Photographer: Stefano Buonamici/Bloomberg

Spain Deadlock Deepens as Political Turmoil Rocks Catalonia

  • Mas will probably have to call early elections in Barcelona
  • National alliances still remain out of reach: Oxford Economics

Spain’s political deadlock deepened as the industrial region of Catalonia stumbled toward fresh elections, adding to an existing impasse over the formation of a new national government.

Barcelona followed Madrid into uncertainty on Sunday as acting Catalan President Artur Mas failed to win support from the anti-capitalist CUP party for his bid to piece together a regional government dedicated to independence from Spain. That raises the likelihood of early elections in March in a region that accounts for about 20 percent of Spain’s output.

Catalonia ran into further instability as political leaders in Madrid struggle with the result of last month’s general elections that left no one party or constellation of potential allies with a clear majority. The political mix, already complicated by national party leaders lining up on either side of the Catalan independence debate, is still harder to predict with the collapse of efforts to form a regional government.

“It’s anyone’s guess what will happen now” in Catalonia, Angel Talavera, an analyst at Oxford Economics in London, said by phone on Monday. The most probable scenario at national level is new elections, he said, since “there is no alliance possible.”

Spanish leaders are trying to find their place in an upturned political landscape after Prime Minister Mariano Rajoy lost his overall majority in the Dec. 20 election. The main opposition Socialists also lost backing as voters turned to emerging parties such as the anti-austerity group Podemos, which picked up votes in Catalonia by pledging support for an independence referendum. Rajoy, whose People’s Party took the most seats, has said he wants to build a broad-based government to defend economic growth and safeguard Spain’s national integrity in the face of Mas’s demands for independence.

The revenue raised from the 7.5 million Catalans is critical to the Spanish state’s ability to fund schools and hospitals, pay pensions and service its debt. The region transfers 8.5 billion euros ($9.3 billion) a year to the rest of Spain, according to a July study for the Spanish Budget Ministry, equivalent to 25 percent of the national budget for interest payments last year. The Catalan government estimates the net tax transfer is as much as 16.4 billion euros.

The failure of Mas’s bid to create a separatist regional administration should in theory make the task facing Rajoy or whoever leads the new national government easier, said Talavera. In practice, developments in Catalonia are secondary to the national deadlock, with the Socialists especially wary of any deal that would allow Rajoy to continue in government. At the same time, a pact with the anti-austerity platform is tricky because of its insistence on pushing for a referendum on Catalan independence, said Talavera.

Spain’s IBEX 35 index fell 2.4 percent in Madrid trading as of 2:16 p.m. in Madrid, while the yield spread between 10-year Spanish bonds versus similarly dated German bunds was little changed at 114 basis points.

Separatist Challenge

Catalonia has for years chafed at having to subsidize poorer regions such as Andalusia as a net contributor to the national tax system. After stepping up his separatist challenge over the past three years, Mas failed to win outright re-election as Catalonia’s president in regional elections on Sept. 27, leaving him reliant on the CUP’s backing to form a government.

“I am totally calm and willing to fight, to move ahead and also to face the powers in Madrid, which always try to stop this country from moving forward,” Mas told reporters Monday on his way in to the offices in Barcelona of his party Convergencia. Convergencia joined its separatist allies of Esquerra Republicana to form a platform known as Junts Pel Si to contest the regional elections in September.

With the CUP’s 10 lawmakers in the 135-seat regional assembly refusing to back the re-appointment of Mas as president, Junts pel Si is running out of time before a Jan. 9 deadline to line up the support it needs to install a government or face new elections. Junts should consider an alternative candidate to Mas, Sergi Saladie, a CUP party lawmaker, said Sunday in a televised press conference. 

“Mas said that he won’t be an obstacle for independence,” said Saladie. “It’s time for him to show that he won’t be an obstacle because there is one week left to keep that pro-independence majority.”

Ines Arrimadas, the head of Ciudadanos in Catalonia, where it placed second in September’s regional election, told Onda Cero radio on Monday that Mas was now “alone” in his bid to lead the region. Miquel Iceta, the head of the Socialists in Catalonia, told the radio station he saw little alternative to new elections.

The formation of a pro-independence government in Catalonia would have helped Rajoy’s push for a national “grand coalition” of the PP and Socialists with the liberals of Ciudadanos, according to Jordi Munoz, a political-science professor at Barcelona University. With that prospect replaced by the likelihood of new elections in Catalonia, the formation of a Spanish government in Madrid may be further delayed, he said.

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