IV.  POLITICAL ENVIRONMENT

              NATURE OF BILATERAL RELATIONS WITH THE UNITED STATES

Bilateral relations between the United States and Portugal are
excellent, characterized by shared democratic values and similar
foreign policy perspectives.  Ties between the two countries are
strengthened by the approximately two million Americans who claim
Portuguese descent.

Portugal has traditionally been Atlanticist in its orientation.  A
charter member of NATO, Portugal is a strong proponent of active
American involvement in European Security Affairs.  The United States
has maintained a military presence in the Azores since World War II.

                       BRIEF SYNOPSIS OF POLITICAL SYSTEM


Portugal is a stable parliamentary democracy with a directly-elected
president who wields significant authority, including that of
appointing the prime minister and the cabinet.  In appointing the
government, the president must be guided by the results of the
legislative assembly elections.  The prime minister is responsible for
managing Portugal's domestic and foreign policy, except in a few issue
areas where the constitution gives the president direct
responsibility.

Currently, the president and the prime minister are of different
parties.  The president, Mario Soares, formerly led the Socialist
Party.  The prime minister, Anibal Cavaco Silva, leads the Social
Democratic Party, which enjoys a substantial majority (135 out of 230
seats) in the unicameral assembly of the republic.  Parliamentary
elections must be held by October of 1995.  Under certain
circumstances defined by the constitution, the president could
dissolve the parliament and call early elections, but there is
presently little reason to expect him to do so.  Presidential
elections are scheduled for early 1996.

The governing Social Democratic Party (PSD) is a broad coalition
spanning the center left to the center right.  It has pursued an
active program of privatization (see above) and liberalization of the
economy.  The main opposition party, the Socialist Party (PS),
competes with the social democrats for centrist and center-left
voters, and has not opposed the broad outlines of the privatization
program.  On the extreme left, the old-line communist party (PCP)
regularly polls about 10 percent.  On the right, the center democrats
(CD) advocate economic liberalism.  Their share of the electorate has
fluctuated in recent years between 4 and 15 percent.