History, The New State

Under Salazar’s New State regime Portugal and its overseas possessions became a unitary state with a planned economy. The avowed purpose of the New State was to end political and social unrest and to encourage national collaboration. In reality, the government was a repressive dictatorship, and no opposition was countenanced. Political parties were outlawed and replaced with the National Union. Thousands were arrested and imprisoned at the hands of Salazar’s secret police and a network of informers.

During the Spanish Civil War (1936-1939), Salazar, along with the fascist regimes in Italy and Germany, supported the forces of General Francisco Franco. In 1939 Portugal signed a friendship and nonaggression pact with Spain, which had then come under Franco’s control. In 1940 a protocol was added to the pact to ensure the neutrality of both countries during World War II (1939-1945). Portugal subsequently engaged in an uneasy balancing act, maintaining its neutrality while also supplying tungsten to Germany, the keystone of the Axis powers coalition. In October 1943, however, when the Axis powers were weakening, Portugal allowed the Allied powers to base airplanes and ships in the Azores.

Portugal emerged from the war relatively unscathed, and the wartime trade with Britain allowed Portugal to accumulate large reserves of British currency. With this capital, Portugal began to modernize its communications; expand its merchant marine; and develop irrigation, hydroelectric power, and industry. Internationally, Portugal aligned itself with the West, becoming a charter member of the North Atlantic Treaty Organization (NATO) in 1949. During the 1950s, Portugal developed close relations with the United States and joined the European Free Trade Association (EFTA). Shortly afterwards Portugal became a member of the General Agreement on Tariffs and Trade (GATT), now the World Trade Organization (WTO); the International Monetary Fund (IMF); and the International Bank for Reconstruction and Development (World Bank).

Significant domestic opposition to the dictatorship appeared in the 1958 presidential election, when Salazar permitted opposition candidate Humberto Delgado to run. Delgado was defeated by the government’s candidate, Admiral Americo Deus Tomas. However, Delgado gained impressive support in the election and was subsequently exiled. Tomas was reelected in 1965 and 1971.