, and has contributed funds and personnel for other training and development projects for Iraq reconstruction, including the NATO Training Mission.

U.S.-PORTUGUESE RELATIONS
Bilateral ties date from the earliest years of the United States. Following the Revolutionary War, Portugal was the first neutral country to recognize the United States. On February 21, 1791, President George Washington opened formal diplomatic relations, naming Col. David Humphreys as U.S. minister.

Contributing to the strong ties between the United States and Portugal are the sizable Portuguese communities in Massachusetts, Rhode Island, New Jersey, California, and Hawaii. The latest census estimates that 1.3 million individuals living in the United States are of Portuguese ancestry, with a large percentage coming from the Azores. There are about 20,000 Americans living in Portugal.

The defense relationship between the United States and Portugal is excellent, centered on the 1995 Agreement on Cooperation and Defense (ACD). Lajes Air Base in the Azores has played an important role in supporting U.S. military aircraft engaged in counter-terrorism and humanitarian missions, including operations in Afghanistan and Iraq. Portugal also provides the United States and other allies access to Montijo Air Base and a number of ports.

Portugal defines itself as "Atlanticist," emphasizing its support for strong European ties with the United States, particularly on defense and security issues. The Portuguese Government has been a key ally in U.S.-led efforts in Iraq, and hosted the Azores Summit that preceded military action. Portugal sees its role as host of NATO's "Headquarters West" (formerly SOUTHLANT), located near Lisbon, as an important sign of alliance interest in transatlantic security issues. As a staunch NATO ally since the founding of the organization, Portugal is a participant in NATO peacekeeping. It used its 2002 chairmanship of the OSCE to advance U.S. and European security objectives.

U.S.-Portuguese trade is relatively small, with the United States exporting $1.13 billion worth of goods in 2005 and importing an estimated $2.34 billion. While total Portuguese trade has increased dramatically over the last 10 years, the U.S. percentage of it--both exports and imports--has declined. The Portuguese Government is seeking to increase exports of textiles and footwear to the United States and is encouraging greater bilateral investment. U.S. firms play a significant role in the automotive, pharmaceutical, computer, and retailing sectors in Portugal.