In troubled times, everybody needs good neighbors

By Angus MacSwan

LISBON (BestGrowthStock) – Portugal has often been overshadowed by its bigger, brasher neighbor Spain on the Iberian peninsula.

The two countries’ history and culture are entwined as well as their commercial interests.

Now as they both try to navigate the turbulent straits of the euro debt crisis, Portugal is facing market pressure to scuttle itself in order to save Spain.

Yet it was Spain that enjoyed the party in the bubble of prosperity while Portugal worked doggedly to correct past overspending.

Their different characteristics are evident in Lisbon’s Bairro Alto, an old folkloric district popular with the many Spaniards who cross the border for short visits.

“We have lots of Spaniards come in here and it’s very important to our business,” said Carla Viera, who runs Tasca do Chico, a bar popular for the singers who perform the mournful Fado ballads there in the evening.

“They drink more than the Portuguese. They are very noisy. But I like them.”

In a corner of the small bar, a group of Spanish students sat chattering animatedly. They were on a break from Madrid.

“It is much quieter here. People go out into the street more in Spain. Madrid is more cosmopolitan,” said 22-year-old Maria Craquis.

But they felt an affinity with the more reserved Portuguese.

“We’re in the same peninsula, it’s not like Italy. We sympathize with them. Lots of Portuguese are in Spain to work or study.”

Asked to explain their respective temperaments, her friend Maria Chacon, 21, said: “They have fado, we have flamenco.”

FORTUNES SQUANDERED

Historically, both countries won then squandered fabulous fortunes with their overseas empires.

Indeed, the Portuguese virtually invented globalization in the Age of Discovery as their sailors and merchants set up trading enterprises from Brazil to Africa and on to Asia.

As Spain boomed again in the past two decades, its businessmen cut a swagger through Latin America in what was dubbed the “reconquista” (reconquest). Even revolutionary Cuba called Spain the “Mother Country.”

Portugal however has long been eclipsed by mighty Brazil, once the jewel in its empire. Portuguese are the butt of jokes in Brazil.

Professor Parvati Nair, head of Hispanic Studies at Queen Mary, University of London, noted that Spain and Portugal both experienced long right-wing dictatorships which isolated them from the rest of Europe until the return of democracy in the mid-1970s.

Under General Francisco Franco, Spain embarked on a program of economic modernization, while the regime of Portugal’s Antonio Salazar failed to develop the economy.

“There is a feeling in Spain that Portugal is a poorer neighbor and slightly more backward,” Nair told Reuters.

“There is a little bit of rivalry … I wouldn’t call it animosity …but there are a lot of things they have in common.”

They also share a tradition of people emigrating to find work and opportunity, Nair said. In recent years, they have been magnets for immigrants from the former colonies and other African countries. But with the economic crisis, that flow could reverse.

Trade is also a cornerstone of the relationship. Spain is Portugal’s biggest trade partner while Portugal ranked third as a destination for Spanish exports after France and Germany.

Portuguese exports to Spain for Jan-Sept this year reached 7.18 billion euros and Spanish exports to Portugal were 12.72 billion euros.

VIEW FROM NEW YORK

But will sentiment be pushed aside by practicality in the next days or weeks as the euro debt crisis grows?

Portugal’s debt woes stem from low growth, weak competitiveness, and past inability to control public spending.

Spain is its biggest creditor, with Spanish banks having a $108 billion exposure to Portugal at the end of March, according to the Bank for International Settlements.

Some foreign investors and economists fear Portugal could be the next eurozone country to fall, and if it does, could bring Spain down with it. So they want it to accept a bailout, a move Prime Minister Jose Socrates has so far rejected.

Francisco Barcia, a Spaniard who has worked in the media in Lisbon for many years, said he did not buy the argument that Portugal should be sacrificed for Spain.

“I don’t think it’s logical. I can see that if you are an investment analyst in New York or Berlin you could view it that way.”

“We have a great relationship, with much investment and commerce. But we are two independent, sovereign countries, with different realities, even if we occupy the same land.”

In troubled times, everybody needs good neighbors