On May 14, ACID TRIP #2, an initiative of the Association for Independent Film Distribution, is dedicated to Portuguese cinema. It will screen three films selected by the Portuguese Directors’ Association (APR) – Pedro Cabeleira’s “Damned Summer”, Teresa Villaverde’s “Colo” and Leonor Teles’ “Terra Franca.”

The APR’s note accompanying the selection stated that Portugal’s cinema is “persistent and resilient, and despite production difficulties, it invents its own conditions to continue to exist and create.”

Portuguese films in at Cannes this year include Un Certain Regard-player “The Dead and the Others” by João Salaviza and Renée Nader Messora, acquired for sales by Paris-based Luxbox; Carlos Diegues’ “The Great Mystical Circus”, sold by Latido Films; soccer-themed “Diamantino”, by Gabriel Abrantes and Daniel Schmidt, which could be a break out in Critics’ Week; and short film “Amor, Avenidas Novas”, by Duarte Coimbra, again playing in Critics’ Week; and Terry Gilliam’s closing pic, “The Man who Killed Don Quixote.”

“Quixote,” co-produced by Pandora Cunha Telles’ Ukbar Filmes, benefited from Portugal’s film tax incentive scheme launched in 2017, which has been revamped to include a maximum 30% cash rebate, expected to provide a significant funding boost for Portuguese productions.

With fewer than 20 features per year, a small domestic market, and low, inconsistent levels of public funding, Portuguese filmmakers have become masters at “making omelets without eggs,” according to helmer Terese Villaverde.

Until the early 2000s, Portuguese cinema’s international renown was based on late filmmakers such as Manoel de Oliveira, Joao Cesar Monteiro and Paulo Rocha, and younger directors such as Pedro Costa (“Horse Money”) and Miguel Gomes (“Tabu”).

A new generation of directors has since emerged, and won top kudos at A-list international festivals, including a cluster of best short awards for directors such as Joao Salaviza, Leonor Teles and Diogo Costa Amarante. Portuguese cinema is held in high esteem by festival programmers – demonstrated by this year’s Locarno’s pix-in-post sidebar “First Look,” dedicated to Portuguese cinema.

Lack of funding remains, however, one of the main bugbears that has dogged Portuguese filmmakers over recent years.

Film policy has been repeatedly overhauled, leading to uncertainty and fierce debates about the types of films to be made and selection procedures.

The Portuguese industry is sharply divided between “commercial” and “auteur” cinema, with a separate producers’ association and directors’ association for each camp.

One of the sources of discontent is that funding for the film institute ICA is primarily based on levies charged on the advertising and commercial revenues of local broadcasters and distributors, with virtually no direct funding from the State Budget.

As a consequence, broadcasters have lobbied for film funding decisions to be targeted towards productions likely to generate high local ratings, but this potentially endangers Portugal’s prowess in producing films able to circulate in A-list festivals.

In early 2017, after implementation of a new film law, over 500 Portuguese and international film professionals signed an open letter urging the government to uphold its support system for auteur cinema, and opposing proposed changes to the system of selecting jury members.

A basic conflict of interest was claimed to exist, since it was stated that the new proposed system would mean that jury members would be nominated by industry operators and then be asked to judge between projects proposed by these operators and by independents.

The support systems are now being revised, and a new president has been appointed for ICA – Luis Chaby Vaz. But tensions are not likely to disappear any time soon.

“Sometimes it feels a bit like a civil war,” bemoans producer, Luís Urbano, “with no end in sight.”

Urbano is coproducing Ira Sachs’ “A Family Vacation,” and prepping Miguel Gomes next feature “Selvajaria”, and Gonçalo Waddington’s debut feature “Patrick,” which has a €2 million ($2.4 million) budget, a rare figure for a first feature in Portugal.

“Portuguese cinema is highly rebellious,” he said. “It doesn’t try to comply with genre rules, it’s very free.  Given the reduced size of our domestic market, it doesn’t make sense to be constrained by market formats.”

Urbano says that Portugal’s biggest financial successes in recent years, each with global revenue of around $3.6 million, have been local comedy “Patio das Cantigas” and Miguel Gomes’ “Tabu” which he produced. He also cites other recent examples such as Pedro Pinho’s “The Nothing Factory,” sold to over 12 territories.

Urbano’s next feature is Ivo Ferreira’s “Hotel Imperio,” handled by Match Factory, which will launch after Cannes.

In addition to “Quixote,” Pandora Cunha Telles recently produced war thriller “Soldado Milhões,” the second biggest domestic hit of this year, and is prepping Simão Cayatte’s “Sandra” and Júlio Alves “Arte de morrer longe.”

She is skeptical that domestic film policy will stabilize in the near future. “The state should set a strategy for the next 5-10 years and clarify its targets in terms of domestic market share, distribution support, whether it wants films and TV series aimed at younger audiences, and narrative vs. art cinema. But there’s no clear policy.”

Maria João Mayer, producer of buzzed-up Cannes-player “Diamantino,” says Portuguese cinema appeals to international festivals because it’s courageous and doesn’t comply with established formats.

“’Diamantino’ is very personal, a kind of political delirium, I’m convinced that it will have a strong career after Cannes.”

But some figures still believe that Portuguese cinema can chart a middle-ground, combining a strong narrative with an auteurist vision, Producer-director, Fernando Vendrell, whose recent feature, “Apparition” underwhelmed at the box office, observes that excessive lobbying has blocked progress. “Decision-making is excessively centralized in the film institute ICA. Juries essentially decide on the basis of curricula of the candidates rather than the quality of the projects themselves.”

Paulo Trancoso, producer and president of the Portuguese Film Academy is nonetheless upbeat about the future. “Portuguese cinema has always experienced  turbulence, but we’ve managed to maintain a constant number of films, with a very distinctive cinema, which I would say is ‘cinephile’ and always has a strong authorial vision,” he says.

That has been achieve “without making significant concessions to a standardized and global production. Our main challenge is to help Portuguese audiences recognize and appreciate their own rich cinema.”