Photographer: Anadolu Agency/Getty Images

Catalonia Reaches Rubicon as Rajoy Vows No Independence Vote

  • Regional assembly may legislate for referendum this week
  • Spanish government says it has measures ready to block ballot

Now we find out how far the Catalan separatists are prepared to go.

After more than five years of street demonstrations and propaganda, the movement wants to see legislation for an unconstitutional referendum on independence from Spain before their annual demonstration next week. The regional parliament’s board opted not to push forward the bill at its meeting on Tuesday morning, though separatist lawmakers could still decide to consider the text at any point in the plenary session due to end Thursday.

“It’s time to see real concrete measures,” said Jordi Sanchez, head of the Catalan National Assembly, a civic group that has led the campaign for secession. “Unless the Spanish government puts up barriers in front of the parliament, we will have the laws we need.”

Jordi Sanchez, right.

Photographer: Miquel Llop/NurPhoto via Getty Images

Approving the legal framework for the contested ballot set for Oct. 1 would pose the biggest challenge to the 1978 constitutional settlement that drew a line under the Franco dictatorship and reinstated an autonomous government in Barcelona, the regional capital.

Prime Minister Mariano Rajoy, whose party has only marginal support in Catalonia, has to act with enough firmness to appease those in the rest of Spain enraged by the Catalans’ maneuvers, but without inflaming the situation further.

The government says it has prepared measures to stop the vote taking place, whatever the Catalans might try.

Read more: Catalan History of Grievance Leaves a Divided Spain: QuickTake

Few independent observers give the separatists much chance.

Their efforts to rally public support from international institutions have failed; support for their cause has slipped to a five-year low as Spain recovers from the financial crisis; and if push comes to shove, Madrid pays most of the salaries of the Catalan police, who might have to pick sides in the event of a direct confrontation.

“It’s hard to see any scenario in which independence happens in the near future,” said Nicolas Veron, a senior researcher at Brussels-based Bruegel and the Peterson Institute for International Economics in Washington. “But you can’t say for sure that the Spanish government will enforce the rule of law.”

The risk premium on Spain’s 10-year government debt has widened by about 13 basis points since the start of August, but the bonds still yielded just 117 points more than similarly dated German bunds on Monday. That compares with more than 600 points in 2012. Investors have been demanding more yield to hold Italian debt than Spanish debt since the middle of last year.

Terror Attacks

Hanging over it all is the threat of terrorism. Islamists killed 16 people last month in attacks in Barcelona and a nearby beach resort. The aftermath has seen politicians and security officials in Madrid and Catalonia exchanging allegations over who was to blame, souring further an already tense atmosphere.

“Just to survive politically, they will have to go beyond what they initially planned due to the anger that has been created in Catalonia since the attacks,” said Santiago Espot, a separatist activist facing trial for organized jeering of King Felipe VI at a soccer match in 2015. “This week is going to be an important test of their commitment.”

As well as the referendum bill, lawmakers may also consider a second draft law that would provide the legal foundations for new state institutions -- a tax and social-security agency, a supreme court, and a central bank.

Catalan Tactics

Passing either of those laws would probably trigger an immediate response from Madrid, with the government prepared to ask the Constitutional Court to revoke the legislation as a minimum.

Hardliners within the governing People’s Party are calling for much harsher measures -- the party’s leader in Catalonia, Xavier Garcia Albiol, said Rajoy should suspend the powers of the regional government in an interview published Sunday in El Pais.

Catalan President Carles Puigdemont’s predecessor Artur Mas was fined and temporarily barred from public office this year, along with his former right-hand man Francesc Homs, who was also kicked out of the Spanish parliament. They organized a non-binding independence vote in defiance of the courts in 2014.

Puigdemont has said he’s ready to go to jail if that’s the consequence of pursuing the vote.

“There is one month left to Oct. 1, and the referendum still hasn’t been called, because it’s easier to announce it than to sign it off,” Deputy Prime Minister Soraya Saenz de Santamaria said in a People’s Party rally in Valencia Friday. “Those who illegally try to break up our country and erect borders will pay.”

Provoking such a harsh response may actually be what the separatists are aiming for.

Potential Crisis

With momentum behind their push faltering, the Catalans need a reaction from the Spanish government to create a sense of crisis and bring moderates back into their camp -- support for independence reached its peak in 2011 as Spain fought to stave off a financial rescue from the European Union.

So far, Rajoy has mainly relied on the courts to block the separatists. He’s also tightened controls over Catalonia’s finances and warned local officials about the legal consequences of getting involved.

Municipal financial comptrollers report to the central government in theory, but their salaries and resources are provided at local level. Local governments in 787 of the region’s 947 municipalities are offically in favor of independence (though Catalunya en Comu, a group allied to Podemos that controls Barcelona city hall, is more ambivalent).

“The risk is that the situation in Catalonia ends up creating an institutional crisis,” said Xavier Domenech, a Catalunya en Comu lawmaker in Madrid. “Symbolic, or indeed not-so-symbolic clashes, could end up with part of the Catalan government being barred from office, and that would damage a key part of the constitutional set-up.”

    Before it's here, it's on the Bloomberg Terminal.