Portuguese Carnation Revolution and Decolonization Policy (1974)

• Salazar (anti-communist Portuguese PM) died, ending right-wing New State regime
• 1974 Carnation Revolution in Portugal (named after carnation flowers pinned on soldiers)
• New left-wing government embarked on decolonization policy
  • Gave up all African colonies immediately
  • Devastating economic effects: hundreds of thousands Portuguese returned to motherland
  • Flooded economy with excess labor, overcrowding
  • Abrupt withdrawal triggered regional conflicts in colonies
• Portuguese had "bigger fish to fry" - Macau was essentially a bother
• New left-wing government ideologically aligned with Chinese, making China more willing to negotiate

Portugal's Surprising Offer and China's Rejection (1974)

• High-level Portuguese Minister visited Macau, met with Chinese officials
• Portugal offered to withdraw from Macau
• Twist: China responded they did not wish to alter Macau's status as foreign territory
• Hong Kong tabloids: "China does not want Macau" headlines
  • Elaborated colonies more valuable as sources of information, trade, hard currency than if part of China
• Portuguese officials denied exchange took place
• Researchers/historians conclude it did happen - Chinese turned down offer

Three Reasons China Rejected Immediate Handover

Domestic Reasons

• Mao Zedong and Zhou Enlai (PRC founders/key statesmen) were dying
• China gearing up for power struggle
• Dealing with Macau/Hong Kong would be distraction

Economic Reasons

• Macau/Hong Kong represented ways to circumvent China's closed-door policy
• Hong Kong was China's top source of hard Western currency
• $500 million worth flowing across China's borders annually from Hong Kong alone

Strategic Timing Considerations

• Recovering Macau would marginalize British, jeopardize Hong Kong's economic future
• Would greatly unsettle Taiwan
• Party's number-one priority: recover/take over Taiwan Island
• Macau/Hong Kong would be recovered only after Taiwanese reunification

Secret Paris Negotiations (1978)

• First handover negotiations began January 1978 in Paris
• Portuguese came with no overarching strategy other than returning Macau to Chinese
• China didn't want Portugal to simply leave immediately
• Portugal had significant leverage but failed to use it
  • Could have secured partial democratization
  • Could have continued administration for decades
  • Could have gotten Macanese people seat at negotiating table
• Secret Agreement signed: "Octa Secret Ax" or "Secret Memo"
  • Portugal promised to return Macau to China, full stop
  • Nothing else needed deciding except ceremony timing
  • "Portugal opened barn door, gave away horse and barn too"

Formalization Talks (1986-1987)

• Another round of talks held
• Portugal wanted more honorable withdrawal (reeling from trauma of unpopular 1974 African decolonization)
• Window had already closed - could only formalize 1978 secret agreement terms

Two Unique Concessions China Granted Macanese

Timing Concession

• China wanted simultaneous handover with Hong Kong
• Portugal wanted to keep Macau until 2007 (450th anniversary of Portuguese presence)
• 2007 rejected - China committed to recovering colonies before 2000
• Compromise: December 1999 handover (2.5 years after 1997 Hong Kong handover)

Citizenship Concession

• UK issued "national passports" to Hongkongers (no work/abode rights in UK)
• Portugal granted full Portuguese passports to Macanese with full abode/residency rights
• Since Portugal in European Community, granted abode rights in rest of EC
• Problem: China doesn't allow dual citizenship
• China's solution: Simply let people hold both passports (significant concession)

Reasons for Chinese Concessions

• Macau small in both population and economy
• Relations between Chinese and Portuguese free of tension
• Chinese negotiating from position of strength, felt comfortable granting concessions
• Helped everyone save face

Conclusion

• China recovered Macau long before 1999 - only matter of when flags would switch
• Portuguese nowhere near as powerful as British
• Macau didn't matter as much as Hong Kong to both parties
• Handover went smoothly - both got what they wanted
  • Portugal: departed without loss of face
  • China: got back one more colony
• Ultimate prize remained out of reach: Taiwan continues to govern itself
• China's national reunification policy continues as long as Taiwan remains independent