In the latest part of the Ambassador series, Cormac Ó hEadhra interviews Portugal's Ambassador to Ireland, Bernardo Futscher Pereira.

Portugal's Ambassador to Ireland has spoken frankly about how austerity measures have affected his people and his country.

Portugal is implementing a programme of reform in return for a €78m bailout from the European Union and the International Monetary Fund.

"They (austerity measures) are affecting people first. Their salaries have been cut. Their pensions have been cut. Their taxes have been raised…so they are feeling the pain.

"There is a great deal of anxiety in Portugal, but no despair…at least not yet."

While concluding Portugal had no alternative to implementing a programme of cuts, he was critical of the EU's uniform approach to economic policy.

He said: "A separate question is whether it is right to apply the same policies all over Europe at the same time….I think it stands to reason to say it would facilitate the adjustment, if the burden was not only on the deficit countries but if the surplus countries took on some responsibility to bring back the eurozone into a greater balance."

Domestic Economy

Portugal's economy shrank for an eighth quarter in a row recently.

Its gross domestic product fell by 3.4% last year, while unemployment is at 15.5% and is projected to rise.

But Mr Futscher Pereira points to other, more positive elements of economic performance.

He said Portugal embarked on efforts to broaden the country’s export market over the last decade.

These efforts were intensified at the recent Ibero-American summit, at which Portugal and Spain appealed to countries in Latin America to invest in Iberia.

The Ambassador dismisses what some perceive to be the irony of Portugal asking former colonies for help and insists it is a realistic option.

"There’s no stigma attached or any problem at all. Those days of colonialism are long passed and people feel it's very natural and very welcome that countries like Brazil and Angola…and other countries in Latin America or Africa… invest in Portugal. It is a reality."

He outlined a few examples: an airplane manufacturing plant in the south of Portugal has benefited from Brazilian investment; the real estate and financial sectors benefit from Angolan investment; and countries such as Colombia, Venezuela and Mexico trade with Portugal.

Along with exporting to new horizons and receiving investment from new sources, the Ambassador pointed to tourism as an area for growth.

He noted tourism from Ireland was strong and continued to recover.

When asked how Portugal's reputation as a tourist destination had been affected by recession, he mentions the relative peace in the country.

"The main thing is if there are perceptions of violence….we have avoided that thank God. So what would really discourage tourists from coming is if they thought the country was unsafe."

However, could the domestic economic policy of austerity jeopardise Portugal's reputation if the population, in future, feels it is being subjected to too much?

"People have been demonstrating in Portugal, it is their right. But they have not been violent…and they have not been covered a great deal by the international press. That is possibly an advantage we have."

Spain

Mr Futscher Pereira said Portugal had already been adversely affected by Spain's economic difficulty.

One quarter of Portugal's exports go to Spain – hence the attempts to broaden the export market.

He said, however, Portugal is less likely to be affected by the Spanish banking crisis than one would think.

Portuguese banks are relatively healthy. The larger Spanish banks that do operate in Portugal are not as badly affected by the domestic crisis. Also, many of Spain's troubled regional banks or "cajas" do not have operations in Portugal.

Portugal’s Future

Despite the obvious difficulties facing Portugal, the Ambassador said he is hopeful for his country's future.

He said strong efforts are being made to attract investment. He mentions language as an advantage, as well as a relatively cheap (in Europe) but well-qualified workforce and the country's location.

He said nothing like Ireland's low corporate tax rate is being offered at the moment but that discussions are taking place to see if this is a viable option for Portugal.

Regarding how Portuguese people are coping in the present and how they are facing the future, the Ambassador said "people are very anxious, very worried, looking for solutions…there's a very lively debate. I don't think there is despair. I don’t think there is the perception that things are completely out of control."

When asked why this is the case, he points to recent history.

He said living standards have improved over the last 20 years as Portugal benefited from EU involvement.

"There is some cushion. Austerity is hard, bites hard…a lot of people are suffering a great deal in Portugal, but we are not talking yet – except for some small segments of the population – about misery, despair."

He added: "People can function...in this crisis…the economy can still function…there’s no feeling, as yet, that things are out of control."