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    November 17, 2011

Europe's Debt Crisis: Spain, France Face Higher Borrowing Costs

   VOA News
   Spain's Finance Minister Elena Salgado, left, talks with European
   Commissioner for the Economy Olli Rehn at the start of an EU Finance
   Ministers meeting at the EU Council in Brussels, November 8, 2011.
   Photo: AP
   Spain's Finance Minister Elena Salgado, left, talks with European
   Commissioner for the Economy Olli Rehn at the start of an EU Finance
   Ministers meeting at the EU Council in Brussels, November 8, 2011.

   The long reach of the European debt crisis touched Spain and France
   Thursday, with both countries forced to pay more to finance their
   governments.
   Spain, Europe's fourth biggest economy, paid its highest borrowing
   costs since 1997 to sell nearly $5 billion in bonds. Madrid was forced
   to pay almost seven percent interest, the point at which overwhelming
   government debts have pushed Greece, Ireland and Portugal to secure
   international bailouts in the last year and a half. But Spanish Finance
   Minister Elena Salgado said her country is "absolutely not at risk" of
   needing a bailout.
   France also had to pay higher interest rates to finance its debt. Its
   borrowing costs on 10-year notes are now more than twice that for
   European economic powerhouse Germany, even though both countries have
   the same top AAA credit ratings.
   With investors worried about the spread of the continent's debt
   contagion, stocks fell Thursday in London, Paris and Frankfurt. The
   Fitch Ratings service said Wednesday that U.S. banks face a "serious
   risk" that their credit worthiness will deteriorate if the European
   debt crisis is not resolved.

   In both Greece and Italy, police clashed with thousands of protesters
   demonstrating against austerity measures the new Athens and Rome
   governments are seeking to impose to control government deficits.
   In Athens, masked youths rallying near Parliament threw firebombs at
   police, who responded with tear gas and stun grenades. It was the first
   major rally against the new Greek coalition government of Prime
   Minister Lucas Papademos. His government is seeking to impose spending
   cuts, eliminate government jobs and increase taxes in an effort to
   secure release of an $11 billion installment of its 2010 bailout to
   avoid bankruptcy next month.
   The protest was part of an annual rally marking a bloody student
   uprising in 1973 that led to the downfall of the military dictatorship
   in Greece.
   Thousands of Italians demonstrated in several cities against what they
   said was a "bankers' government" led by new Prime Minister Mario Monti.
   Students in Italy's financial capital Milan threw firecrackers at
   police, while demonstrators in Rome hurled eggs and tomatoes.
   Monti, who replaced Silvio Berlusconi as the new Italian leader earlier
   this week, laid out his austerity measures to Parliament. He said he
   intends to overhaul the country's pension system and called for a new
   property tax on the primary homes of Italians as part of a plan to trim
   the country's $2.6 trillion debt load. He said Italy's lack of such a
   property tax is "a peculiarity" in Europe.
   One of the protesting union leaders, Piero Bernocchi, said the Monti
   government's austerity plan represented an "extremely capitalist" way
   to cut government spending at the expense of those who could least
   afford it.
   "The Monti government may be able to enjoy its honeymoon period for
   another couple of weeks because people are so happy that Silvio
   Berlusconi has gone," said Bernocchi. "But this will finish soon
   because Monti's program is extremely capitalist and follows on with
   this disastrous idea that the weakest need to pay for this crisis."
   Debt-ridden Portugal won a new offer of support Thursday in solving its
   financial woes - from its one-time colony Angola.
   Angolan President Jose Eduardo dos Santos said his country is "open and
   available" to assist Portugal, from which it declared independence in
   1975. Dos Santos met with Portuguese Prime Minister Pedro Passos Coelho
   in the Angolan capital, Luanda, and said it was important to remember
   the good relations between the two countries.
   Angola is Africa's second largest petroleum producer, and its economy
   is expected to grow about 10 percent next year.

   Some information for this report was provided by AP, AFP and Reuters.

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