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António Costa should not be prime minister. His Socialist party came second in the 2015 general election, winning 32 per cent of the vote to the centre-right Forward Portugal’s (PAF) 38 per cent. But the PAF failed to cobble together a majority, giving Costa the chance to try to form a government. He should not be popular either. His government is backed by three left-wing parties – the Left Bloc, the Communists and the Greens – not known for compromise. Yet just over a year after taking office, his approval rating is a barely fathomable 81 per cent.

His success in forming a government – and in making it popular – is down to his ability to engage his opponents and unite their disparate interests. It is also down to his ability to turn around Portugal’s economy. Having run his campaign on an anti-austerity message, he has confounded his critics by simultaneously bringing the deficit under control and lowering the unemployment rate by 2 per cent.

He has a knack for making friends abroad too. On a state visit to India in January, Costa (whose own father was of Goan descent) became one of the first European prime ministers to be welcomed by both Narendra Modi and Pranab Mukherjee, the country’s heads of government and state respectively. He also met president Xi Jinping in Beijing and returned home with promises of closer ties. On the global stage he presents Portugal as an oasis of liberalism and openness in a world heading in the opposite direction.

Monocle sat down with the prime minister in a grand reception room of his official Lisbon residence. Among the artworks and ornaments in the room is a 1936 oil painting that hangs above the fireplace, depicting Macau under Portuguese rule, a swarm of merchant ships crowding the shoreline. It says a lot about the Portugal that Costa wants to present to the world: historically mercantile, culturally open and emphatically global.

Monocle: Why has the centre left faded as a political force across Europe? How can it be revived?
António Costa:Europe needs to rebuild a huge alliance based on its own values founded in the past 50 years and has to give concrete answers to people’s fears. What Europe and the centre left can give is assurance that people can be confident about the future and that we face the challenges. Populism is fed by the idea that there is no difference between the centre left and the centre right in Europe; the idea that we have the same way of thinking and one set of policies has led people to try to find alternatives outside these pathways. In Portugal we have been able to prove that, although there is agreement on some issues – namely our position in the EU – it is possible to offer different political solutions. We proved that it is possible to stay in Europe and turn a page on austerity.

M: As other countries turn against globalisation, immigration and trade, is there an opportunity for Portugal?
AC:We don’t want opportunities because of others’ problems but, because of our geography and history, we’ve been defined as an Atlantic country: multicultural, tolerant, open to trade and open to migration. This enables us to build bridges where others build walls. I went to India on a state visit and I was received as the first prime minister of an EU country who has Indian ancestry. This has not happened just like that; Portugal is a country where there is a real capacity for integration.

M: How much is Portugal’s economic turnaround down to private enterprise?
AC:We have the numbers only for the first quarter of last year but private investment grew by 7 per cent. Throughout the next quarter the number of jobs, imports of machines and equipment and the number of projects applying for EU funds also grew. That means that the second quarter also saw growth and probably investment was even higher than the growth in the first. We have a policy that prioritises entrepreneurship. Since 1 January we have a tax system that supports the start-up field and the point is to attract more investment.

M: A lot of the investment in Portugal is coming from abroad. While it is broadly positive, do you worry that the Lisbon property market may overheat?
AC:We need to keep attracting foreign investment – either from outside the EU through our Golden Visa programme or from within – but at the same time build affordbale houses for youngsters and develop policies for the middle class. We don’t want our cities to become a kind of Disneyland, where foreigners come only on weekends. Studies show that tourists value Lisbon as a genuine city so if we lose our population, we will lose that. The solution is not to do what some Europeans cities are doing and forbid tourists. But alongside tourism we have to do things that are for the middle class and encourage young people to stay in the cities.

M: You’ve been working with the Left Bloc, the Communists and the Greens. How have you made this alliance work?
AC:In Portugal we had an asymmetric system where the right was able to unite and the left was always divided. This time either we could have everybody against everybody again or we could find a solution. There are big differences between the Socialist party and its partners in parliament but we were able to have a mature vision of politics whereby we understood that, despite our differences, we could work together to give back to families and give companies the means to create jobs, as well as reinstating public services such as education and health.

M: What does Donald Trump in the White House mean for Portugal?
AC:There are permanent interests for the Portuguese state: we are founding members of Nato, we have a strong economic relationship with the US, we have a big Portuguese diaspora there and we have the Azores midway between New York and Lisbon. We will keep a straight and friendly relationship with the US. Trump won while we had the Web Summit here and it was a shock for many participants, particularly for the Silicon Valley community. They were receiving that message from across the Atlantic; the message here was: “This is a very small country compared to the US but it’s open to anyone [as long as we] can live all together with mutual respect.”

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