Foreigners have difficulty in finding Cape Verde on the map, local people like to joke, because when they open an atlas, the tiny islands tend to get lost in the fold between two pages. Locating the country politically and emotionally is a more complex issue, even for the Cape Verdeans: is it closer in outlook to Africa or Europe?

José Maria Neves, the country’s 47-year-old prime minister, has no doubts. “Cape Verde is here,” he says, pointing to the ground with both hands, “in Africa”.

The special partnership with the European Union he hopes to see approved later this month (November) will strengthen rather than weaken Cape Verde’s involvement in Africa, he adds.

“Our strategic importance depends on Cape Verde acting as an interface with Africa and that means strong participation in the African Union and the Economic Community of West African States [Ecowas].”

Cape Verde, located at the intersection between the north and south Atlantic, between Africa and the Americas, seeks to derive maximum advantage from what Mr Neves calls its “Atlantic vocation”, born out of a unique mix of geography and history.

“Cape Verde grew out of an intense dialogue between different cultures and civilisations,” he says. “Our position and our history mean we have a great deal to contribute internationally. We want to be useful. We want to be a bridge between continents.”

Mr Neves was 15, a schoolboy in Praia, the capital, when Cape Verde declared independence from Portugal in 1975. Some intellectuals argued at the time that the country was not economically viable on its own and wanted to maintain a close association with the former colonial power.

If they had prevailed, Cape Verde may today have had a similar status to the Portuguese islands of Madeira and Azores, big beneficiaries of EU aid as “ultra-peripheral” regions of Europe. It remains related to these islands, and the Canaries of Spain, as a part of Macaronesia, the collective name for the four volcanic archipelagos.

Belonging to Macaronesia makes Cape Verde a neighbour and a natural partner for the EU, says Mr Neves, but not part of Europe. “There is no question of us wishing in any way to separate ourselves from Africa. Our history has always been as a gateway between Africa, Europe and the Americas. That is what we have to use to our political and economic advantage today.”

Mr Neves, part of Cape Verde’s new generation of political leaders, joined the youth movement of the African Party for the Independence of Cape Verde (PAICV) when he was 17 and the country was still a single-party state. He went on to become an MP and was elected leader of the PAICV at his second attempt in 2000. In 2001, he led the party to a general election victory and was appointed prime minister. He was re-elected to a second five-year term in January 2006.

What Cape Verde lacks in geographical proximity to Europe – the Canaries are more than 1,000km to the north – it makes up for in shared democratic and free-market values, says Mr Neves. “We are part of the Judeo-Christian civilisation with a parliamentary democracy that promotes the rights, guarantees and freedom of its citizens. Our justice system is independent, we respect the rights of opposition parties, our elections are fair and different parties alternate in power.”

Cape Verde’s economic policies, he says, adhere to the Maastricht criteria, the fiscal rules adopted by the eurozone, its exchange rate is fixed against the euro, and the economy is being liberalised and privatised in line with European models. As well as financial aid and trade agreements, the special partnership with the EU, he says, will help the islands “internalise” rules and principles for the functioning of the state, the public administration and the economy that he believes are as essential to the country’s modernisation as investment in infrastructure.

For its part, Cape Verde, he says, can “enlarge the area of security and stability in the Atlantic” and become “an advanced security post” for Europe in the fight against drug and people trafficking, organised crime and illegal immigration. Applying EU know-how and investment to the country’s scarce resources in this area would work to the mutual benefit of both sides.

His vision of Cape Verde in 10 to 15 years’ time is as “a modern, competitive country” with well-developed infrastructures and a “qualified, skilled” workforce. Rather than a simple tourism destination, it will be an international centre providing financial services, a logistics platform and a diversified range of other services as well as idyllic beaches and year-round sunshine.

“We’re planning for quality tourism with a high value-added component that does not put the environment at risk,” he says. “A masterplan is being drawn up that will set out clear parameters, the capacity up to which each island can go, to ensure that tourism develops in a managed and sustainable way.

“Tourism is the motor driving the transformation of Cape Verde,” he says. “But it would be a mistake to rely exclusively on one sector.”

Politics: a rare exercise in democracy

Jorge Santos, Cape Verde’s opposition leader, has a great deal to say about the government. It is not tough enough on corruption. It is misleading people into thinking they will have free access to Europe. The prime minister spends too much time promoting his personal image.

But it is what he does not say that is perhaps most revealing of the country’s political climate. He does not complain about a lack of press freedom or access to the media. He does not allege nepotism in government appointments. He does not impugn the fairness of elections, even though his party’s candidate lost the 2001 presidential ballot by only 17 votes.

His party, the Movement for Democracy (MPD), is, he says, “free to oppose” and not inhibited from promoting a national debate on sensitive issues such as corruption. Having been in office from 1991 to 2001 and working to win the next general election in 2011, the MPD is also happy to bear witness to the alternation in government of the two main parties.

This respect for the democratic process and opposition rights makes Cape Verde stand out in Africa as one of the few countries where civil and political liberties are valued as much in practice as in theory and good governance is more a reality than an aspiration.

“When Cape Verde gained independence in 1975 we were one of the poorest countries in the world,” saysJosé Maria Neves, prime minister. “Today, encouraged by the international community, we are succeeding as an African nation where so many others continue to fail.”

Change began in earnest in 1991, when Cape Verde introduced multi-party democracy and joined the vanguard of a shift to more open politics in sub-Saharan Africa. The country’s first free elections led to a resounding defeat for the African Party for the Independence of Cape Verde (PAICV), which had led the struggle against Portuguese colonial rule and established a one-party Marxist state.backed by the former Soviet Union, China and Cuba.

In the late 1980s, Carlos Veiga, an MP, began a vigorous campaign for democratic elections, breaking away from the PAICV in 1990 to found the MPD. Events moved rapidly in a country ripe for change andLegislation was drafted to allow multi-party elections in January 1991.

The MPD swept to power on a programme of democratic and market reforms. Mr Veiga became prime minister and a month later the party’s candidate, António Manuel Mascarenhas, was elected president. The MPD was to remain in power for a decade, winning parliamentary and presidential elections again in 1995 and 1996 respectively.

This was the period, says Mr Santos, when the MPD were the “protagonists of democracy”, changing Cape Verde from a one-party socialist state into a market-friendly parliamentary democracy.“We needed to find our role for ourselves in the global economy,” he says. “Cape Verde may be small, but that doesn’t mean we don’t have a part to play.”

Encouraged – some diplomats say pressured – by the World Bank and the International Monetary Fund, the MPD government liberalised markets and implemented a comprehensive privatisation programme encompassing fishing, oil, energy, telecommunications, banks, transport and other sectors.

It enlisted Portugal’s help to peg the exchange rate of the Cape Verdean escudo to the euro. It invested strongly in health and education, opened up the country to foreign investment and even changed the country’s flag and national anthem as part of a constitutional revision in 1992.

Things began to go wrong for the MPD in 1999 when Mr Veiga stepped down as prime minister to run for the presidency. He was replaced by his deputy, leading to bitter internal divisions and the founding of a breakaway party. Public support began to fall away at the same time as a younger generation of leaders led by Prime Minister José Maria Neves reshaped the PAICV into a more appealing, outward-looking party.

In the event, the PAICV won a convincing general election victory in 2001 and Mr Veiga lost the presidential race by a handful of votes to Pedro Pires, a PAICV veteran of the anti-colonial struggle and the country’s first prime minister. The PAICV and Mr Pires were both re-elected in 2001.

As prime minister, Mr Neves has sought a consensus with the MPD on important reforms that require a two-thirds majority in parliament. In June, the two parties reached agreement on a new electoral law, but the MPD has blocked other changes, including tax reforms.

As campaigning begins for municipal elections in 2008, the MPD is expected to step up pressure on the government over anti-corruption measures, unemployment, increased crime and demands for a minimum wage and a constitutional court.

In office, its vigorous liberalisation measures met with some resistance, acknowledges Mr Santos, who was elected MPD leader unopposed in June 2006. “Some accused us of being unpatriotic, of selling off the country to foreigners.”

The PAICV government, overturning expectations that it would be more circumspect towards foreign investment and free enterprise, has pursued market-oriented policies and controlled budget spending with equal vigour. In the view of Mr Santos: “They have adopted our vision for Cape Verde. There is no alternative.”