Economy
2:39 am
Fri July 20, 2012

Tough Austerity Plan Incites Spanish Protesters

Originally published on Fri July 20, 2012 12:42 pm

Transcript

RENEE MONTAGNE, HOST:

In Spain, hundreds of thousands demonstrated in scores of cities yesterday, protesting austerity measures meant to pull the government out of the red. Sales tax is going up, and civil servants are taking pay cuts. All this as Europe readies a bailout of Spain of up to $125 billion.

Lauren Frayer reports from Madrid.

(SOUNDBITE OF CHANTING)

LAUREN FRAYER, BYLINE: About 100,000 Spaniards flooded Madrid's center once the sun went down on another 100-degree day.

(SOUNDBITE OF AIR CANNONS)

FRAYER: After midnight, police fired rubber bullets and air cannons to disperse demonstrators who'd set fires in the street. Dozens were injured.

All week, Spaniards have been protesting the biggest single dose of austerity in this country's democratic history: a nearly $80 billion package of spending cuts and tax hikes. It passed parliament yesterday with support only from ruling conservatives, who hold a large enough majority to push it through.

LORENA FERNANDEZ: So we have elected them, but in this moment, we don't feel that they represent us.

FRAYER: Protester Lorena Fernandez is a nurse, being forced to take a 7 percent pay cut, like all public employees here. Even the king and crown prince have said they'll accept the same pay cut, too.

Come September, sales tax on things like clothes and cars will go up to 21 percent.

Prime Minister Mariano Rajoy acknowledged the pain these measures inflict on regular people.

PRIME MINISTER MARIANO RAJOY: (Foreign language spoken)

FRAYER: This government hasn't been able to decide between a good and bad choice, he told parliament. We've had to choose between the bad and the even worse.

Economist Gayle Allard says the cuts are necessary, but that mild-mannered Rajoy hasn't done a great job of explaining that. So people are left thinking he's being controlled by those who hold Europe's purse strings.

GAYLE ALLARD: Now people are starting to say, wait a minute, the Germans are trying to run Europe. You know, the Germans don't care about what we're suffering here. The Europeans tell us to do things and they don't work, because the risk premium keeps rising.

FRAYER: And that's exactly what happened yesterday. Spain had to pay nearly six-and-a-half percent interest to sell five-year bonds. France held a similar auction, but paid less than 1 percent. That shows how investors still have little faith in Spain's economy, despite these austerity measures, and a more than $120 billion bank bailout from Europe, set to be finalized today.

(SOUNDBITE OF CHEERING)

FRAYER: Back in the streets, protesters cheer as a band of firemen join the demonstration. Civil servants have become local heroes because they bear the brunt of the new cuts. Traffic cops snap photos of their coworkers protesting.

I ask one of the policemen, Pablo Rodriguez, what he thinks the future holds.

PABLO RODRIGUEZ: We will lose more jobs in Spain. The taxes are up, prices will rise. And I don't know, I think in six months, we'll be very, very worse.

FRAYER: Spain's two biggest labor unions are calling for workers to walk off the job in a general strike in September.

For NPR News, I'm Lauren Frayer, in Madrid. Transcript provided by NPR, Copyright National Public Radio.

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