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Portugal's economic resurgence leaves its citizens behind

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Portugal's economic resurgence leaves its citizens behind
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In the streets of Porto city centre, property developer Rui Lé Costa cannot walk more than 200 metres before stopping near another building he has renovated.

He is one of many who have taken advantage of Portugal's recent emergence from years of austerity policies, buying up buildings to meet the burgeoning demand for rental accomodation.

The country's second largest city has in recent years become a tourist hotspot. Drenched in history and culture, Porto has become the perfect place for a weekend getaway for citybreakers looking to indulge in a short trip to recharge the batteries.

But while business is booming for tourism and holiday rental companies, the resurgence of Portugal's economy is having an adverse effect on its everyday citizens.

With high demand for housing, comes soaring prices, forcing residents out of the city's picturesque old town where many have lived for decades.

"Here on this street we have this building which we will soon renovate with funds from an international investor. In this case a Miami investor," said Lé Costa, beaming as he admires his investment.

"And there, right next to it, we have a project that is almost finished. A hotel that was funded by a Mexican group."

Since purchasing two studios in 2014, he now manages a portfolio of 75 apartments, and his company, Feel Porto, specializes in the purchase and renovation of buildings for short-term rental.

In order to do so, Lé Costa had to rely heavily on foreign money after years of austerity policies imposed by Brussels had left the average Portuguese with barely enough to afford one home, let alone 75.

"We have Spanish investors, French, we have Italians, English. And we also have investors from the Americas, in this case Brazil, the United States, Canadians," he said.

Rocky road back from the bottom

In 2011, to get out of the austerity policies imposed by Brussels, Portugal wanted to attract foreign capital.

After the government began offering tax exemptions to nationals who invest in real estate, a small ripple became a tidal wave.

Renovation projects are flourishing and the city centers of Porto and Lisbon have become awash tourists.

For Lé Costa the crisis has now become a cash machine - last year, his company made a cool €2.5 million from short-term rentals.

But that is a mere drop in the ocean.

Portugal is raking in almost €5 billion thanks to this scheme to revive the real estate and tourist market.

And with no more austerity policies in sight for the time being, the country was proud to announce its return from the brink.

But as is often the case, filling the pockets of one citizen, means emptying the pockets of many more.

Making way for a miracle

In the heart of the old town of Porto, Irma Sousa feels increasingly foreign in her own neighbourhood.

The social worker who works for city hall, has the thankless task of helping residents who face eviction from their homes due to soaring rent prices and frozen wages.

"It has changed a lot, we have lost a lot of people in the historic center," she muses.

"Because rents have increased exponentially. And income, especially for the oldest people, cannot match up to the prices charged today. We speak for people with a pension of €250 or €280 per month and with that, today you cannot even pay for a room in the city center."

In 2012, the government amended the law in favor of property owners - drawing the rights of those living in rental properties into question.

The eviction of occupants in the event of renovation of the premises became much easier.

One evicted resident, Otelinda de Jesus Pinto, 74, lives on the ground floor of one dilapidated building in the city's old town.

She's lived there her entire life, seen her children grow up and flee the coop, and never thought that one day she would be told to leave.

When she received a notice of eviction for unpaid bills, she knew her time was up.

With a pension of just €282 euros per month, keeping up with the rent became impossible.

"What will I do now that I have received this eviction notice?" she asks, desperately.

"I'm going to have to collect my things and put everything in boxes.

"In these old houses where we live, where we have always lived, where we raised our children, where we have our roots, this is what the government should be concerned about! Not tourists!"

'Paralyzing possibility'

In Porto, the liberalization of the rental market leads to dozens of evictions every month.

Boiled down to mere figures, Portugal sets a shining example in terms of economic recovery, with 2 percent growth per year, and an unemployment rate below 8 percent in 2019.

But for one economist, these flattering results hide a very different reality.

"Yes it is true, the trade equilibrium is balanced," said Jose Reis, Professor of Economics at the University of Coimbra.

"But it's balanced because of the service sector and especially tourism, an industry with very low wages.

"There are limitations imposed by the Brussels requirements and the restriction of having to send a significant part of the wealth, which is important for the development of the country and to pay public debt, back to international creditors.

"This is a huge restriction that paralyzes the possibility of investing in the public sector."

'It affects my dignity'

In Portugal, public services have been shipwrecked by years of austerity measures, often hitting those who simply cannot afford to take the hit.

To make up for the discrepancies in his teacher's salary, Porto resident Ruben Silva gives surf lessons to children every weekend.

"I only do this on weekends because the rest of the time, I'm in Lisbon," he said.

His reason? It's the only place he can find work.

Stringing together a series of precarious contracts for a salary of 1,100 euros per month has proved economically unsustainable, however.

Taking the three hour train journey to the capital every week and finding accommodation to see him through the week costs him half his take home pay.

"I have a house in Porto and in Lisbon I live in a youth hostel," he said.

"It is a precarious situation, which affects my dignity. But I got used to it."

Ruben dreams of a time when he will be able to settle with his family in Porto, but unless those in power realise the strain and pressure being put on workers, he fears he may be waiting a long time.

"They don't know what it's like to have to leave my child and my family every week," he said.

"My son will never be this age again. He asks me to take him to school. But I cannot."

To control the public deficit, the Portuguese government has frozen the salaries of civil servants for the past 10 years.

The many strikes in which Ruben participated did not change anything.

"To give you an idea of the drama that is going on, there are teachers who can never get to the maximum salary level," he said.

"No one wants to be a teacher anymore. No one. The only jobs offered nobody wants. You are going to do a replacement month, two months. With reduced hours."

And the lack of stability is affecting his plans for the future. With no work or even a place to live guaranteed, making plans has become a luxury he cannot afford.

"When people ask me what I'm going to do next year. I tell them I don't know," he said wistfully. "I just don't know."

While waiting for a miracle in which he no longer really believes, Ruben continues to cover the 300 km that separates him from Lisbon every week.

Brain drain

In recent years, health care workers have regularly gone on strike.

Miguel Guimaraes chairs the Portuguese Medical Association and, like his colleagues, he denounces the lack of personnel and materials in the health sector.

In his view, if the economic turnaround is as great as many say, prefabricated buildings would not be housing pediatric wards and doctors and nurses would not be leaving the country.

At the Saint John Hospital center, known as one of the best hospitals in Portugal, he explained exactly what is at stake: "Imagine what is happening in hospitals in Veja, Evora, Porto Alegre. All these structures will not be renovated in the next 10 or 20 years.

"This is very serious for all the people who work in the national health sector. Very harmful for our patients. Our political representatives may think that the crisis has already passed for them. But it has not passed for the Portuguese people."

Every year, the exodus of doctors and nurses continues to increase.

Stuck in a rut

Austerity measures ended years ago but many Portuguese people still have to endure the social cost of economic recovery.

After 53 years in her modest home, Otelinda was evicted.

For a few more days, she can enjoy her breathtaking view of the city before it becomes an additional selling point on a holiday rental website.

"I wanted to stay in my little house, but unfortunately it’s not always as we would like," she said calmly, although her sorrow must be great.

In her place, will soon be swarms of tourists, and in place of the building she once called home, a sparkling new boutique hotel.

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