Festival: Clean up, then dance: Philip Sweeney, man on the spot, watches the dust-sheets being lifted off Lisbon, European Capital of Culture 1994

Blame it on the Greeks. It was the actress Melina Mercouri, then her country's Minister of Culture, who proposed the annual European Capital of Culture scheme in 1985. So we were reminded by Mr H B Cools, Mayor of Antwerp, as he handed over the title to Portugal's President Mario Soares in the cream marbled cultural centre of Belem.

Antwerp did alright out of it according to Mr Cools, contributing to the 'mytho-historial cement' of Europe and copping 10 million visitors to boot. Now Lisbon, the city of Prince Henry the Navigator, Vasco da Gama and grilled sardines, is up and running. An economic downturn and the allegedly divergent motivations of the two finance partners - the socialist city administration and the conservative Social Democrat government - mean that the pounds 400m budget may not be fully in place. But that didn't stop the crowds coming out at midnight to watch the celebratory fireworks over Edward VII Park.

The Lisbon '94 Commission decided to turn the city itself into the central exhibit of the year, an excellent idea since it richly merits consideration as an art object. A substantial slice of the budget therefore goes to 'Urban Intervention', a programme of rebuilding and restoration designed to remedy losses such as the large chunk of the 19th-century Chiado area burnt out in 1988, and to revitalise the riverfront and spruce up generally.

As of Saturday, most of the intervening was still going on, with roads up and last-minute scrambles to prepare buildings, still covered in sheeting, for specific events. The dust-sheets came off the glorious 16th-century Jeronimos Monastery just hours before Prime Minister Cavaco Silva's BMW drew up for the opening there of Subterranean Lisbon, an exhibition of vestiges of the city's archeological past.

The fire-damaged Chiado is still a big building site, and the adjacent 'seventh hill', destined for major gentrification, remains 80 per cent worn and grubby - and all the more charming for it.

On Saturday evening, intervened upon in the nick of time, the great Coliseu concert hall, built in 1891 to accommodate anything from an opera to a circus, re- opened for the gala concert. A swish audience, much given to mink, tobacco and extravagant hugs, applauded Sir Georg Solti directing the London Symphony Orchestra and the young Portugese pianist Pedro Burmeister in Beethoven's Fifth Symphony. Now Lisbon's largest concert space, outstripping the beautiful Teatro San Carlos, the revamped Coliseu is an impressive but odd hybrid, part bullring, part opera house, with its elaborate web of supports by Eiffel bearing an ugly new blue steel roof, and with the original red and gold paintwork of the proscenium arch and balconies now a cold grey and white.

Next weekend, the Coliseu hosts the first concert of the popular music programme, an eight- strong bill of South African bands. 'The really important thing about the concert programme,' according to the popular music commissioner Ruben de Carvalho 'is that we've pioneered a co-operative planning approach by all of the separate institutions - the Gulbenkian Foundation, the Belem cultural centre, and the different concert halls. . .'. A useful exercise with 1998 in mind, the year of Lisbon's EXPO, for which the events of '94 are widely seen as a trial run.

The '94 Commission is clearly keen to foster the city's budding reputation as a style capital a la Barcelona. To give the Lisbon youth culture, or Movida, another prod, Saturday night was declared a 'white night' with bars and clubs open all night in the Bairro Alto, the docks and the waterfront Avenida 24 Julho. Lisbon citizens responded with gusto, crowding the white cobbled pavements and washing-strewn alleys.

Queuing at 2.30am outside the old Fado club, Cafe Luso, now revamped with cabaret and a jazz pianist, I was swept aside by the Mayor of Antwerp's party and repaired instead to an African club, The Ritz, where I danced to a Cape Verdean band until morning. Then to the flower market for breakfast and further research before catching the free tram home. Ten months more of this and then it's Copenhagen.