Angola's Dos Santos says relations with Portugal unhealthy

By Shrikesh Laxmidas LUANDA (Reuters) - Angola's President Jose Eduardo Dos Santos said on Tuesday relations with Portugal were unhealthy, in the latest sign of tensions in a planned "strategic partnership" between Africa's number two oil producer and its former colonial ruler. Portugal is Angola's main source of imports and Portuguese companies are very active in banking and construction in the African country. In turn, Angolan investors have snapped up large stakes in top Lisbon-listed companies. Angola is Africa's second-largest oil producer after Nigeria and its rapid growth has given Portuguese firms and workers opportunities to escape economic problems at home. But relations between the two states were "not well," Dos Santos, who has been in power since 1979, told parliament. "There have appeared contradictions at the level of the leadership and the current political climate in the relationship does not advise the construction of the strategic partnership," he said. Tensions became apparent last month after Portuguese Foreign Minister Rui Machete apologised for legal probes by Lisbon into business deals involving senior Angolan officials. Angolan state-owned newspaper Jornal de Angola, seen as a mouthpiece for the ruling MPLA party, has published editorials criticising the Portuguese justice system and media and slamming the country's elite as "ignorant and corrupt". A bilateral summit planned for later this month has been postponed to February. "We have to rebuild a relationship that was and is good between the states," said Nuno Magalhaes, parliamentary bench of CDS-PP, the junior partner in Portugal's ruling coalition. "We know that if Portugal does not occupy a privileged place in relations with Angola, other states are waiting to do it." Markus Weimer, senior analyst for Africa at consultancy Control Risks, said Dos Santos' comments may not have great immediate impact, but in the longer-term Portuguese building firms could miss out on lucrative contracts. CORRUPTION Angola's main opposition party UNITA criticized the comments and Dos Santos' weak record on clamping down on corruption. "Portugal is denouncing some acts of corruption and for a corrupt state like Angola this does not go down well," UNITA Secretary-General Vitorino Nhany told reporters. Transparency International ranks Angola among the most graft-ridden countries globally, but Dos Santos rejected this. "There is deliberate confusion made by organisations in western countries to intimidate Africans who want to build assets and wealth, generally it is to create the image that the rich African man is corrupt," he said. British, French and American companies in the oil sector and Portuguese banks were draining of billions of dollars out of Angola every year, he said. Alex Vines, an Angola expert at London-based think tank Chatham House, said diplomacy was required to heal the two nations' relationship. "Angola's efforts to increase transparency and disclosure could help ... but international investors are saying that the business environment is getting tougher even for established companies," he added. Dos Santos said his government had cut its economic growth estimate for 2013 to 5.1 percent from 7.1 percent due to a long drought, lower-than-expected growth in the oil sector, "bad management" of public debt and a weak global economy.