An Expo Speeds The Pace Of Change...And The Site May Have A Big Future

The decor of the Viagem dos Sabores ("Voyage of Flavors") restaurant at the Lisbon Expo is a triumph of minimalism. The walls are white, adorned by two wispy, Picasso-like line drawings in a subdued brown. The sleek chairs provide only the surface necessary to comfortably support the human body. But a simple request for a glass of white wine can shatter the ultramodern image. Fifteen minutes later the headwaiter appears, red-faced, to report in flawless English: "I'm sorry, I could not find wine in any of the bottles left by the other patrons."

This is Portugal, caught between its modern future and its underdeveloped past. Justly proud of the economic metamorphosis that propelled it into the EMU, the nation still has backward vestiges to shake off. Its progress is impressive. Gross domestic product growth averaged 3.1% from 1995 to 1997 and hit 3.5% last year, higher than in any other EU country. At the same time, Portugal got inflation down to 1.8% and cut unemployment to 6.5%. Projections for 1998 are growth between 4% and 4.5%. Such successes prompted Morgan Stanley to shift Portugal from its emerging markets index to its developed markets index at the beginning of this year.

But Morgan Stanley calling Portugal a developed nation doesn't make it so. For example, "it's very hard for a developed stock market to grow by 50% in four months," observes Diogo Abreu, an executive director at Banco Essi. The quoted value of Portugal's stock market grew by 54% from Jan. 1 through April. Then there's the notoriously undereducated labor force. "Samsung came here to look at making an investment and decided not to on the basis of the poor quality of the available labor," says Pedro Braz Teixeira, head of macroeconomic research at Spanish bank Banco Santander de Negocios Portugal.

The Socialist government has used public-works projects such as the huge Expo '98, which opened on May 22, to keep people employed while giving the capital a much needed face-lift. Lisbon now has nine new access roads, a new 13-kilometer Vasco da Gama bridge over the Tagus River, and an elevated railroad. The cost of these improvements was $1.6 billion. An additional $1.5 billion has been spent on the site of the Expo, the last World's Fair of the millennium. The funding came largely from top Portuguese banks.

So far, their loans have been spent on constructing the train, subway, and bus station; apartment buildings now in use by the staffers from the 154 countries represented at the Expo; and the display pavilions. These flashy structures include the world's largest aquarium, a 10,000-seat stadium, and a virtual-reality fantasyland.

In classic Portuguese style, Expo has suffered some technical glitches underneath its sleek exterior. The sprinkler system spontaneously flooded the Spanish pavilion a week before opening, and the entrance turnstiles malfunctioned on opening day. Nonetheless, Expo had drawn 750,000 visitors by June 10 and expects a total of 12 million before its closing on Sept. 30.

Looming over the excitement in Lisbon today is the Ghost of Expos Past, most notably Seville. Spain's 1992 Expo cost taxpayers $780 million, and the municipal government is still trying to haul itself out of debt. While the city got four bridges, an airport, and a high-speed train out of the project, today the fairgrounds on Cartuja Island are a desert of rotting pavilion carcasses.


Lisbon has been planning ahead to avoid the Seville debacle. Its Expo Urbe plan will turn the site into a commercial and residential development once the Expo finishes. The Utopia stadium will become a sports and concert venue. The Science Ministry is going to turn the Knowledge of the Seas and the Future pavilions into museums. Post-Expo construction will include upper-middle-income housing for 5,000 residents, a 120-bed hospital, colleges for nursing and hospital technology, and two dorms for the University of Lisbon.

The Portuguese are showing a lot more foresight than the Spanish in their planning. "Spain is not a role model for us," insists Santander's Teixeira. "In the '70s, we followed France. Now it's more Britain and the U.S. If you're going to look to a foreign power for leadership, why not choose one that's really successful?"

Before it's here, it's on the Bloomberg Terminal.