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Throughout the Second World War, Lisbon was at the very center of the world’s attention and was the only European city in which both the Allies and the Axis powers openly operated. Portugal was frantically trying to hold on to its self-proclaimed wartime neutrality but in reality was increasingly caught in the middle of the economic, and naval, wars between the Allies and the Nazis. The story is not, however, a conventional tale of World War II in that barely a shot was fired or a bomb dropped. Instead, it is a gripping tale of intrigue, betrayal, opportunism, and double-dealing, all of which took place in the Cidade da Luz and along its idyllic Atlantic coastline. It is the story of how a relatively poor European country not only survived the war physically intact but came out of it in 1945 much wealthier than it had been when war broke out in 1939. Although much of this wealth was considered by the Allies to be “ill-gotten gain,” the Portuguese were allowed to retain the vast majority of it.
Lisbon was a city in which an apparent German plot in 1940 to kidnap the Duke and Duchess of Windsor was foiled and one in which much of the royalty of Europe lived and played in either temporary or permanent exile. Over one million refugees flooded into the city seeking passage to the United States on one of the ships that sailed from the neutral port or, for the super-rich, via the Azores on the Pan-American Boeing B314 Clipper service. Most, however, had to wait months or even years in the city before securing their onward passage. Among the refugees were prominent Jews such as the writer Arthur Koestler, the artists Marc Chagall and Max Ernst, and art collector Peggy Guggenheim. On the run from the Germans since the fall of France in the summer of 1940, many of the refugees survived on a clandestine network of financial and organizational support originating from the offices of Solomon Guggenheim in New York.
Hundreds of Allied and German agents operated openly in the city and monitored every move of the enemy. Their role was to log enemy shipping movements in and around the busy port of Lisbon, to spread propaganda, and to disrupt the supply of vital goods to the enemy. Among the agents was a young Ian Fleming busy devising Operation Golden Eye and playing blackjack against German agents at the Estoril Casino—a location that was to later provide the inspiration for a number of James Bond films. The two hundred or so British agents operating in Lisbon were controlled from London by the Iberian Desk of the Special Operations Executive, which was led by the brilliant spy chief, and traitor, Kim Philby. Writers Graham Greene and Malcolm Muggeridge worked at the same desk as Philby before Muggeridge was posted to Lisbon and eventually on to the Portuguese colonies.
As the British and German agents watched each other, their movements were, in turn, shadowed and recorded by the hugely feared Portuguese secret police, the PVDE, led by the Berlin-educated and strong anti-Communist Captain Agostinho Lourenco. His reports and decisions drew the lines that determined which espionage and propaganda activities in the city were tolerable to the authorities and which were not. As a number of British, German, and Italian secret agents and journalists found to their cost, if you tried to cross Captain Lourenco, your stay in Portugal was severely shortened. Such was the reputation of the PVDE during the 1930s that it became the model used by the Nazis to develop the Gestapo.