How’s Portugal doing these days? It’s not a question that most Canadians would ask, other than last month when the United Nations voted for Portugal instead of us for a two-year term on the UN Security Council. Portugal is a very exciting place these days. But not in a good way. Last week they were gripped with a general strike that paralyzed hospitals, airports and trains. The general strike was in response to proposed government spending cuts. Portugal has subsidized its Euro-welfare lifestyle by borrowing. The government claims its national debt is 86% of GDP, but the Portuguese opposition party says the true figure is actually 122%. And that’s just the government. Private debt is 239% of GDP. Portugal is one of the poorest countries in Europe, but joining the European Union and using the euro as their currency took away its ability to chart its own destiny. Poor countries — like China — can artificially make themselves competitive by devaluing their currency. A weak currency is like a national pay cut, but it makes exports more affordable to foreign customers, and attracts bargain-hunting tourists too, which is important in a place like Portugal. But such local tactics are extinct in a euro zone whose one-size-fits-all economic policies are set by the big economies like Germany. Germany might be big enough to bail out Greece and Ireland. But Portugal, and Spain next? It’s all coming apart — and thank Thatcher that the Brits kept their pound. But back to Portugal. It’s not just a matter of debt and continued overspending. The economy is structurally weak — unproductive and strewn with thick red tape that kills jobs. Only a miracle could help, and Europe is running out of those. And even a spendthrift like U.S. President Barack Obama couldn’t get away with bailing out Portugal’s banks. But there is someone ready to help: The People’s Republic of China. China doesn’t have a debt. It has a surplus. It has $2.6 trillion in cash that’s burning a hole in its pocket. And it’s out shopping for power. Earlier this month, China’s president visited Lisbon and met with the Portuguese prime minister, Jose Socrates. That in itself is surprising. Portugal is a small country — just 11 million people, and an economy of just $250 billion — smaller than Alberta’s. But that’s the point. China’s hobby is collecting small, weak countries. You collect enough of them, and you’ve got yourself a little sphere of influence. You’re not just an economic and military superpower. You’re a geopolitical superpower, too. “We are willing to take concrete measures to help Portugal cope with the global financial crisis,” said China’s President Hu Jintao. All of a sudden, Portugal has a new patron, and it’s not Germany or the U.S. In addition to loans, China is talking about buying a stake in Portugal’s power utility and telephone company. Giving Portugal $100 billion is unthinkable for America. After Greece and Ireland, it might not even be possible for the EU to do. But that’s just a rounding error for China. What a nice trinket Portugal will make on China’s mantle, right next to its other beneficiaries, like Sudan. Sudan is a rogue state; the butcher of Darfur. But it’s also a major source of oil for China, and a growing customer for Chinese weapons. Sudan gives China what it wants. And China returns the favour, by protecting Sudan from criticism at the UN with its permanent veto at the Security Council. Which brings us back to Portugal. They won the UN vote not because they’re strong, but because they’re weak. The world’s dictators don’t want a strong democracy on the Security Council. A desperate beggar is more pliable. Watch Portugal’s voting record at the UN Security Council. Watch them as they consider Chinese allies like Iran and Sudan. Watch them on human rights. Portugal used to be an empire. Now it’s about to become a colony.Portugal used to be an empire. Now it's about to become a colony
Thursday, 2 December 2010
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