So, Is Catalonia Really About To Break Away From Spain?

  • SumoMe

Catalans head to polls on Sunday for one of the more unusual and important regional elections of recent times.

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For many Catalans, the Sept. 27 ballot is the definitive vote on independence from Spain that they were denied last year by the Constitutional Court. For the central government in Madrid, it’s a flight of fancy by regional President Artur Mas with no legal basis that is distracting officials from the important business of fixing up the region’s economy.

Probably not, no. But regional President Artur Mas will likely get enough support to begin the process of secession and push for more powers. His mainstream pro-independence alliance Junts pel Si is projected to fall just short of a majority, and a smaller separatist group, the CUP, will probably get the movement over the 68-seat threshold.

While this will most likely be enough for the separatists to push on with their fight, without a majority of votes they will struggle to present this as a clear democratic mandate. Polls show votes for independence coming in below the 50 percent threshold.

What is Junts pel Si?

An alliance of separatist groups. Mas’s party, Convergencia, agreed to join forces with its traditional separatist rival Esquerra Republicana for this election after their attempts at holding a non-binding referendum were blocked last year.

Spain has about 1 trillion euros ($1.1 trillion) of sovereign debt outstanding and Catalonia contributes about a fifth of the country’s economic output. On top of that, global manufacturers including Alstom SA and Volkswagen AG have factories in Catalonia, with the region’s euro membership eliminating currency risk from the their supply chains.

They’ve been joined by figures from across Catalan society such as Bayern Munich soccer coach Pep Guardiola. The aim is to set aside differences on economic and social issues to bring the separatist vote together under one banner and send a clear signal to officials in Madrid.

Mas and Esquerra leader Oriol Junqueras have drawn up a road map that involves setting up a tax agency, a central bank, an army and securing access to the euro before declaring independence in 18 months’ time if they can secure a majority of 68 seats in the 135 strong regional assembly.

Why should we care?

Spain has about 1 trillion euros ($1.1 trillion) of sovereign debt outstanding and Catalonia contributes about a fifth of the country’s economic output. On top of that, global manufacturers including Alstom SA and Volkswagen AG have factories in Catalonia, with the region’s euro membership eliminating currency risk from the their supply chains.

A messy divorce could make the Greek crisis seem like small change.

What do the markets think about it so far?

Investors are monitoring the situation, but they are more concerned about volatility at this stage than Mas achieving his goals. Catalan government-bond yields have climbed more than 100 basis points since the election was called Aug. 3 while the Spanish sovereign’s bonds have declined relative to Italy’s over the past year even as the economy accelerated.

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Still, the pressure would be much greater if investors thought there was a real risk of secession. Xavier Cebrian, a fund manager at Barcelona-based asset manager GCV Gaesco Gestion, said this week.

Why can’t the Catalans vote on independence legally?

Under the Spanish constitution, sovereignty belongs to all Spaniards, so the whole country should vote on whether to change its border.

Prime Minister Mariano Rajoy could probably muster the super-majority required in both chambers of the Spanish parliament to change that if he wanted to. But he doesn’t.

The currently legal framework is Rajoy’s main defense against the separatists. The government has drafted legislation that gives it the power to remove civil servants from their jobs if they ignore constitutional court rulings, a move designed to help keep Catalan officials in check after the vote if necessary.

Is a Catalan state viable?

It would work if the rest of Europe let it work.

Catalonia is Spain’s second-most populous region with about 7.5 million people. That’s more than Finland, Ireland or Denmark, all of them EU members in their own right. And its 200 billion-euro economy is in line with Portugal’s. It has a sophisticated industrial base and some of Spain’s biggest banks.

But all that is underpinned by Catalonia’s euro membership.

U.K. Prime Minister David Cameron, who gets a veto just like Spain’s Mariano Rajoy, insisted this month that an independent Catalonia would have to join the queue to join the EU. And that means no euro either.

Should we get that far, it becomes a game of chicken between the Catalan leadership and the European establishment.

How far away is that crunch?

The clock isn’t ticking yet.

Mas has given himself 18 months to get his ducks lined up if he gets the support he needs from Catalan voters. But if Junts pel Si needs the anti-capitalist CUP for a majority, as polls suggest, the path to a declaration becomes more complicated, because the two branches of the separatist movement agree on so little.

Before then, Spain will have a general election in December. Most of the main parties are calling for a constitutional reform that would probably include an offer to the Catalans to improve their financial situation within Spain. Unless Sunday’s result is unequivocal, the prospect of a settlement may tempt many Catalans, both among voters and officials.

THE OUTCOME

Catalonia vote: Pro-independence parties win elections

 

Pro-independence parties in Spain’s Catalonia region have won an absolute majority in regional elections.

The main separatist alliance and a smaller nationalist party won 72 seats in the 135-seat regional parliament.

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However, the pro-independence parties fell just short of getting 50% of the vote, winning 1.9 million out of 4 million ballots cast.

The separatists say the victory gives them a clear mandate to form an independent Catalan state.

Spain’s central government in Madrid has pledged to challenge any unilateral moves towards independence in court.

The “Junts per Si” (“Together for Yes”) alliance won 62 seats. If it combines with the far-left separatist CUP party, which won 10 seats, it will be able to form a parliamentary majority.

“We have won,” Catalan regional President Artus Mas told his cheering supporters late on Sunday.

After a celebration rally, the pro-independence camp’s leaders said they would now proceed towards the creation of an independent Catalan state.

“We have a clear, absolute majority in the Catalan parliament to go ahead,” Mr Mas said.

 

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