ROME, Italy - April 7, 2011 - Portugal became the third European country in less than a year to seek a bailout when it finally admitted it was effectively broke, a development that could infect neighboring Spain and even cause political damage to German Chancellor Angela Merkel, whose country funds the single biggest proportion of the rescue packages.

“In this difficult situation, which could have been avoided, I understand that it is necessary to resort to the financing mechanisms available within the European framework,” Finance Minister Fernando Teixeira dos Santos said in a humiliating statement Wednesday night, delivered only hours after Portugal was forced to offer stunningly high interest rates to find buyers for its short-term debt.

Some economists feared that the debt contagion could hurt neighboring Spain, Portugal’s biggest trading partner, even though Spain’s economy seems to be recovering.

“With Portugal in the bailout camp, markets might turn their attention to Spain,” said Benjamin Reitzes of Toronto’s BMO Nesbitt Burns. Spain’s economy is six times larger than Portugal’s, so a debt crisis there poses a much greater risk to the fragile European economy.

The Portuguese bailout would push the total rescue bill for the eurozone’s clapped-out economies to almost 300 billion euros. In May, Greece accepted an emergency loan package worth 110 billion euros from the European Union and the International Monetary Fund. Six months later, it was Ireland’s turn; its bailout was valued at 85 billion euros.