Despite joining the European Monetary Union, at the beginning of the new century, Portugal had not managed to significantly reduce the distance from the more developed European states. This goal, which in 1999 had been announced by the socialist government as a priority for the country, appeared in 2006, even after the experience of a center-right executive (2002-2005), as a goal that was still distant and difficult to reach without a transformation. of institutions and society. After all, the economic crisis, which began in 1999, had hindered the implementation of a modernization policy pursued, albeit with different strategies, by the two main parties alternating at the head of the government, the socialist one (Partido Socialista, PS) and the social democratic one (Partido Social Democrata, PSD).

After the legislative elections held in October 1999, which had confirmed the political dominance of the PS (which came to power in 1995), a new socialist executive was formed, also chaired by A. Guterres, who announced the intention to launch a series of reforms to stimulate the production system and restore the state budget. But already in May 2000 the government’s decision to reduce the increase in the salaries of civil servants provoked a general strike. However, this decline in support for the PS did not prevent the socialist J. Sampaio, elected president in 1996, from winning a second term in the presidential elections in January 2001. For Portugal political system, please check politicsezine.com.

At the end of the year, however, the administrative elections decreed a sharp defeat for the socialists. Guterres then announced his resignation as prime minister and was replaced at the head of the party by E. Ferro Rodrigues. In the general elections of March 2002 the Social Democrats managed to overtake the Socialists: the former obtained 40.2 % of the votes (105 seats) while the latter 37.8 % (96 seats). In third place were the popular (Partido Popular, PP) with 8.8 % (14 seats). Thus a center-right government was formed in April, consisting of PSD and PP and led by the social democratic leader JM Durão Barroso, who immediately announced an austerity policy to bring the state deficit within the limits imposed by the EU. A draft revision of labor legislation was met with strikes (November-December 2002), as well as a subsequent public sector reform plan (November 2003). Contrasts and controversies also arose from Barroso’s decision to support the US military intervention in ̔Irāq. On the eve of the war, in fact, the head of the government granted the US aviation the use of an airport in the Azores islands, arousing criticism from President Sampaio, against the country’s involvement in a military operation not authorized by the UN. However, the two soon reached a compromise: the Portugal would not have sent troops but would have facilitated the transit operations of US military aircraft. After UN approval of the peacekeeping mission in ̔Irāq, the Portuguese government also sent a military contingent (November 2003, then withdrawn in February 2005).

The European elections of June 2004 revealed a significant decrease in support for the ruling parties. A few days later, surprisingly, the leaders of the EU agreed to designate Barroso as the successor of R. Prodi at the helm of the European Commission. Barroso then resigned from the government and from the party presidency and, while the PSD chose Portugal Santana Lopes as the new leader, Sampaio started a series of consultations to decide whether to hold early elections. Among the supporters of the recourse to the vote, the secretary of the PS, Ferro Rodrigues, stood out, but the president decided to instruct Santana Lopes to form a new government (July 2004). In protest, Ferro Rodrigues resigned and was replaced at the head of the party by J. Sócrates (September). The life of the new government was short and troubled: the premier was accused of wanting to limit the autonomy of state television and at the same time there was no lack of disputes within the executive, which made changes and replacements of ministers necessary. In December Sampaio decided to dissolve parliament and call new elections for February. First, however, he urged the approval of the budget law for 2005, causing further controversy over some planned measures (such as the reduction of taxes and the increase of state pensions), judged to be in contrast with the need to reduce the public deficit. The PSD focused its electoral campaign on easing the taxation and state spending, while the PS on political and economic reforms considered indispensable to support the production system. The Socialists prevailed at the polls and, for the first time since 1974, won an absolute majority in parliament with 45 % of the votes (120 seats), while the Social Democrats stopped at 28.7 % (72 seats). It was thus formed in March 2005 a new government, composed of socialists and two independents, chaired by Sócrates. Parliament immediately approved a series of measures to reform the economic system and reduce the public deficit, but the austerity measures sparked protests and strikes. In July, the Minister of Finance, L. Campos and Cunha, resigned. In January 2006 the former Social Democratic premier A. Cavaco Silva was elected president with 50.6 % of the votes, overtaking the independent socialist M. Alegre (20.7 %) and the PS candidate M. Soares (14.3 %). In foreign policy, Portugal managed to overcome the conflicts with Indonesia dating back to 1975and related to the complex question of East Timor: after the referendum on the independence of the island (August 1999) the two countries re-established diplomatic relations.