Thousands march in Portugal against austerity

LISBON Sat Oct 1, 2011 2:29pm EDT

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LISBON (Reuters) - Tens of thousands marched in Lisbon and Porto on Saturday to protest against austerity measures imposed under the terms of an EU/IMF bailout, the first major rallies since a center-right government took power in Portugal in June.

The largest union, CGTP, which organized the demonstrations, called for more rallies and labor action in the week of October 20-27 "against impoverishment and injustice, against the aggression by the International Monetary Fund."

CGTP leader Manuel Carvalho da Silva said as many as 130,000 people took part in the rally in Lisbon, where protesters filled the central Liberdade thoroughfare. Police declined to provide an estimate of the crowd.

The tax on electricity and gas bills rose to 23 percent from 6 on Saturday to help plug a budget shortfall. Portugal is trying to avoid the fate of Greece, where a debt crisis has left the country on the brink of default.

Unlike in Greece and other European countries that have been the scene of violent protests against austerity measures, rallies in Portugal are traditionally peaceful and Saturday's was no exception.

Da Silva stopped short of calling for a general strike which Portugal last witnessed in November.

Under the terms of the 78 billion-euro ($104 billion) bailout, Portugal has to hike taxes, slash spending, apply structural reforms, especially in the labor market, and privatize state property to reduce the budget deficit.

The measures are forecast to cause a deep recession this year and next, and a rise in unemployment from the current level of more than 12 percent, which is already the highest in three decades.

"When we analyze the first 100 days of the new government, it's a disgrace ... the right and extreme right have no solution for the country's problems, no economic development," Carvalho da Silva told protesters.

"When they attack our rights, when poverty and injustice are growing, then our struggle has to be generalized, it has to be everyone's struggle."

The center-right coalition government took over in June backed by a solid parliamentary majority after a Socialist administration collapsed. The new government has promised to meet bailout-imposed budget deficit targets at any cost.

The unions reacted to the initial austerity drive last year with a general strike, but have since resorted to smaller sector strikes.

Analysts say social strife may intensify as higher taxes kick in, and as privatizations advance in companies such as the REN power grid operator and TAP airline.

(Reporting By Andrei Khalip; Editing by Robert Woodward)

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