Fuel protests spread

Spanish farmers marched, Israeli truckers slowed rush-hour traffic and Nepali students stoned cars yesterday in anger at rising fuel prices and inflation that they say are crippling their economies.

Protests by truckers, taxi drivers, fishermen and farmers demanding fuel tax breaks have spread across the world, increasing fears of political instability and a global economic downturn.

The oil price, which dipped $3 to $133 on news that China will raise retail gasoline and diesel prices from today, has touched record highs near $140 in recent months, fuelling inflation and squeezing business margins.

In Madrid, thousands of farmers brought traffic to a halt on the capital's busiest road to demand lower diesel tax to help cushion the blow of higher fuel costs and low producer prices.

"This is the last straw. If good spring rain hadn't arrived this year and last, we would already have gone bust," said sugarbeet farmer Evaristo Ortega. "The price of diesel and fertiliser is impossible to bear."

Diesel prices have shot up to around €1, from 60 cents a year ago, farmers said as they marched past soccer club Real Madrid's Bernabeu Stadium carrying banners reading: "For the future of our countryside".

For Greeks, the cost of living has replaced unemployment as the top concern, unions said. Food prices have risen and motorists pay 13 per cent more for fuel than a year ago and heating oil costs 38 per cent more.

Labour unions have called for rallies in the capital Athens yesterday to protest against the conservative government's failure to rein in the price increases.

"Business interests have staged a party while the government is duping us with its ineffective measures to contain rising prices," said the president of Greece's largest labour confederation, Yannis Panagopoulos.

But Germany and other EU states said they would reject a fuel tax break plan sought by France to cushion rising oil prices.

A senior French official said President Nicolas Sarkozy would ask EU peers to back a reduction in value-added tax on petrol across the 27-nation bloc.

In Berlin, German Chancellor Angela Merkel told Parliament: "In our view, financial policy intervention, which is being discussed again and again... should be avoided."

Swedish Prime Minister Fredrik Reinfeldt went further and told reporters that Europeans should work longer hours and pay less income tax to cope with rising prices.

"I am asking myself... that we might ease up on income taxes to make work pay even further, so that people could react to the fact that an increase in the petrol price could be met by working some extra hours," Mr Reinfeldt said.

In the Middle East, Israeli truck drivers, supported by taxis and buses from across the country, intentionally slowed down traffic on Tel Aviv's Ayalon Highway during rush hour to demand that the Treasury remove tax charged over diesel fuel. Scuffles erupted when police attempted to disperse the protest. One driver was injured and several detained.

But Treasury officials said they had no intention of changing current tax policy.

Asia has also been hit by protests and demonstrations from trade unions and students over climbing prices.