Portugal's motivation to fight Angolan nationalism was based on economic factors. Salazar had instituted an economic system in 1935 that was designed to exploit the colonies for the benefit of Portugal by excluding or strictly limiting foreign investments. But by April 1965, Portugal faced increasing defense expenditures in order to resist the growing military strength of the nationalist movements, the MPLA in particular. This turn of events forced Salazar to permit the influx of foreign capital, which resulted in rapid economic growth in Angola.

One of the most lucrative foreign investments was made by the Cabinda Gulf Oil Company (Cabgoc), a subsidiary of the United States-based company Gulf Oil (now Chevron), which found oil in the waters off Cabinda. Other economic concerns included iron, diamonds, and the manufacturing sector, all of which experienced an enormous increase in production from the mid-1960s to 1974 (see Background to Economic Development , ch. 3). By this time, Angola had become far more valuable economically to Portugal than Mozambique or any of its other colonies. Consequently, Angola's economic growth reinforced Portugal's determination to refuse Angolan independence.

One of the most far-reaching and damaging features of the Portuguese counterinsurgency was the implementation of a resettlement program in 1967. By grouping dispersed Africans into large villages organized by the military in eastern and northwestern Angola, the Portuguese hoped to achieve organized local defense against guerrilla attacks and to prevent insurgent infiltration and mobilization among peasants. Outside the fighting zones, the Portuguese used resettlement villages to promote economic and social development as a means of winning African support. The Portuguese further controlled the African population by establishing a network of spies and informers in each resettlement village.

By 1974 more than 1 million peasants had been moved into resettlement villages. The widespread disruption in rural Angola caused by the resettlement program, which failed to stop the insurgency, had profound and long-term effects on the rural population. The breakdown in the agricultural sector in particular was so pervasive that rural reconstruction and development in independent Angola had, as of 1988, never really succeeded. The Portuguese armed forces gained an advantage over the insurgents by the end of 1973 through the use of napalm and defoliants. The MPLA suffered the most from counterinsurgency operations, which were concentrated in the east, where the MPLA had its greatest strength. The MPLA's military failures also caused further conflicts between its political and military wings, as guerrilla commanders blamed the MPLA political leadership for the organization's declining military fortunes. In addition, the Soviet Union's support for Neto was never wholehearted.

The FNLA, which fought from Zairian bases, made little progress inside Angola. Furthermore, the Kinshasa government, reacting to a 1969 Portuguese raid on a Zairian border village that the FNLA used as a staging base, shut down three border camps, making it even more difficult for the FNLA to launch actions into Angola. Moreover, internal dissent among FNLA troops exploded into a mutiny in 1972; Mobutu sent Zairian troops to suppress the mutiny and save his friend Roberto from being overthrown. Although the Zairian army reorganized, retrained, and equipped FNLA guerrillas in the aftermath of the mutiny, the FNLA never posed a serious threat to the Portuguese.

UNITA was also suffering from a variety of problems by the end of 1973. Militarily it was the weakest nationalist movement. The organization's military arm lacked sufficient weaponry. Many of its Chokwe members, who did not have the ethnic loyalty to the organization felt by the Ovimbundu, went over to the better-armed FNLA and MPLA.

Data as of February 1989