Madrid Doubles Down as Catalans Prepare to Declare New State

Updated on
  • Rajoy’s officials finalizing plans to take control of region
  • Separatists consider declaration of independence this month

CaixaBank, Sabadell 'Normal' After Cash Pull Calls

As the Catalonia conflict enters uncharted territory, both sides are upping the ante.

Officials in Madrid are finalizing plans for taking control of the rebel region. They’ll be rubber-stamped at an extraordinary cabinet meeting on Saturday when Prime Minister Mariano Rajoy returns from a summit in Brussels, where he’s looking to shore up his support among European leaders. The Catalans meanwhile are working out how they might stage a unilateral declaration of independence.

“We should take a decision in the next days,” Jordi Xucla, a Catalan deputy for the PDeCAT party in the Spanish Parliament in Madrid, said in a Bloomberg Television interview Thursday. “The decision could be obviously the declaration of independence maybe in one week or in two weeks.”

Both sides edged closer to the cliff edge Thursday on an historic day of threat and counter-threat, with Rajoy ordering his advisers to prepare the Spanish government’s most wide-ranging constitutional powers for the first time ever.

The Catalan National Assembly, a separatist campaign group, called on its supporters to pull cash from lenders, including CaixaBank and Banco Sabadell, between 8 a.m. and 9 a.m. Friday. In a video posted on Twitter, the group told Catalans to protest the two banks’ decision to move their legal domiciles out of the region. Spokesmen for the two banks said business was normal early Friday.

CaixaBank fell 0.4 percent in Madrid at 10:25 a.m., its sixth straight day of losses. Sabadell was down 1.8 percent, the biggest decline in Spain’s benchmark index.

Read more: How Catalonia’s Bloody Breakaway Bid Divides Spain: QuickTake

The next, critical step is fraught with risk for both sides.

Mariano Rajoy

Photographer: Angel Navarrete/Bloomberg

The prime minister, his authority already damaged by an unprecedented rebellion in the country’s biggest regional economy, will be trying to bring Catalonia to heel using the untested legal weaponry of the Spanish Constitution’s Article 155. He has little popular support on the ground, and his opponents have honed their guerrilla operations over seven years of campaigning.

The last time he tried to impose his will on the Catalans was on Oct. 1, when violent clashes between Spanish police and would-be voters provoked a torrent of criticism from around the world. And the separatists declared victory in their improvised, illegal referendum anyway.

Puigdemont’s Stakes

Once the government approves his plan Saturday, Rajoy needs the backing of the Senate before he’s ready to take charge in Catalonia. That process could take another two weeks, according to constitutional scholar Jorge de Esteban Alonso.

Carles Puigdemont

Photographer: Angel Garcia/Bloomberg

For Catalan President Carles Puigdemont and his allies, the stakes are arguably even higher -- two of his closest collaborators have been in jail since Monday, a National Court judge ruling that they might interfere with evidence if released. If they’re eventually convicted on charges of sedition, they face up to 15 years in jail.

A court in Lleida, Catalonia, on Friday ordered Spain’s Civil Guard to search the Catalan government’s data and communications center for evidence that regional police officers coordinated their actions to allow the makeshift ballot to take place, in defiance of the Constitutional Court.

European Union leaders lined up on Thursday to back Rajoy, and the EU has made it clear that an independent Catalonia would fall out of the bloc, its companies shut out of European markets, and its banks cut off from funding by the European Central Bank. Blue-chip Catalan companies, such as CaixaBank SA and Gas Natural SDG SA, are already leading a flood of businesses uprooting for other parts of Spain to escape the potential disruption.

Government Job

“The government is doing all it can to guarantee the prosperity of Catalonia and Spain,” Economy Minister Luis de Guindos told reporters in Madrid Thursday. “The government is doing everything it possibly can to restore stability.”

Catalan Vice President and economic-policy chief Oriol Junqueras will meet with executives from international companies operating in the region Friday to urge them not to join the corporate exodus, El Confidencial news website reported. Alstom SA, HP Inc. and law firm Baker & McKenzie are among those invited, El Confidencial said. De Guindos will join the rest of the cabinet for its regular weekly meeting in Madrid Friday, while Rajoy attends the final day of EU talks in Brussels.

Separatists’ Bet

In reality, a unilateral declaration of independence in the coming weeks is more likely to mean chaos than isolation. The EU won’t recognize a proclamation based on an illegal vote with no proper guarantees, so the region will remain plumbed in to the European economy. But Catalans would be faced with two rival administrations claiming control of the courts, the public finances and the streets.

Senior lawmakers from the main pro-independence parties will meet in the Catalan Parliament on Monday to discuss the potential choreography of the event, according to a person familiar with their plans. The political leaders are concerned that they may lose control of more radical factions among the grass-roots campaigners unless they move quickly, the person said, asking not to be named, because the discussions were private.

Protesters gather to demonstrate against the pending triggering of Article 155 in Barcelona on Oct. 19.

Photographer: Sean Gallup/Getty Images

The separatists are betting that European leaders will choose to break their own rules rather than see that chaos snowball, even though many would see such a declaration as an act of economic self-harm.

“The fact that the Spanish government doesn’t want a mediation doesn’t mean that they won’t end up accepting one,” Junqueras said in an interview in Barcelona Thursday.

— With assistance by Charles Penty

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