Bloomberg News

Angola’s Dos Santos Threatens Portugal Trade Over Investigations

October 17, 2013

Angolan President Jose Eduardo dos Santos

Angolan President Jose Eduardo dos Santos said Portugal’s relationship with Angola is “not well” and a planned “strategic partnership” in trade is at risk. Photographer: Stephane de Sakutin/AFP via Getty Images

Angolan President Jose Eduardo dos Santos’s criticism of former colonial ruler Portugal over Lisbon’s probes of Angolans shows he’s ready to exert the economic power of Africa’s second-largest oil producer.

“Angola is important for Portugal as a source of investment, export markets and jobs,” Markus Weimer, an analyst at Control Risks, a London-based political risk analysis group, said in an Oct. 16 text message reply to questions. “Dos Santos, aware of Portugal’s reliance on Angola, is flexing his muscles.”

Portugal’s relationship with Angola is “not well” and a planned “strategic partnership” in trade is at risk, dos Santos said in a state of the nation speech to open Parliament Oct. 15 in Luanda, the capital. A summit meeting between the two countries was moved to February from this month.

Portuguese companies such as Grupo Soares da Costs SGPS SA, Teixeira Duarte SA and Mota-Engil SGPS SA have contracts valued in the billions of dollars to rebuild Angola from a 27-year civil war that ended in 2002. Isabel dos Santos, the president’s daughter, owns stakes in Zon Optimus SGPS, Portugal’s biggest cable-television provider, and Banco BPI SA, its third-largest bank, which is also active in Angola.

Dos Santos made his comments after Portuguese Foreign Minister Rui Machete expressed regret last month that prosecutors in Lisbon had opened investigations into Angolan citizens.

“There have been some misunderstandings and given the current political environment in this relationship, the construction of a strategic partnership previously announced is not advisable,” the president said in Parliament.

Prosecutor’s Investigation

Portugal’s Prosecutor’s office said in a statement on Oct. 4 that there are several proceedings in which Angolan citizens are involved as both suspects and plaintiffs, without naming them.

Dos Santos, Africa’s longest-serving ruler after Equatorial Guinea President Teodoro Obiang Nguema Mbasogo, said U.S., French and British companies had extracted billions of dollars in resources from Angola while the West criticized Africans for accumulating wealth.

Companies such as Chevron Corp. (CVX:US), Total SA (FP) and BP Plc (BP/) helped the country pump 1.74 million barrels of oil a day in September, second to Nigeria, according to data compiled by Bloomberg.

“Why is it that they can have private companies of this size and Angolans not?” dos Santos said. “The campaigns of intimidation I have mentioned before are persistently made against Africans because they don’t want to have local competitors and they want to continue to take more and more wealth for their countries.”

Corruption Perception

Dos Santos, 71, has led Angola since 1979. The country is ranked 157th of 176 countries on Transparency International’s 2012 Corruption Perceptions Index. The World Bank estimates the population at 21 million and the United Nations says more than half live on less than $1.25 a day.

“The president actually placed himself in a tight spot,” Ana Cristina Alves, a professor of international relations at Johannesburg-based University of Witwatersrand, said an e-mailed response to questions. “Either he is taking the opportunity to surf the always latent tension between Angola and the former colonizer to gain the upper hand while grasping the sympathy of some sectors of Angolan society, or he has personal interests in those judicial cases.”

While the discord is “serious,” deep personal links between the countries will probably salvage the situation in the long term, Weimer said.

Angolan Market

Portuguese workers and companies are heading to Angola at a faster pace than at any time since the southern African nation’s 1975 independence. Angola is Portugal’s biggest non-European export market.

The number of Portuguese citizens registered in Angola rose 13 percent to 113,194 in 2012 from a year earlier, according to the Emigration Observatory in Lisbon. This includes people who acquired Portuguese nationality through marriage and Portuguese nationals born abroad.

Angola’s economy has expanded every year since 1994, with growth peaking at 22.6 percent in 2007, according to the World Bank. The $114 billion economy will probably increase 5.1 percent this year, dos Santos said in his speech, lowering the estimate from 7.1 percent.

Bailed Out

The $212 billion economy of Portugal, the third country after Greece and Ireland to be bailed out by the European Union and the International Monetary Fund, will contract 1.8 percent this year before returning to growth in 2014, according to government forecasts. It expanded at an average rate of less than 1 percent a year for the past decade.

Africa accounted for 42 percent of Mota-Engil’s 1 billion euros ($1.4 billion) in sales in the first half of 2013, according to the website of Portugal’s biggest construction company. Angola is Mota-Engil’s biggest market in Africa, Mota-Engil Chief Executive Officer Goncalo Martins said in an interview on Sept. 19.

“I will do everything within my reach, as head of the Portuguese government, so that this relationship between the two countries will not be shaken by episodes of any kind,” Portuguese Prime Minister Pedro Passos Coelho said on Oct. 16.

To contact the reporters on this story: Colin McClelland in Luanda at cmcclelland1@bloomberg.net; Henrique Almeida in Lisbon at halmeida5@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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