On the surface, it would seem natural that Portugal, a small country of 10.6 million people that shed an authoritarian regime, would have an instinctive affinity for the EU. The Union has been an anchor of democracy since the revolution that overthrew the dictatorship here in 1974. It has pumped nearly 50 billion euros into Portugal's economy since the country joined the EU in 1986 and helps it to have influence beyond its size on the world stage.

Yet Portugal has an ambivalent relationship with the bloc of 480 million people it will now lead as EU president for the next six months. It is sometimes said here that Europe was the last continent to be discovered by the Portuguese.

"We were the first European country to have an empire and the last one to give it up," said Jaime Nogueira Pinto, a biographer of Antonio de Oliveira Salazar, the dictator who ruled Portugal for nearly 50 years. "So the Portuguese, more than most, are sensitive about losing our national identity."

Salazar's authoritarian regime was far more focused on Portugal's overseas provinces than on Europe, believing that little Portugal would be lost without its empire.

Since the transition to democracy, successive governments have harnessed the country's future to the EU. But its colonial past still exerts a strong hold on the national psyche and Lisbon still maintains close ties with Portugal's five former African colonies and Brazil. It is no coincidence that Portugal will use its EU presidency to hold the first EU-Africa summit in seven years, as well as a high-profile summit with Brazil.

However potent its imperial hangover, the greatest factor weighing on Portugal's mixed attitude toward the EU is its economy, which is severely underperforming other neighboring EU countries like Spain.

According to a recent Eurobarometer poll, support for the EU dropped to 49 percent last year compared with 58 percent the year before but edged up to 55 percent in the first quarter of this year. In 2006, half of the respondents believed the process of European integration undermined the country's economy and contributed to its 8 percent unemployment rate.

While the Spanish economy grew at about 3.9 percent last year, Portugal had the lowest economic growth in Western Europe, about 1.3 percent. Its budget deficit of 3.9 percent of gross domestic product also breaches EU rules requiring countries in the euro zone to maintain deficits under 3 percent.

Fernando Teixeira dos Santos, Portugal's finance minister, argues that its economy is lagging because the country failed to enact essential structural reforms in the late 1990s - including a much-needed overhaul of the public sector - before rushing to join the euro, the EU's single currency, in 1998. He said that in the countdown to joining the euro, as Portuguese interest rates converged with France's and Germany's, Portugal experienced a "wealth effect" as credit poured into the country and created a false sense of security.

"The illusion of prosperity in the late 1990s meant that reforms were relegated to the back shelf," said Teixeira dos Santos. "Now the reforms have come, better late than never."

Indeed, the Socialist government of Prime Minister José Sócrates is trying to catch up for lost time and is pushing through tough changes, including lifting the minimum retirement age of government workers from 60 to 65 and slashing public sector benefits.

Sócrates, a center-left politician in the mold of Tony Blair, said these reforms were improving the national outlook and cementing the country's natural EU vocation. "Every country, depending on its economic circumstances, goes through depressions," he said. "But we are winning back confidence."

Economists say Portugal's ambivalence toward the EU also can be explained by the fact that it has invested its ample EU funds - about €25 billion, or $34.6 billion, last year alone - less productively than neighboring Spain.

While Spain's investments in modern infrastructure helped offset uncomfortable structural changes, like liberalizing the labor market and privatizing state-owned industries, Portugal used its EU funds to expand its economy, without addressing embedded problems such as its inadequate education system. Political pressure from small-town politicians also diverted funds to rural areas at the expense of cities.

"We spent all this money building stadiums when we should have used the money to improve worker skills and to make us more competitive and more prepared for change," said Luis Rego, an economic commentator for Diário Económico, the country's leading financial newspaper.

Even putting aside its economic doldrums, Portugal's newfound political clout in Brussels appears to have done little to set hearts racing here.

With Sócrates holding the EU's presidency and former Prime Minister José Manuel Barroso presiding over the European Commission, Portuguese could rejoice in having two politicians ensconced at the EU's highest levels. Instead, there is lingering resentment toward Barroso, a former Maoist turned economic liberal, whom many Portuguese accuse of abandoning the country.

Barroso resigned as prime minister in June 2004 to take charge of the EU's executive - two years before his mandate was over - a move that plunged Portugal into political crisis. Barroso has said that taking the high-profile job was in the national interest. But many here do not forgive him for naming Pedro Santana Lopes as his successor, a former mayor of Lisbon who was beset by allegations of ministerial incompetence and lasted only months before early elections had to be called.

"Having Barroso as president of the Commission is not making people here love the EU or care about it," said Miguel Moutinho, 26, an animal rights activist who possesses extensive knowledge of EU affairs and admits to reading EU animal hygiene directives for fun. "People felt Barroso betrayed the country when he went to Brussels, and that feeling has not gone away."

Whatever the ambivalence about the EU, the younger generation is adamant that the future of a small country like Portugal rests firmly and abidingly in Europe. Moutinho said many of his friends were ignorant about the EU, which they viewed as distant and inaccessible. But he insisted that the economic and political benefits of being part of a 27-member bloc were Portugal's greatest asset in a globalized world and few Portuguese doubted this.

"We Portuguese seem to be incapable of governing ourselves and the EU gives us much-needed stability," he said, adding that "the EU forces us to look beyond Portugal and to have the discipline we need if we are going to prosper in the future."