Catalan Pro-Independence Parties Win Regional Vote

Moody’s Cuts Ratings on Catalonia, Four Other Spanish Regions
A Spanish national flag, left, flies alongside the Catalan regional flag above the Palau de la Generalit, office of the regional government of Catalonia, in Barcelona. Photographer: Lourdes Segade/Bloomberg

Election gains by Catalan separatists spurred their independence drive in a setback for regional President Artur Mas that may deepen his stand-off with Spanish Prime Minister Mariano Rajoy.

Mas, who called early elections to force the debate on independence, lost a dozen seats in the 135-member regional assembly, getting 50 for his Convergencia i Unio party in yesterday’s vote. The separatist Catalan Republican Left, known as ERC, more than doubled its seats to 21 from 10. Almost two-thirds of the seats went to parties that back a referendum.

The setback for Mas showed his bid for a mandate backfired, leaving him dependent on anti-austerity separatists to govern Spain’s largest regional economy. Rajoy, hurt by recession and speculation that Spain needs a European bailout, says a referendum on secession is unconstitutional.

“Once Rajoy gets over dancing about the fact that Mas has not had a good result, he’s going to realize that this is not a good result for him at all,” Ken Dubin, a political scientist at Carlos III University and IE business school in Madrid, said in an interview. “It’s going to be hard for him to argue that this is not something that the Catalan population supports. And CiU will have to put the brakes on their austerity.”

Rajoy’s People’s Party won 19 seats, a gain of one. The Socialists took 20 seats, down from 28.

Mas, who had not made independence a core issue until the campaign, has pledged a referendum within four years.

Catalan Separatists

In contrast, ERC, which has always defined itself in terms of Catalan separatism, wants a vote by 2014 at the latest. Failing that, it would be willing to declare independence unilaterally. While Mas’s traditional voters include Catalonia’s business elite, ERC calls itself leftist. It proposes new taxes on banking and wealth and opposes austerity.

Rajoy’s People’s Party said Mas, who had called on voters for an “exceptional majority” to back his plan, had failed.

“Mas has been irresponsible and reckless to call elections just two years into his term for nothing, for a fiasco,” PP deputy leader Maria Dolores de Cospedal said at a press conference today. “What’s important now is the future. Catalonia and the Catalans need a return to responsibility.”

Catalan bonds were little changed after the vote and the extra yield investors demand on Catalonia’s 2018 notes compared with Spanish equivalents narrowed 3 basis points to 526 basis points. Spain’s benchmark 10-year bond yield was unchanged at

5.62 percent.

Conceited Intruders

“Those who have come out of this most strengthened are those who spoke most explicitly of independence,” ERC leader Oriol Junqueras told cheering supporters in Barcelona.

At the ERC’s headquarters, Junqueras was greeted last night with cheers and chants of “In-de-pen-dence.” After his address, the crowd raised their clenched fists as he led them in a rendition of the Catalan anthem, which is about driving away “conceited and contemptful” intruders.

Mas has blamed tax transfers to the rest of Spain for the area’s financial woes and has pushed for independent tax collection. The region transfers 15 billion euros ($19 billion), or 8 percent of its output.

Like nationalist leaders before him, Mas wove past heroism with present adversity into a campaign narrative that portrayed Catalonia escaping from a Spanish state that is holding it back. In a speech on the eve of the national celebration Sept. 11 that drew 1.5 million people, he urged Catalans to draw inspiration from their history in tackling the financial crisis.

Bet ‘Backfired’

“It’s backfired for Convergencia, but the project of independence is still pretty much alive,” Alejandro Quiroga, senior lecturer in Spanish history at Newcastle University in England, said in a telephone interview.

Chastened after the results, Mas said he won’t be able to govern alone. He will talk to ERC and the Socialist party to seek to form a “strong government,” whether that’s a coalition or a minority administration with “clear” support from other lawmakers in Parliament, he told reporters today. A government may be formed in December or early January, he said.

While the result was far from what the party expected and wanted, it “hasn’t occurred” to Mas to resign and the party wouldn’t let him if it had, Josep Duran i Lleida, his deputy, said at the same news conference.

Since 2010 elections, Mas, whose pro-business economic policies are in line with those of Rajoy, led a minority government and Rajoy’s PP has backed his austerity budgets. The 2013 budget will be one of the new government’s first tasks.

Regional Economy

The 7.5 million Catalans make up 16 percent of the Spanish population and last year contributed 19 percent of the country’s economic output. Madrid is the second-biggest regional economy, with 18 percent of national output. Catalonia is the country’s most-indebted region, with total borrowing of 48.5 billion euros. Moody’s Investors Service cut its credit rating to junk on Aug. 31.

The fallout from Europe’s debt crisis has shut Catalonia out of financial markets, making it more dependent on the central government, while at the same time fueling the campaign to break away. Mas, who says Catalonia can have a “brilliant” future alone rather than a “gray” one as part of Spain, was forced to ask Rajoy for a 5 billion-euro lifeline this year.

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