“The Challenges Facing Portugal and How to Act” by António Neto da Silva

Global Challenges Facing Portugal and How to Act

Author: António Neto da Silva
Event: Sociedade de Geografia de Lisboa – October 20, 2026

Introduction: A Changing Global Order and Portugal’s Strategic Choices

Since 2024, the international environment has undergone a profound transformation, marked by increasing militarization and direct strategic confrontation across economic, technological, informational and diplomatic spheres. The global balance of power is increasingly shaped by coercive instruments, as states resort to protectionist measures, sanctions, export controls, investment screening and increasingly stringent supply-chain security requirements to defend their national interests.

At the same time, information and normative warfare have become central features of international competition. Disinformation campaigns, social polarization, the extraterritorial application of national legislation and the strategic use of regulatory compliance are increasingly employed to influence sovereign decision-making and weaken national autonomy.

This changing landscape calls for a fundamental reassessment of the relationship between economic interdependence and national sovereignty. The global economy can no longer be regarded as a neutral space governed exclusively by the rules of free trade. For a country such as Portugal, sovereignty cannot be taken for granted: it must be actively protected, strategically developed and adequately funded. Failure to do so risks leaving the country increasingly dependent on external decisions and ultimately exposed to strategic irrelevance.

Portugal must therefore move beyond the role of a passive recipient of European subsidies or external policy directives. Its ambition should be to establish itself as a central geopolitical and economic hub in the Atlantic, leveraging its geographical position, historical connections, maritime resources and international partnerships.

Achieving this objective requires a comprehensive national strategy built around three interconnected priorities: strategic geopolitics and security; demographic renewal and human capital; and economic competitiveness, technological innovation and the development of strategic resources.

1. Strategic Geopolitics and National Security

The first priority is to strengthen Portugal’s capacity to defend its territory, interests and strategic autonomy in an increasingly unstable international environment. The resurgence of major-power rivalries, growing pressure on Atlantic maritime communication routes, hybrid cyber threats targeting critical infrastructure and persistent instability along Europe’s Southern Flank, particularly in North Africa and the Sahel, all represent significant challenges to Portuguese security.

In this context, national defence must become a long-term strategic commitment rather than a budgetary variable subject to political fluctuations. Portugal should establish a binding commitment to NATO’s defence spending target of 2% of GDP, accompanied by a comprehensive modernization of its Armed Forces and the development of capabilities adapted to contemporary security challenges.

Particular attention should be given to cybersecurity. The creation of a unified national Cyberdefence Command would provide Portugal with the institutional capacity to protect its digital infrastructure, secure critical networks and attract highly qualified talent from both the private sector and academia. Data, communication networks and digital infrastructure must increasingly be regarded as essential components of national sovereignty.

Portugal’s Atlantic identity should also translate into concrete defence capabilities. Modernizing naval forces and strengthening ocean-projection capabilities are essential to ensuring effective surveillance and protection of the country’s Exclusive Economic Zone (EEZ), one of its most important strategic assets.

Finally, national security must be supported by a coherent network of international partnerships. Portugal should deepen its Euro-Atlantic relations, particularly with the United States and the United Kingdom, while reinforcing its diplomatic and economic engagement with the Community of Portuguese-Speaking Countries (CPLP). Economic diplomacy should become a central instrument of this strategy, strengthening Portugal’s international influence and opening new avenues for cooperation.

2. Demographic Renewal, Human Capital and State Cohesion

National sovereignty also depends on the strength and cohesion of society. Portugal, like much of Europe, faces a serious demographic challenge resulting from population ageing, persistently low fertility rates and the emigration of highly qualified young professionals. This brain drain threatens long-term economic growth, the sustainability of the social security system and the capacity of essential public services, particularly the National Health Service (SNS).

Addressing this challenge requires a coherent policy designed to retain talent, encourage family formation and restore confidence in the country’s future. Fiscal policy should play a more active role in achieving these objectives through progressive tax relief for families, with income taxation adjusted according to the number of children, as well as a cap on personal income tax (IRS) for young adults up to the age of 35. Such measures would help make Portugal more attractive to young professionals and encourage them to build their careers and families in the country.

Immigration policy must also be approached from a strategic perspective. Rather than relying on unregulated migratory flows, Portugal should establish a structured system of immigration quotas aligned with the actual needs of the labour market. Such a framework should combine economic requirements with clear standards for legal entry, integration, public security and respect for national laws.

At the same time, the State must strengthen the human resources upon which its essential functions depend. Military personnel, police officers, teachers and doctors are fundamental pillars of national sovereignty and social stability. Improving their salaries, working conditions and social recognition is therefore not simply a matter of public-sector management, but a strategic investment in the country’s institutional resilience and cohesion.

3. Economic Competitiveness, Technology and Strategic Resources

The third pillar concerns Portugal’s economic foundations. Political and geopolitical sovereignty cannot be sustained without financial independence. Chronic public debt restricts national decision-making, reduces the capacity to respond to external shocks and ultimately weakens the country’s strategic autonomy.

A competitive and productive economy is therefore indispensable. Portugal should undertake structural tax reform, significantly reducing corporate income tax (IRC) and personal income tax (IRS), with the objective of positioning the country among the most competitive OECD economies for productive private investment. A more attractive fiscal environment would encourage entrepreneurship, stimulate innovation, attract international capital and create the conditions for sustainable economic growth.

However, competitiveness must also be built on the strategic development of Portugal’s natural, geographical and technological assets. The country’s maritime dimension offers considerable opportunities within the Blue Economy. The sustainable industrial development of ocean resources, combined with the responsible exploitation of strategic minerals such as lithium and rare earth elements, as well as emerging energy resources such as hydrogen, could position Portugal as an important supplier and strategic partner for Europe.

Its geographical position also provides a unique opportunity to develop into a major energy, logistics and digital hub connecting Europe, the Americas and Africa. This ambition should be supported by investment in infrastructure, connectivity, energy production and digital services, allowing Portugal to transform its Atlantic location into a tangible economic and geopolitical advantage.

Equally important is the need to strengthen the relationship between universities, industry and defence. Portugal should develop an integrated Knowledge Triangle inspired by successful international models such as DARPA, linking academic research, industrial development and national security requirements. University funding and research incentives should increasingly encourage patented innovation and dual-use technologies with both civilian and military applications. Such an approach would help retain scientific talent, strengthen domestic technological capabilities and create new high-value economic activities.

4. Global Megatrends and the Long-Term Outlook

These national priorities must be understood within the context of broader global transformations. Demographic trends, wealth concentration and growing international inequalities will profoundly influence the economic and geopolitical environment in the decades ahead.

Global population reached approximately 8 billion in 2022, with nearly 60% of humanity living in Asia. According to United Nations projections, the world population could peak at around 10.3 billion in the mid-2080s before beginning to decline. However, this overall trend conceals significant regional differences. Rapid population growth in less wealthy regions, combined with persistently low fertility rates in more developed economies, is likely to intensify migration pressures and create new challenges for labour markets, public services and international stability.

At the same time, the concentration of global wealth remains a major source of structural inequality. According to the UBS Global Wealth Report, 16.8% of adults hold approximately 87.2% of global wealth. Such disparities contribute to social instability, economic frustration and migratory pressures, reinforcing the need for more resilient national policies and stronger international cooperation.

For Portugal, these developments underline the importance of anticipating rather than merely reacting to global change. Demographic policy, economic competitiveness, technological development and national security must be approached as interconnected dimensions of a single long-term strategy.

Conclusion: A National Pact for Sovereignty and Competitiveness

Portugal stands at a strategic crossroads. Its future will depend not only on its ability to adapt to an increasingly competitive and uncertain international environment, but also on its willingness to define and defend a clear national ambition.

The challenges outlined above cannot be addressed through isolated measures or short-term political programmes. They require continuity, institutional stability and a shared understanding of the country’s fundamental interests.

This is why Portugal needs a broad, multi-partisan Regime Pact for Sovereignty and Competitiveness, capable of transcending electoral cycles and providing a consistent framework for national development. Such a pact should combine stronger national defence, demographic renewal, a more competitive economy, technological innovation and the strategic development of Portugal’s natural and geographical assets.

It should also reflect a renewed commitment to political courage, greater economic freedom, a more efficient and less interventionist State, and the resolute defence of Portugal’s national identity and interests.

Ultimately, the objective is not simply to preserve Portugal’s position within an evolving international order, but to enable the country to shape that order to its advantage. Portugal has the geographical position, historical connections, resources and international relationships to become a significant Atlantic power. What is now required is the strategic vision, political determination and national consensus to turn that potential into reality.