Foreign Relations of the United States, 1969–1976, Volume E-15, Part 2, Documents on Western Europe, 1973–1976, Second, Revised Edition

174. Memorandum From the President’s Assistant for National Security Affairs (Scowcroft) to President Ford¹

Washington, August 28, 1976.

SUBJECT

• Interagency Intelligence Memorandum on Portugal

The Director of Central Intelligence has forwarded for your information a July 30, 1976 interagency intelligence memorandum, “Portugal, a Mid-Range Assessment” (at Tab A). It concludes that the minority Socialist Government of Mario Soares has a better than even chance of survival in 1976. In addition, the assessment makes the following points:

—A minority government may be the most efficient to make the tough economic decisions that Portugal requires.

—Despite this, Soares’ room for political maneuver is limited by President Eanes’ popular mandate and strong military support, Soares’ need for continued support from the two more conservative political parties, and resistance on the part of radical left wing elements within his own party.

—Soares administrative capabilities remain unproven.

—The threat of extraordinary action from the extreme right appears slim.

—The Communists remain strong despite election losses and can effectively use their strength in labor unions against the government’s economic austerity programs.

—Solving Portugal’s economic problems—which include a 10 percent decline in GNP, near 15 percent unemployment, 20 percent inflation, and a 50 percent foreign reserve decline—remains key to political stability. Soares has endorsed a program that would reduce worker control over firms, control prices and wages, cut the budget deficit, and adjust exchange rates in order to reduce inflation and the trade deficit.

—Soares’ strength lies with the willingness of his Western allies to provide extensive economic support.

—Portugal’s foreign and defense policies will move closer to the West European mainstream with emphasis on NATO and closer ties with the EC–9. Relations with the Soviets will be cooler and Portugal’s Third World orientation will diminish.

—Portugal’s policy toward the US will be friendly but will avoid excessive dependence. Portugal will favor a new Azores agreement but will avoid blanket assurances regarding resupply of Israel.

—If Soares’ government fails, the two most likely alternatives are a Socialist coalition with a more conservative party or a military take over.

1. Summary: Scowcroft forwarded an interagency intelligence memorandum on Portugal.

   Source: Ford Library, National Security Adviser, Presidential Country Files for Europe and Canada, Box 10, Portugal (11). Secret. Sent for information. Attached but not published is Tab A, Interagency Intelligence Memorandum NIO IIM 76–034. A stamped notation on Scowcroft’s memorandum indicates the President saw it; Ford initialed the memorandum. The PSP won a plurality of votes in the April 25 legislative assembly elections; on July 22, Soares was sworn in as Prime Minister at the head of a minority government. Eanes won the June 27 presidential election and took office on July 14.