Newspaper article The Christian Science Monitor

Portugal's Opposition Contests Benefits of EC Membership

Newspaper article The Christian Science Monitor

Portugal's Opposition Contests Benefits of EC Membership

Article excerpt

THE campaign leading up to Portugal's general elections Sunday has come to focus on difficulties surrounding the country's rapid economic growth.

Jorge Sampaio, leader of the 20-year-old Portuguese Socialist Party (PSP), is challenging Social Democratic Prime Minister Anibal Cavaco Silva, whose supporters call him the champion of Portugal's integration into the European Community (EC).

But while Mr. Cavaco Silva points to Portugal's annual economic growth rate of 4.6 percent, Mr. Sampaio counters that what has grown most has been the gap between rich and poor.

The populace is burdened by pressures that include high taxes and interest rates, housing shortages, and poor services, says Marques De Costa, a PSP spokesman. He concedes that his party has only a slim chance of winning Sunday's election, but says economic problems will not disappear afterward.

Interest rates, hovering around 25 percent, have a mixed impact. They provide a favorable return on investment, so the domestic savings rate among those who do not have to immediately spend their earnings is substantial. But high rates also make borrowing prohibitive for most Portuguese.

Cavaco Silva reminds voters that they have enjoyed increased social mobility in recent years - a result, he says, of the country's booming economy. Mercantilism and a thriving service sector have emerged from the construction and business development produced by Portuguese and European investment.

Finance Minister Miguel Beleza told international bankers last week that the country has modernized its industrial base and expanded roads, tunnels, and telecommunications. Portugal's living standards are nearing its EC partners, he says.

De Costa is skeptical. "That doesn't mean that our classic industries have been restructured - that they're more efficient compared to those of our European partners. …

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