Insight: Portugal toughs it out as austerity bites

GRANDOLA, Portugal (Reuters) - To every Portuguese, the town of Grandola is a cradle of the 1974 revolution that ended decades of dictatorship, but nowadays it is hard to find even a spark of revolt here against the worst economic hardship in the country's recent history.

A visit to Grandola inspired left-wing songwriter Zeca Afonso to write 'Grandola, Vila Morena', the song that was played on the radio to signal the start of the revolt.

White-walled and now sleepy, the town nestles in the southern cork-growing region. A few shuttered shops are the only visible signs of the debt crisis that brought the country to its knees.

Grandola illustrates Portugal's surprisingly low-key opposition to austerity, unlike Greece and Spain, as it grapples with the harshest recession since the 1970s under the terms of an international 78-billion-euro ($97-billion) bailout.

For Portugal, the second most risky country in the euro zone after Greece in the view of the bond market, the high levels of tolerance for austerity could be a good thing if Athens leaves the euro, prompting a new escalation of Europe's debt crisis.

"Normally, what market operators ask is why is there such a low level of resistance to austerity in Portugal," said Antonio Barroso, an analyst at Eurasia Group. "The general feeling is that people have accepted change because there is no choice."

Portugal became the third euro zone country to seek a bailout last year -- after Greece and Ireland -- and has adopted tough austerity measures, including sharply higher taxes and wage cuts of up to 20 percent for civil servants. Still, protests and strikes since then have been low-key, peaceful events, despite record unemployment.

Grandola offers some explanation for the tame reaction. Here, as in many other parts of Portugal's poor Alentejo region, the Communist Party dominated after the revolution, drawing on support from farm workers who expropriated the vast properties of landowners.

But Portugal's Communist Party has dwindled since then and failed to remain a potent force, with support mainly coming from the older generation that still remembers the revolution. The Socialist Party has become the main centre-left force in the country but it backs austerity and it was a Socialist government that actually requested the bailout last year.

Grandola's Communist Party occupied the building that was used by the regime as a jail in 1974 and turned it into its headquarters. Now, the building is neglected and the only sign of protest is a placard outside the entrance that reads "It is time to say ENOUGH," a few feet from where old men sit on benches in the square chatting.

Veteran Communist Manuel Martins, 77, says the crisis has reversed 35 years of progress as austerity imposed by the European Union and IMF rolls back the welfare state. But he is not optimistic about any stronger reaction by the Portuguese, which the now enfeebled Communist Party has tried to mobilize.

DICTATORIAL PAST

"The Portuguese are a pacifist people, policies have been carried out to make people go to sleep," he said.

Others say there are more complicated explanations, rooted in Portugal's experience of Antonio de Oliveira Salazar's authoritarian regime - the longest-ever right-wing dictatorship, which lasted in one form or another from 1932 to 1974.

Salazar's regime - which inspired J.K. Rowling to create the character of Salazar Slytherin in her Harry Potter series after she lived in Portugal for a brief period - nurtured traditional Catholic conservatism by promoting simple, rural ways of living.

That put down opposition and left little space for urban radicalism.

"It (lack of resistance) has something to do with our history, with the way that people experienced the military regime," said Elisio Estanque, a sociologist at Coimbra University. "Through doctrine, the regime exploited a certain Catholic conservatism. Salazar promised to end anarchism."

In fact, the 'Carnation Revolution' itself was testimony to a lack of Portuguese radicalism as it was actually carried out by a group of disaffected army captains, who were mainly disgruntled with Salazar's colonial wars to prevent Portugal's African territories from winning independence.

The Communists were the only organized political party at the time, stepping in after the revolution and at one point prompting fears that the country would turn to the Communist bloc.

The revolution was so peaceful that the only mass action people remember is giving carnations to soldiers during celebrations in the streets. Just four people were killed in the disturbances, by the former regime's secret police.

Other factors are also at play in Portugal -- Greece left behind dictatorship at about the same time in the 1970s but has had far more protests. Greece was occupied during World War Two and Spain had its bloody civil war in the 1930s, while Portugal was neutral in the war.

"Portugal is a very homogeneous country," said Antonio Costa Pinto, a political analyst at the University of Lisbon. "We don't have (regional) cleavages like in Spain, like the legacy of the civil war."

FADO, COLONIALISM PLAY A PART

Another factor may be the Portuguese national characteristic of resignation, which is summed up in Portgual's melancholic fado music that centres on the sentiment of 'saudade', or a sense of loss.

"The national Portuguese temperament has to do with a kind of fatalism and resignation," said Estanque.

Portugal's history may also explain its high levels of tolerance. It is one of Europe's oldest nation states, dating back to 1139 after it expelled the Moors, and established the first global empire during its 'Age of Discovery' with territories from Brazil to Macau.

"The Portuguese were always scattered around the world and they maintain their links and adapt. As such they may have some additional tolerance in terms of the way governments act," said Estanque.

That has been borne out in this crisis, as before, with thousands choosing to emigrate, an escape for the unemployed.

Back in Grandola, Communists cling to their beliefs even though their allies in the CGTP union -- the country's largest -- have been unable to mobilize much support for protests and strikes. Grandola the song is still the battle hymn for both the party and the CGTP.

The Communists won just 5.7 percent of the vote in a snap election last year just after Portugal was forced to seek its bailout. Centre-right parties won, even with pledges that hardship would get worse under the rescue plan.

Victor Santos, who now heads Grandola's workers' music association and used to be active in the Communist Party, talks fondly about his centre's role in inspiring local dissidents. But he recognizes that the Communists need to change their message to appeal to the young.

"The Portuguese people are too calm, too conservative," he says. "Before, the enemy had a face, it was Salazar. Today, the enemy has no face, it is the dictatorship of the financial markets."

But Grandola's mayor, Carlos Vicente Morais Beato, who had an active role in the 1974 revolt as he was one of the 'Captains of April' that participated in the overthrow, says Portugal will grit its teeth and pull through.

"Our acceptance and understanding of tough austerity measures is exclusively due to our recognition that it is necessary to carry out structural reforms and unite, once more, to overcome the crisis," he said.

(Reporting By Axel Bugge; Editing by Giles Elgood)

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