Portugal has been a significant beneficiary of the European Union and is a proponent of European integration. Portugal held the presidency of the European Union for the second time during the first half of 2000. Portugal used its term to launch a dialogue between the EU and Africa and to begin to take steps to make the European economy dynamic and competitive. In 2002, the Euro began to circulate as Portugal's currency.

Portugal was a founding member of NATO; it is an active member of the alliance by, for example, contributing proportionally large contingents in Balkans peacekeeping forces. Portugal proposed the creation of the Community of Portuguese Language Countries (CPLP) to improve its ties with other Portuguese-speaking countries. Additionally, Portugal has participated, along with Spain, in a series of Ibero-American summits. Portugal was a strong advocate of independence for East Timor, a former Portuguese colony, and has committed troops and money to East Timor, in close cooperation with the United States, Asian allies, and the United Nations.

Portugal holds the chairmanship of the Organization of Security and Cooperation in Europe (OSCE) for the year 2002. The chairman-in-office is Portuguese Foreign Minister Antonio Martins da Cruz.

Illicit drugs: important gateway country for Latin American cocaine entering the European market; transshipment point for hashish from North Africa to Europe; consumer of Southwest Asian heroin

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