Mr. President and Mrs. Eanes, it is an honor for us to join you. For your warmth, your kindness, and your hospitality we thank you from our hearts. We're delighted to be here in one of the oldest states in Europe, a country that traces her independence to 1140 and her present-day boundaries to 1249. As you noted in Washington, Mr. President, during her eight centuries of independence, Portugal has been a major participant in the long and complex effort that created the Europe that we know today.

Still more significant, Portugal contributed to our conception of the world itself. It was your country, smaller than many others and situated on the extreme western edge of the continent, that became a keystone by which Europe was joined with Africa, Asia, and America, integrating for the first time the four corners of the Earth.

Young students in America, and I would imagine in all lands, will forever be fascinated by the dreams and skill and courage of the Portuguese, who gave the world some of the greatest adventures in human history. Portuguese ships reaching the Canary Islands as early as 1337; then, supported by Prince Henry the Navigator and John II, exploring further to the Congo, southern Africa, and around the Cape of Good Hope; and in 1499, Vasco da Gama's miraculous return from India, an epic event that stirred all Europe and formed the basis for one of the great literary works of Western civilization, the poem ``The Lusiadas.''

By the early 1500's your flag was flying in the Americas, and by 1542 Joao Cabrilho discovered California, and that happens to be one discovery, if I may say so, for which Nancy and I will always be particularly grateful.

In these years man's sense of the possible was expanded. The unknown world yielded to reason and daring. The known world was celebrated and adorned. It was a time of intellectual and cultural excitement, a time when the Portuguese were reaching for the new and the unexplored and when the greatness of the human spirit was given expression in greatness of deed and art.

Today, Mr. President, we who have studied and been so stirred by the feats of Portugal's past, see your nation setting off on am ambitious new voyage into the future. Your democracy is just a decade old. Already, it has been threatened, but you overcame those threats. You've suffered economic disruptions and slow growth, but you're facing these problems forthrightly, and I believe you will overcome them as well. In doing so you bring honor to democratic ideals; and you are, once again, expanding the limits of the possible. Portuguese democracy is no longer a risky experiment but a solidly established fact. The spirit of daring is thriving again.

Mr. President, your personal leadership in helping to shepherd the Portuguese renewal has been strong, constant, and decisive. You have defended democratic freedoms and civil liberties. You have become a symbol of your country's commitment to liberty, helping Portugal herself become an example for all the world, showing those who still thirst for freedom that totalitarianism can be rebuffed and representative government established in its place. And for all this, Mr. President, we heartily salute you.

I'm pleased that since our last meeting our two nations have strengthened the bonds that unite us. We have completed agreements on military assistance and cooperation. Portugal has created the Luso-American Foundation, which will prove an important instrument for cooperation in economic, technical, and other spheres. American banks have placed branches here in Lisbon, and recently a delegation of American business leaders visited Portugal to consider further investments in this country and joint undertakings with Portuguese enterprises. American business leaders know that Portugal now offers freedom and stability in economic life; these are precious seeds of opportunity that can blossom into great enterprises yielding greater abundance for tomorrow.

The friendship and trust between Portugal and the United States runs deep. We serve proudly together as members of the NATO alliance, defending the West. We consult widely on other foreign policy matters, and we in the United States value the perspective that your long involvement with Africa has given you on that continent.

I believe that the stars of our progress are bright. And as travel between our countries increases and Portugal takes up its membership in the European Community -- an important step for Portugal and all of Europe -- they will shine brighter still. We look forward to the work that Portugal and the United States will do together -- improving the lives of our people, defending the free world, and by our example extending comfort to the downtrodden and hope to the oppressed everywhere.

At the close of the ``The Lusiadas,'' the poet addresses King Sebastiao and, in a wider sense, Portugal herself. He speaks of the John I and Pedro the Just, two of Portugal's monarchs on the eve of the Age of Discovery:

Yet thou, Sebastiao, thou, my king, attend;

Behold what glories on thy throne descend!

Oh, be it thine these glories to renew,

And John's bold path and Pedro's course pursue.

Mr. President, it is in our own time that Portugal is truly taking up the poet's challenge. Today the ancient glories are being renewed in freedom, and the bold path has a very special name -- democracia.

Ladies and gentlemen, please join me in a toast to you, Mr. President, to Portugal, and to the success of Portugal's future of freedom, democracy, and peace.

Note: President Reagan spoke at 10:14 p.m. in the Throne Room at Ajuda Palace. He spoke in response to a toast by President Eanes.