Because of Portugal's unique geographic position, hinged onto the extreme western protrusion of Europe yet separated from the rest of the continent by Spain, the country has traditionally looked outwards - first to Brazil and then to its former African colonies - to assure its political and economic place in the world.

Thus, Portugal always had an ambiguous attitude toward Europe: It was, paradoxically, in Europe but not entirely European.For example, a decade after the powerful European states had granted independence to their African possessions, Portugal began a futile 15-year struggle to hold back the hands of the clock. The result was vast sums of money wasted in a lost cause and a military coup in 1974 that swept away the debris of the ancient regime.

Almost like a Third World state, Portugal entered a period of revolutionary turbulence, which followed almost half a century of right-wing dictatorship.

Since 1980, however, Portugal has gradually started to settle down. But finding a new balance, both politically and economically, has not been an easy task and many difficulties still lie ahead.

The center-right government of Prime Minister Anibal Cavaco Silva, a 46-year-old technocrat, has been in power for just over a year. His government has barely a third of Portugal's 250-seat parliament, which means Mr. Silva must rely on the votes of other parties to stay in power.

This severely restricts his initiative and hinders government attempts to reform the bloated state-sector of the economy and provide strong leadership to face up to the challenges of the future.

To complicate the situation even further, a Socialist, former Premier Mario Soares, was elected president earlier in the year.

So far, the cohabitation between the prime minister and the president has been without tension. Mr. Soares has yet to engage in political gamesmanship or try to rock the boat.

Moreover, former President Antionio Eanes has taken over leadership of the country's third largest party, the Democratic Renewal Party.

This current truce is certainly only temporary, as forces on Portugal's political chess board organize for the next political joust. The Socialists are reorganizing, but the prime minister might just call early elections at the beginning of next year.

In certain ways, the Portuguese electorate is fed up with endless bickering by politicians and would like a more stable government. Since 1974, Portugal has had 16 different governments.

In the midst of this political uncertainty, Portugal has finally decided that its future lies in Europe. It joined the Common Market, along with Spain, early in 1986.

This new European commitment, while having its advantages, will oblige Portugal to adapt to EC economic policies.

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