Portugal has been characterized by a late discontinuous democratization process. This contribution discusses the case of state and public administration reform in Portugal by using approaches from democratization, modernization and Europeanization theories. In order to understand the Portuguese case, the concept of 'neo-patrimonialism' is used. We characterize Portuguese public administration as still having 'neo-patrimonial' features, and therefore is still in transition from old closed-minded practices such as particularistic decision making or clientelistic relationships to new open-minded ones. The 'new' governance agenda combines new public management instruments and a growing flexibilization of public administration towards networks with non-statal actors and has certainly led to some improvement in the quality of the services associated with public administration. Although is still too early to assess, top-down and horizontal Europeanization processes, particularly since the late 1990s, may have contributed to a more reflexive approach in moving towards a more endogenous strategic vision based on the needs of the Portuguese state and public administration.

Despite there having been a positive context for initiating health care reforms in Portugal in the past fifteen years (accompanied by political consensus on the nature of the structural problems within the health care system), there has been a lack of reform initiatives. We use a process-based framework to show how institutional arrangements have influenced Portuguese health care reform. Evidence is presented to demonstrate inertia and nondecision making in three critical areas of Portuguese health policy: clarifying the public-private mix in coverage and provision, creating financial incentives and motivation for human resources, and introducing changes in the pharmaceutical market. Several factors seem to explain these processes, namely, problems in the balance of power within the political system, which have contributed to a lack of proper policy discussion; a lack of pluralism in the formation of health care policies (with low participation from citizens and high mobilization among structural interest groups); and the low priority of health care in public sector reforms. Portuguese politicians should be aware of the pitfalls of the current political system that constrain participatory arrangements and pluralism in policy making. In order to pursue health care reform, future governments will need to counterbalance the strong influence of structural interest groups.

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This paper delineates the changing environment from a benevolent to a conditionalityoriented. It uses the case study of Portugal and the implementation of the austerity programme to show how a semi-peripheral country of the European Union (EU) reacted to this changed environment. The first section shows how the EU has become more divided due to the growing cleavage between rich and poor member states. This is followed by the section on the making of the growing tensions between the European partners and the International Monetary Fund. Subsequently, the semi-peripheral economy of Portugal is analysed, before the policy responses of the Portuguese government are presented.