greatreporter.com, December 31st, 2006
Area: 92,118 sq km (35,567 sq mi)
Population (2006 est.): 10,605,000
Capital:
Lisbon
Chief of state:
Presidents
Jorge
Sampaio and, from March 9, Aníbal Cavaco
Silva
Head of government:
Prime Minister
José
Sócrates
The early part of 2006 in
Portugal
was dominated by politicking as former centre-right
prime minister
Aníbal Cavaco
Silva
battled with two Socialist candidates—former prime minister and president
Mário
Soares
and Socialist Party stalwart
Manuel
Alegre
, who ran as an Independent—in the late-January vote to replace Socialist
Pres.
Jorge
Sampaio
, who had completed two five-year terms. Though
Cavaco
Silva
was widely seen as the front-runner and
Alegre
was considered the main candidate from the left, the Socialists decided late in the race to bring the party's éminence grise,
Soares
, on board in the hope that
Alegre
would stand down. When he did not, the two Socialist candidates split the vote on the left, handing
Cavaco
Silva
a solid first-round win with 51% of the popular vote.
Alegre
took 21% of the ballots,
Soares
received 14%, and Communist Party candidate
Jerónimo de
Sousa
finished with 9%.
Following his inauguration as president,
Cavaco
Silva
took a statesmanlike stance on most crucial issues, in particular helping to craft a bipartisan pact to reform the country's justice system and calling for a greater effort to crack down on corruption after
Portugal
ranked an embarrassing 16th in Transparency International's 2006 Bribe Payers' Index.
The recessionary environment of recent years slowly dissipated, helped by an increasingly positive tone to consumer and business confidence. The country's usually staid business scene was upset early in the year by the audacious hostile takeover bid for Portugal Telecom (PT), formerly the state-held telecommunications monopoly, by national upstart SonaeCom (which was partially owned by France Télécom). The SonaeCom was about a fourth of PT's size—sent the stocks involved soaring. PT offered more than PT to block the takeover. In December the national competition authority gave SonaeCom's offer a final green light, despite the company's plan to merge its mobile phone unit, Optimus, with Portugal Telecom's TMN, which would reduce the number of players in that lucrative sector to two from three. PT sought to bring shareholders on board to back its alternative payout plan and growth strategy, and the government remained largely on the sidelines. The machinations were expected to lead to dramatic changes in the telecom industry in
Portugal
, bringing to an end decades of sector domination by PT.€11.1 billion (€1 = about $1.27) all-cash offer from a relative minnow—€3 billion in dividend payouts if shareholders rejected the offer. There were rampant rumours of private equity interest in mounting a counteroffer, as well as speculation that the government would use its controversial "golden share" in
The banking sector also saw excitement as the country's largest private bank, Millennium BCP, launched an unsolicited offer for rival Banco BPI. The Millennium into the top spot among Portuguese lenders, pushing it past state-owned Caixa Geral de Depósitos in terms of both assets and profits. BPI's management pledged to fight what it called a "totally unacceptable" hostile approach.€4.33 billion bid would launch
Overall, the economy looked rosier than in recent years. Unemployment fell to near 7% after peaking at close to 8% early in the year. GDP was expected to grow at least 1.5% in 2006, higher than the roughly 1% initially expected, thanks in large part to burgeoning export growth. The government, led by
Socialist Prime Minister
José
Sócrates
, moved forward with a number of long-awaited reform plans, including efforts to reduce public-sector spending and cut through bureaucratic red tape. Improved tax collection, as well as reined-in spending, was expected to cut the country's budget deficit to about 4.8% of GDP in 2006, down from more than 6% in 2005.
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