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The Communists and extreme left refused to be chastened by their poor showing at the polls and increased their offensive against the moderates. At the plant of República, the pro-Communist printers took control of the publication away from its Socialist editors; the M.F.A. intervened—Ineffectively, as it turned out—and eventually let the workers keep the paper. The final blow to the Socialists was the M.F.A.'s endorsement last month of a scheme to establish local revolutionary councils that would bypass the political parties (TIME, July 21). "We have not left even Albania on our right!" exclaimed a shocked moderate, with a dose of hyperbole. Scares withdrew his party from the Cabinet and called for a series of nationwide rallies. There too he failed; instead of forcing the M.F.A. to broaden its political base, his challenge triggered the creation of the Directory. With it, the exclusion of moderates from the government is complete.
How long this new regime will last is another question, since the military —even with the help of some talented Western-oriented technocrats—has driven Portugal's economy into the ground. There are at least 270,000 unemployed (8% of the work force), the rate of inflation exceeds 30% annually, and the current balance of payments deficit could exhaust foreign reserves by the end of the year (TIME, July 28).
Meanwhile, an exodus of Portuguese is under way, and it is one the country can ill afford: a "gray drain" (as the Portuguese call the brain drain) of highly trained professionals such as managers, engineers, bankers, doctors, lawyers and economists. Most of these middle-class executives and professionals head for Brazil; by the end of this year, about 200,000 Portuguese are expected to migrate to Brazil to escape either the revolution at home or the changed situation in the liberated African territories.
Among the exiles are members of Portugal's legendary "Twenty Families" —the tight-knit, moneyed oligarchy that completely dominated their nation's economy and cooperated closely with the fascist regime. While an M.F.A. blacklist prohibits all wealthy businessmen from emigrating, many have managed to flee. Some literally walked across the border into Spain, while others sailed from Portugal's ports in their yachts —before the navy began patrolling the coast to prevent such escapes.
Scared Off. The lack of any credible policy aggravates the economy's malaise. "Until there is stability of some kind, no one will have any confidence," observed a Lisbon businessman. "Right now, I'd accept anything except the Maoists if the government could only make it stick." Foreign investors have been scared off by the constant flux of the M.F.A.'s policies, and speeches such as that last week by Premier Gonçalves before a labor leaders' meeting in Lisbon. "Ours is a fight to the death against capitalism!" he boomed. "The forces of great capital, whether domestic or international, are multiple."