Barley drinking and playing chess with a friend ( named “Gravy” in the book) in a small bar before being summoned to the British Embassy by Merridew
I was in Lisbon a few years ago and tried, without success, to find the location of this scene - although I did come close. It was obviously in the vicinity of Santa Egracia – the National Pantheon as this can be seen in the distance when the camera pans round to face Merridew.
I originally identified the exact location by using the birds eye view on Multimap (now part of Bing maps), and subsequently confirmed it using Google Streetview once that became available. It does appear as though the bar was no longer there when the street view shots were taken. By coincidence, opposite the café-bar there is what appears to be a Russian Orthodox church.