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Seeking a path to modernization

For two years Manuel Fernandez has worked at the shipyard here without being paid. ``If I didn't show up, the company could fire me,'' he explains. Portuguese law written a decade ago by the radical left government forbids bosses from dismissing workers unless they walk off the job. But it says nothing about protecting wages.

``I don't believe I ever will receive my money,'' Mr. Fernandez says.

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His country faces a similar paradox. While searching for domestic political stability, it is struggling to modernize without a clear notion of which path forward to choose -- more cooperation with Europe or with Africa.

Meanwhile economic crisis looms. The government's austerity program, inspired by the International Monetary Fund, has reduced the country's huge public deficit and its yawning trade deficit. But inflation has soared to more than 30 percent, and unemployment to about 10 percent, with much more joblessness hidden in the countryside and in bankrupt enterprises such as Lisnave.

Union leader Joao Proen , secretary general of the Socialist UGT, estimates that about 100,000 workers employed in some 500 companies are not receiving wages.

The 44-year dictatorship of Ant'onio de Olivieria Salazar left a legacy of underdevelopment and revolutionary jolts that produces third-world-like conditions here. Many farmers continue to till the land by hand. Although one-quarter of the population remains employed in agriculture, the country imports half of its food, according to the Organization for Economic Cooperation and Development.

And as the situation at Lisnave and other companies that cannot pay their workers demonstrates, the industrial sector remains just as backward.

Portugal boasts only a few viable exports -- textiles, port wine, and tomato paste. Remittances from emigrants working abroad, mainly in France and Germany, total some $2 billion annually and remain a critical source of hard currency.

The government of Prime Minister Mario Soares has gradually given back seized property to former managers and owners in the hope they will make their businesses profitable again. But it proposes no thorough agricultural or industrial reform.

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The failure to streamline the country's economic backbone means taking grave political and economic risks. The moderate Social Democrats, the Socialists' partners, are furious with Mr. Soares.

``This government did not use its momentum to restructure industry when it could have,'' charges Justice Minister Rui Machete, a leading Social Democrat.

Economically, analysts fear the country will continue to pour scarce resources into unproductive industries without denting its industrial or agricultural backwardness. Fishermen will continue to brave the Atlantic in small, creaky wooden boats. Large industries will remain noncompetitive.

``We're not addressing the real issues,'' says Jos'e Antonio Girao, research director of the Bank of Portugal. ``We have to use the market more and modernize.''

Such modernization will be forced on Portugal when it enters the European Community. That is one reason Soares points to EC membership as a lifesaver. His advisers add that, by reinforcing Portugal's traditional European ties and its role in the Atlantic alliance, EC membership will solidify the country's democracy and thwart any possibility of a powerful Spain preying on its weaker neighbor. Portugal was a founding member of NATO.

But as the negotiations for entry into the EC have dragged on past the l983 target date, disillusionment has emerged. Polls on EC membership show that ``don't knows'' and ``no opinions'' exceed 50 percent of all answers, and businessmen worry that entry could destroy whatever is left of the economy.

Most important, the delays seem to have reinforced the idea that Portugal's real future lies with Africa, not Europe. Relations with the former colonies are far from perfect, but much better than in the years immediately following independence.

``We know Africa,'' claims Gaspar da Silva, secretary of state for cooperation, the No. 2 man in the Foreign Ministry. ``Do you know how many workers we have in Angola? Thirty thousand. Not bad, eh?''

Mr. Da Silva says that if peace could be brought to both Angola and Mozambique, thousands, even tens of thousands more Portuguese, would head south. ``Wehave the intermediate skills the Africans need,'' he reasons, ``and we will go and work in conditions the French and British won't accept.''

But is relying on Africa a dangerous illusion? Da Silva and other analysts admit the heady days of colonization cannot be repeated. They say Portugal will continue to press its case to enter the Common Market.

``Africa and Europe will complement each other,'' Da Silva predicts confidently.

Mr. Girao at the Bank of Portugal says the burden of food imports can be brought down to 20 percent within 10 years by the establishment of a solid Ministry of Agriculture, proper training programs, and subsidized fertilizer. Portugal will always have to import wheat, he says, but it could export meat, vegetables, and fruit.

Industry also could come alive with proper restruc-turing, according to Girao. If bureaucratic restrictions are lightened, foreign investment could flow into the country just like it flowed into Spain. Labor intensive products such as textiles could boom.

What will happen to all the poor, jobless Portuguese before this can be achieved? They will muddle through, preserved as much as possible from abject poverty, even hunger, by a strong family structure and an indefatigable patience.

In Lisnave a sense of perseverance prevails. Most workers remain on the job without pay to avoid being fired. They do not even appear downhearted.

``We live with my parents,'' explains Mr. Fernandez. ``I do a little painting on the side, my wife works in a factory. My parents help pay for the children's schooling.'' -- 30 --

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