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President of Portugal talks innovation, European debt crisis in Stanford speech

Portuguese President Aníbal Cavaco Silva was in the Bay Area to meet with representatives of business, finance and education to encourage the establishment of closer connections with the institutions of his country.  Not surprisingly, attention was focused on the European debt crisis and recent political events in Greece and Italy.

L.A. Cicero Portuguese President Anibal Cavaco Silva

Portuguese President Anibal Cavaco Silva said for European countries to weather the economic crisis, they will 'need understanding from our friends and partners.'

Prince Henry the Navigator, generally credited with launching Portugal's remarkable imperial era in the 15th century, usually is not mentioned in the same breath as Silicon Valley.

But he was on Monday, as Portuguese President Aníbal Cavaco Silva told an audience at the Bechtel Conference Center in Encina Hall that the same spirit of exploration that put his country on the map then would serve it well now.

It was "not the work of chance" that Portugal knew glory on the seas, he said. Rather, Henry drew to Portugal an elite group of scientists from around Europe, establishing a pioneering center known as the Sagres School, where scholars and experts in navigation, astronomy and cartography, among others, exchanged their knowledge and experience.

That, he said, sounds a lot like the innovation and entrepreneurship loops of Silicon Valley, with Stanford in the middle.

"For me, the spirit of the Sagres School is similar to that of Stanford University," he said. "There is a clear parallel between the Sagres School, with the navigators and seamen and financiers of the diverse maritime companies, and Stanford University's connection to Silicon Valley's entrepreneurs and risk capital financiers.

"A fundamental factor seems to be fascination with adventure and risk," he added.

Cavaco Silva was in the Bay Area to meet with representatives of business, finance and education to encourage the establishment of closer connections with the institutions of his country. In his talk, he said that MIT, Carnegie Mellon and the University of Texas-Austin have set up successful exchange programs with Portugal.

His talk was followed by a brief question-and-answer session moderated by Garth Saloner, dean of the Graduate School of Business.

L.A. Cicero John Hennessy with Portugal's President Aníbal Cavaco Silva and his wife

John Hennessy greets Portuguese President Anibal Cavaco Silva and his wife, Maria Alves da Silva, at the Oval and gives a brief tour of the Quad leading the delegation to a visit of Memorial Church.

Attention was focused, not surprisingly, on the European debt crisis and recent political events in Greece and Italy. Equally unsurprising, the man who oversaw several of the European Union's most important economic agreements in the 1980s and 1990s is still a fervent supporter of union and a strong believer that what is happening now is a systemic problem.

"We shall overcome the difficulties, but we need understanding from our friends and partners," Cavaco Silva said.

In his opinion, which he has expressed repeatedly to the media over the past several months, the problem lies in the "failure of multilateral surveillance."

"I presided over the treaty [of Maastricht]," which in 1992 created the EU and the euro, "and the treaty was very clear that these situations should be prevented," he said. "The situation Greece is in now was not supposed to take place. But European institutions were unable to prevent that, and they failed. So it is a shared responsibility of those countries and European institutions."

The new Portuguese government, formed after Socialist José Socrates stepped down in June, a victim of the crisis, has appointed a deputy minister of entrepreneurship and innovation, Cavaco Silva said, an indication the country is moving forward in that regard.

However, he also admitted that hard times are ahead. The Portuguese national budget announced in October entails deep salary cuts for public-sector workers. There have been some protests, though far fewer than in neighboring Spain and other European countries. Cavaco Silva and members of the current government say the recession will not lift until 2013.

Portugal signed a $110 billion bailout agreement with the EU and the International Monetary Fund in May. "Portugal will fully honor its commitments,"  Cavaco Silva said, though it will require "harsh sacrifices" by the Portuguese people.

"I'm a citizen of Europe," he told the audience, a frequent message in recent weeks by the president. He recalled former German Chancellor Helmut Kohl, one of the principal architects of the EU, who Cavaco Silva said had been willing to oppose both the German people and the Bundesbank to implement the euro.

"What are the most important symbols of sovereignty in Europe? The flag, the currency and the national football team. Who would have thought Germany would give up the deutschmark?"

Cavaco Silva clearly is not enamored of Kohl's protégée, Angela Merkel, Germany's current chancellor, or with many other European leaders who he says have put national interests ahead of European interests. In his view, the European Central Bank must assume the leadership role it has abdicated.

But "the euro will survive," he said. A few days earlier, he told the audience, a journalist had asked him if the euro would be around next year.

"I told him, ‘It will be here next year, and for the next 50 years!'"

Cavaco Silva was an economics professor before entering politics after the 1974 Portuguese Revolution. He served as prime minister from 1985 to 1995, and is in his second term as president. His party, the Social Democratic Party, despite its name, is to the right of other democratic Portuguese political parties. He and his party champion economic liberalization and decreased taxes, though the party also is considered somewhat of a big tent, with various ideological tendencies represented.

Cavaco Silva's visit was hosted by the GSB's Center for Global Business and the Economy. Before his speech, he met with Stanford President John Hennessy.