Protests in Portugal, Spain

Tens of thousands of people rallied in Praca do Comercio square in central Lisbon on Saturday, where they demonstrated against plans by Prime Minister Pedro Passos Coelho to cut spending and raise taxes in an effort to slash Portugal's budget deficit.

The protest was third in the past two weeks and was organized by the main umbrella trade union CGTP, which has threatened to call a general strike. Protest participants called on Coelho to step down.

Coelho's center-right government is under pressure from the so-called Troika to present a budget for 2013 that meets austerity targets. The Troika is made up of Portugal's creditors - the European Central Bank, European Union, and the International Monetary Fund (IMF).

Bailout money at stake

If Portugal does not meet austerity targets, the Troika could withhold some of the 78-billion-euro ($100-billion) bailout that the country needs to stay afloat.

"A year ago the prime minister told us the solution to the country's problems was the agreement with the Troika," said CGTP head Armenio Carlos in a speech to the protesters.

"But we have already seen this film in Greece; this is a road without an exit, pushing us toward the precipice," he said.

Coelho's government has already been forced to abandon its original plan to raise employee pension contributions amid mass protests. Under that plan, employee contributions would have risen from 11 to 18 percent, while employers would have seen their burden reduced from over 23 percent to 18 percent.

Portugal applied for a bailout in April 2011. The country currently has an unemployment rate of more than 15 percent.

Protests in Spain

Many thousands also gathered in the Spanish capital, Madrid, to demonstrate against conservative Prime Minister Mariano Rajoy's plan to cut some 39 billion euros in spending.

At the third such demonstration of the past week, protesters gathered between the Prado Museum and Parliament to vent anger at politicians they accuse of
pillaging the welfare state to bail out badly-run banks.

Protesters held up signs that said simply "No", "Resign" and "Democracy" and shouted toward the legislature: "They do not represent us."

Hours earlier, Budget Minister Cristobal Montoro had warned that Spain's public debt and deficit were set to rise far higher than previously forecast.

The protesters demanded that Rajoy step down and called for a new constitution to be drafted.

Although Spain has not applied for a full-blown sovereign bailout, the country got EU clearance in June for a bailout of up to 100 billion euros for Spain's ailing banking sector which was hit in 2008 by a property market crash.

On Friday, the government said nine Spanish banks needed up to 59 billion euros ($76 billion) to fix their balance sheets. Seven other banks were declared viable.

slk/ipj (AFP, dpa, Reuters)