Affairs

Emerging Markets

Former colonies come to Portugal’s rescue— Lisbon

Preface

It is a special kind of relationship, and one that could prove crucial to Portugal’s recovery. In a reversal of history, the Iberian nation is now relying on the trade and financial support of its former colonies to help it through its worst-ever financial crisis.

Angola, Colonialism, Mozambique, Portugal, Colonies

11 May 2011

It is a special kind of relationship, and one that could prove crucial to Portugal’s recovery. In a reversal of history, the Iberian nation is now relying on the trade and financial support of its former colonies to help it through its worst-ever financial crisis.

Brazil is considering buying some of Portugal’s sovereign debt, while Angolan investment has increased by more than 250 per cent in three years. Although Portuguese companies do not usually have the financial clout to compete in emerging markets, a common language and cultural links with other Lusophone countries such as Mozambique and even India could give them an advantage.

Portugal has retained relatively positive relations with its ex-colonies. “Angolans and the Portuguese were actually subject to the same debilitating dictatorship,” says Fernando Jorge Cardoso, co-director of the Institute for Strategic and International Studies in Lisbon. “The overthrow of the regime [by a leftist military coup in 1974] automatically transformed the Portuguese liberators into Angolan allies.”

Angolan assets, spearheaded by President José Eduardo dos Santos, his family and advisers, range from olive groves and vineyards to stakes in leading companies such as GALP Energia and airline TAP. Sonae, one of Portugal’s largest corporations, and Condis, which belongs largely to dos Santos’ wife, have recently signed a deal for the company to enter Angola with hypermarket chain Continente. Portuguese media firms are setting up in Luanda, while Luandan CEOs are buying land in Alentejo, Portugal. Unsurprisingly, Portugal’s ambassador to India, Jorge Roza de Oliveira, said in a visit to Goa – another former colony – that India is the next desired frontier.

Within its borders, Portugal is ranked as one of the top countries for migrant integration, coming second to Sweden. It’s small size and stagnant domestic economy means it is not faced with the same problems as bigger European nations, and its legal framework holds true to the beliefs of Afonso de Albuquerque, the still-revered 15th-century viceroy of its eastern empire, who said, “The mixing of races is the best dictionary of civilisations.” Integration is seen as a key Portuguese value, which today sees benefits at the highest levels. “The Angolan governmental elites feel ‘at home’ here,” says Cardoso. “They usually spend their holidays in Portugal, eating Portuguese food and watching Portuguese football.”

According to the Portugal-Angola Chamber of Commerce, the relationship can go further – both ways. “Africa represents half of Portugal’s non-EU exports,” says executive board member João Luís Traca, who points to civil construction, food, banking and hotels/restaurants as some of the top growth sectors for countries such as Angola, who have no agricultural or industrial production of their own. “The Portuguese product mix undoubtedly fits African markets – it doesn’t just have to be a language thing.”

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