<p>How do formally rights-protective European states produce extreme labor exploitation through, rather than despite, their own legal frameworks? Drawing on 34 in-depth interviews with South Asian agricultural workers in Portugal (June 2024 to November 2025) and analysis of Operation Safra Justa, which dismantled a police-protected trafficking network and arrested 11 law enforcement officers, this article examines how state institutions produce labor exploitability through what I conceptualize as psychological governance: a regime of control operating through embodied state presence, legal precarity, and bureaucratic temporality to render workers docile through anticipated rather than actualized violence. I demonstrate how workers earning a fraction of the legal minimum wage for extreme working hours experience exploitation as inevitable rather than contestable. Psychological governance functions through interconnected mechanisms: recruitment debt bondage, bureaucratic processing delays maintaining permanent temporariness, temporary work agency wage extraction chains, and institutional complicity evidenced by uniformed officers receiving payments to guard agricultural sites and threaten workers seeking help. Building on critical migration studies, I argue psychological governance differs from deportability and precarity frameworks by centering how uniformed state presence transforms abstract legal threats into internalized psychological control. Operation Safra Justa’s dismantling of one network left structural conditions substantially unchanged, suggesting individual prosecutions cannot address systemic exploitation. Transforming labor exploitation requires reforming the political economy of European food systems and migration governance regimes producing exploitability.</p>