European Affairs

Historically, the real Casablanca was actually Lisbon itself, capital of neutral Portugal and the best free gateway in and out of a large Nazi-occupied Europe. With this role thrust upon it, the small hilly city, huddled around its port, suddenly took on new dimensions as a wartime cross-roads, where anti-Nazis and Jewish exiles rubbed up against Gestapo agents, where the world’s spies all but tripped over each other and where – in contrast to celluloid Casablaca – the city managed to elude being taken over by any foreign power.

This history of wartime Lisbon recounts the city’s brief era of splendor in the shadows in all its dimensions. Vivid reporting brings alive the characters who operated in its hotels and grand houses. Not just a colorful narrative, the story is framed by a clear sense of the global stakes involved in Portugal’s fate and the author offers a clear account of how Portugal used its position to preserve its neutrality amid the power struggle of larger powers.

A small country bound on land by the Pyrenees but open to the Atlantic, Portugal enjoyed a strategic maritime position, mainly thanks to the Portuguese Azores islands athwart the crucial wartime shipping lanes of the north Atlantic. It also had an empire of colonies strung across Africa and Asia. For Portugal, the geopolitical imperative was to exploit its strategic position in Europe in ways that safeguarded its colonial empire from attacks by whatever side emerged from World War II to dominate the postwar era. As it turned out, the two victors – the U.S. and the USSR – were both were committed to decolonization in theory but in practice left Portugal’s holdings untouched, at least for a generation. That breathing space was won by the steady course maintained by Portugal, often despite conflicting international pressures. The Portuguese nation demonstrated a cohesion and discipline enabling the country to survive intact in a conflict that destroyed many of its larger neighbors and their empires.

The performance has some parallels with Portugal’s current discipline and tenacity in surviving the continent’s economic turmoil, but there is a key difference: the historical episode involved a wartime Portugal that was an authoritarian country run by a dictator -- Antonio de Oliveira Salazar, who ruled the country for 36 years from 1932 to 1968. Part of the value of this long-overdue portrait of wartime Lisbon lies in its portrayal of the longest-ruling dictator of the period. A lackluster personality but a patriot, Salazar started life as a well-connected economist (he always played down his upper middle-class origins) and gradually rose through prewar politics thanks to his deeply Roman Catholic views and ruthless determination to suppress any domestic challenges to the conservative order. In contrast to more flamboyant Fascist leaders, notably those in southern Europe such as Franco in neighboring Spain or Mussolini in Italy, Salazar was a calculating bureaucratic figure who toiled day and night behind his desk to protect the country’s economic and political assets and save Portugal from geo-political adventurism. His constant goal was to keep Portugal from taking sides in a way that might threaten Portugal’s hold on its colonies in Asia (notably Macao, East Timor and Goa) and in Africa (starting with Angola and Mozambique) – the colonies that Salazar viewed as the indispensable sources of Portugal’s economic survival.

Personally austere and spartan (personally penniless at death, he was buried at state expense), he was also, as Neill Lochery’s “Lisbon” makes clear, a shrewd operator whose cunning enabled him to rule longer than any of his contemporary dictators (and actually outlast them all except Spain’s Francisco Franco). After 34 years in power, Salazar suffered a brain hemorrhage in 1968, apparently simply falling from his chair. Regaining consciousness, he survived for two more years of life in his home, without ever being told that he was no longer the country’s ruler. In the political turmoil that followed his his  death, the country verged on civil war between left and right and lost its colonies. But democracy gradually established itself as part of the process of the country’s integration into the European Union.

That modern period and the ensuing stability contrast totally with the hectic days and nights of wartime Lisbon as recounted by Lochery. The city was a hotbed of money flows and derring-do as the temporary home of wartime adventurers, royals and socialites, spies and merchants of precious raw materials. His narrative of this history of the period gains much from the author’s portrayal of Salazar’s deftness -- in contrast with much of the British and American press and diplomatic reporting at the time that painted Salazar as simply an Axis sympathizer. Salazar may have sympathized ideologically with his neighbor Franco, but he saw no gain for Portugal, even in the early war years of Axis triumphs, of openly siding with Hitler. Before many others, he foresaw the war ending in a Europe dominated and divided by the United States and Soviet Union.  So his goal was keeping Portugal from being caught on the wrong side of either future superpower – and in the meantime ensuring that he could frustrate both the communists and the free world from taking away Portugal’s colonies, which he saw as the source of his country’s prosperity.

Salazar’s policies were a mix of pragmatism and personal predilection. Initially in the war, Salazar appeared to fear a total victory for either the Allies or Axis powers. He carefully studied what the implications for a German victory would mean for a new European economic order and was concerned that Portugal would fare poorly.  Once the U.S. entered the war, he considered that an allied victory of sorts was inevitable but was concerned about the future U.S. role in postwar Europe. In the author’s view of the Portuguese dictator’s thinking, “he felt that America would try to dominate Europe economically and militarily. Salazar had little time for America.”

In neutral wartime Lisbon, the British and German Ambassadors had equal access -- to Salazar, to top officials and to high society in Lisbon.  The diplomatic ranks included the American chargé d’affaires George Kennan, subsequently a key cold war player in the trying to shape effective U.S. policy in dealing with Moscow. At a critical wartime juncture in Lisbon’s dealing with the U.S., Kennan took the initiative of personally flying to Washington to see President Franklin Roosevelt – and persuading him to adopt a flexible policy that eventually succeeded in obtaining an essential degree of cooperation from Salazar.

In maneuvering between Berlin and the allies, Salazar was able to invoke Portugal’s centuries-old formal alliance with Britain. This international treaty provided some formal help for his political deal in negotiating a stand-off for his country. Britain (and then America) got to use the air base Lages on Terceira Island in the Azores -- a strategic necessity for the allies’ war against the German U-boat wolf pack prowling the north Atlantic. In exchange, the allies backed off their threatened occupation of the Azores, sparing Hitler the strain of a possible invasion of Portugal.

Lochery documents and analyzes the many zigs and zags that Salazar employed not only to keep Portugal out of the war but to enable it to emerge much richer in Nazi gold. That wealth came primarily from parceling to both sides Portugal’s most valuable commodity—wolfram or tungsten, vital for modern weaponry. The Germans had to pay in gold, most of it stolen from national banks of conquered nations (and some from Holocaust victims). This lucrative trade for Portugal was only ended in 1944 two days before D-Day when Salazar finally ordered a halt to all wolfram mining.

The maneuvering over strategic material against a background of international glamour and intrigue occurred in a city that was an unlikely setting: in those days, Lisbon  consisted of  a few smart avenues, a couple of fancy hotels, the nearby fashionable beaches of Estoril -- surrounded by some of the most backward and impoverished rural areas in western Europe. It was known as the City of Light, a most appropriate moniker considering it was about the only European capital that did not suffer the inconvenience of years of blackouts. And come they did, notably from café society, including the most famous and probably most fatuous couple of the era, the Duke and Duchess of Windsor. They had escaped the German invasion of France, passed through Spain and ended up in Lisbon, where Winston Churchill was convinced they would be captured by the Germans and Spanish at great propaganda gain. While the Windsors wined and dined, courtesy of Portugal’s most prominent banker Ricardo Espirito Santos (referred to humorously in some diplomatic circles as the Holy Ghost), Churchill finally succeeded in convincing the petulant, recently abdicated King to take up an assignment as Governor General of the Bahamas, where he continued to be dogged by rumors of rumors about his pro-Nazi sympathies, even far from Eurpe.

As the Windsors departed, others arrived. The author Arthur Koestler spent two months in Lisbon as a refugee.  On the last flight from Marseilles before the Nazi occupation was extended to Vichy’s Free Zone in southern France came the free-spirited heiress Peggy Guggenheim, accompanied by both her husband and the celebrated Expressionist artist Max Ernst. Ian Fleming, creator of James Bond thrillers, was beginning his initial career as a spy in Lisbon under the orders of the London-based head of MI-6’s Iberian operations Kim Philby, who was already a Soviet mole,  Sadly, Lisbon was the last destination for British actor Leslie Howard, who had become a celebrity after his performance in “Gone with the Wind” as plantation owner Ashley Wilkes: in 1943, Howard flew to Spain and Portugal for a propaganda tour along with a prominent British Zionist, Wilfred Israel, who had been instrumental in helping hundreds of Jews escape Europe .Their plane from Lisbon, BOAC Flight 777A (which naturally included a quota of business executives and spies), was shot down by Germans and the debris was never found.

In this compact book, the author devotes only a few pages to the aftermath and consequences of Portugal’s wartime neutrality. Perhaps fittingly for a nation run by an economist, it went from a trade deficit to surplus in the war years and its banks became immensely richer. Alongside questions about how Salazar handled the issue of colonialism (and his responsibility for the subsequent colonial wars waged by his military), there is also the still-open question of what happened to the Nazi gold that ended up in Portugal and has never been found since the war despite international investigations.  Lochery concludes, “it remains far too easy for Portugal’s democratic politicians to merely dismiss the story as a hangover from the country’s authoritarian past, and act as if it no longer concerns the country.”

In even broader terms, he concludes that “only with a less politicized and more open and fair critical assessment will the story of Lisbon during World War II have a real ending.”

That passage was likely written before Portugal became consumed in its current economic crisis, ironically brought on by new money flows that came into the country too easily in the 1990s and brought the historically poor nation some trappings of prosperity – now dashed by grim economic reality that will again test Portuguese staying power.

Michael D. Mossetig is Diplomatic Editor at the PBS Newshour