Protests puncture euro zone optimism

BRUSSELS, Belgium — Riot police fired tear gas at an angry mob throwing gasoline bombs during a general strike in Athens today, a day after Spanish police shot rubber bullets at leftist protesters attempting to storm parliament, where lawmakers were mulling more austerity.

Days after it seemed European policymakers may have finally launched a drive to save the continent’s single currency, the euro zone's battlefield is spreading from trading floors to the streets.

Now Spain’s richest region is calling for independence, part of the mounting political fallout from an economic crisis that is far from resolution.

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"Yesterday the Spaniards took to the streets, today it's us, tomorrow the Italians and the day after — all the people of Europe," Yiorgos Harisis of Greece's ADEDY civil servants' union was quoted as saying by the Kathimerini daily. Greek unions called today’s strike, the first since a center-right-led coalition came to power in June, to protest planned spending cuts of $15 billion.

The government must carry them out for Greece to receive its next tranche of bailout funds, without which it could face bankruptcy within weeks.

But Harisis vowed the measures wouldn’t pass “even if voted in parliament."

Last week, a march by half a million Portuguese forced the government to climb down over planned cuts to workers' take-home pay.

This week’s violence coincided with a raft of gloomy economic figures that had an immediate impact on financial front.

Stocks fell across Europe Wednesday, when the Madrid index plunged almost 4 percent.

Spanish borrowing costs reached their highest point since early September, when the announcement of a European Central Bank support plan ushered in two weeks of relative calm by easing pressure on struggling countries in southern Europe.

The bad news increases pressure on Spain’s Prime Minister Mariano Rajoy to appeal to the ECB and the euro zone's bailout funds to activate plans that would stave off economic collapse by buying up Spanish bonds and driving down the cost of borrowing.

Rajoy has so far resisted such a move for fear of having to submit to the humiliation of internationally imposed austerity measures to qualify for the rescue. He is already set to announce more unpopular reforms in a budget bill Thursday.

The crisis has fueled secessionist fever. Hundred of thousands marched through Barcelona, the capital of Catalonia, to demand independence for their economically important northeastern region earlier this month, a drive that’s further rocked Spanish confidence.

The head of the regional government, Artur Mas, has called elections for Nov. 25 and says the time has come to hold a referendum on breaking away from the rest of Spain.

"It is the people of Catalonia who are the rightful masters of their own destiny, and who should decide who should represent them in these historic moments," Mas told the regional parliament in Barcelona.

Deeply in debt, Catalonia has requested a $6.4 billion bailout from the Spanish central government. Many who are calling for independence blame their region’s economic woes on its tax transfers to poorer Spanish regions.

The breakaway push has been met with widespread dismay at European Union headquarters in Brussels, where it’s seen to be eroding cautious hopes of an exit from the crisis.

EU officials privately rail over what they perceive as hypocrisy by Catalans who have denounced German reluctance to bail out southern Europeans while seeking to stop their own taxes from helping Spain’s poorer regions.

Officials in Brussels have also pointed out that should Catalonia secede from Spain, it would also have to leave the EU. That would presumably leave it without the euro or free access to European markets and force it to join the likes of Croatia and Turkey on the membership waiting list.

Separatists in Catalonia and other like-minded European regions have dismissed such fears, saying the EU would bend the rules to keep them in.

Scotland is scheduled to hold a referendum on independence from Britain in 2014 and local elections in Belgium next month are expected to give a renewed boost to nationalists who are already the biggest party in the region of Flanders.

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Despite their ferocity, Wednesday's demonstrations in Athens were minor by Greek standards, and reports from smaller cities indicated support around the country was patchy. However, the violence underscored stains in Greek society and persistent doubts over the government's ability to deliver the budget cuts its creditors demand.

Plenty of grim economic data compounded the gloom around Europe on Wednesday. France posted its highest unemployment levels in 13 years, with the jobless rate breaking the 3 million mark. New reports also suggested deficits are likely to be worse than expected in both Spain and Greece.

Germany's finance minister further befuddled markets by joining his Dutch and Finnish colleagues Tuesday in appearing to roll back an EU summit agreement from this summer to use the euro-zone's $640 billion bailout fund to support failing banks without placing greater burdens on cash-strapped governments.

Their statement added to the pessimism of those believe the survival of the euro zone and the economies of hard-pressed southern nations depends on greater solidarity from the richer European nations.

"Dear Mrs Merkel, the social fabric is rupturing,” tweeted Sony Kapoor, director of the Re-Define think-tank in London, in an appeal to the German leader Angela Merkel. “Will you tell your voters the truth that a systemic crisis only has a systemic solution? The cycle of over-promising and under-delivering in the euro zone continues."