The Catalan election gave voters another chance to express their view on whether the region should press ahead with its bid to break away from Spain. Once again it exposed the divide. The vote was called in October, when Spanish Prime Minister Mariano Rajoy fired the Catalan government and dissolved the regional parliament in a bid to snuff out the secession movement. Instead, Rojoy watched ousted Regional President Carles Puigdemont declare victory in the vote from his self-imposed exile in Brussels.
1. Where does the result leave the separatists?
Puigdemont is back in the game, but he’s in a bind. He faces the threat of arrest if he returns to Barcelona to be sworn in as president. And even if he were to take office, Rajoy has shown that he’s prepared to use the law to stop Puigdemont from implementing his plans for independence. The three separatist groups claimed 70 seats in the 135-strong assembly in the Dec. 21 election. They restored a majority lost in October when Rajoy ousted the rebel administration before it could put a declaration of independence into effect. (For analysis of the vote, check out the TOPLive blog).
2. What’s likely to happen next?
Rajoy leads a cabinet meeting in Madrid and then sits down with his party leadership to work out his next step. Puigdemont’s campaign director Elsa Artadi said last week that Puigdemont would return to Catalonia once he had renewed his mandate from the voters. The first question is if, and when, he’ll make good on that. And whether the Spanish courts will order his arrest.
3. What’s the legal threat to Puigdemont?
A court in Madrid has ordered Puigdemont to testify as part of a criminal investigation into the events surrounding the illegal referendum on Oct. 1 and the subsequent declaration of independence. Puigdemont fled to Brussels rather than face Spanish justice. Magistrates in the Supreme Court are looking at charges of rebellion and secession and are holding former Vice President Oriol Junqueras in jail along with three other separatist leaders.
4. So who is running Catalonia at the moment?
Rajoy and his Madrid-based national government remain in charge until there’s a new government. Rajoy invoked emergency powers under article 155 of Spain’s constitution and he has said he’d be willing to deploy them again if necessary. Rajoy’s move in October drew a line in the sand: Should a pro-independence government emerge from the elections and openly challenge Spain’s constitutional order, he may disband it again. The separatists won 47.5 percent of the vote between them, enough to control the regional legislature, though short of the majority that would boost their claims to a democratic mandate to break away.
5. What’s the way out of this mess?
It’s complicated. Dialogue and a reform of Spain’s system of government might appear to offer a way forward but it was never going to be that straightforward. Rajoy has said he won’t agree to any step -- such as allowing Catalans to vote on independence in a referendum -- that goes against the 1978 Constitution. The appropriate place for Catalans to voice their demands is -- according to him -- the Spanish parliament, which, unsurprisingly, is overwhelmingly in favor of keeping the country whole.
6. Why won’t Spain offer Catalonia more autonomy?
It’s tricky to devolve more powers to Catalonia, which makes up about a fifth of Spain’s economy. For instance, granting the regional government powers to raise its own taxes risks upsetting the delicate equilibrium of constitutional powers and may lead to other regions demanding the same privileges. Rajoy’s base in the rest of Spain would be enraged by anything that looks like a concession to the Catalans.
7. What should investors watch?
Tensions are running high in Catalonia and in Spain more widely. While the separatists have only a slim majority, the eight lawmakers of the Catalunya en Comu party are in favor of a legal independence referendum. If they choose to make that their banner issue, it could complicate life for Rajoy, who’s ruled out such a move. Any open defiance of public order -- and the Spanish state’s response -- would generate headlines. The crisis has also caused wider political problems for Rajoy by straining relations with the Basque deputies he relies on to pass legislation. Investors should also watch for any impact on the economy. The Bank of Spain has trimmed its growth estimates for 2018 and 2019, citing the impact of the crisis.
The Reference Shelf
- A QuickTake explainer on Catalonia’s history and the battle that divides Spain.
- Bloomberg View columnist Leonid Bershidsky on Rajoy’s election strategy in Catalonia.
- The dispute over Catalonia may take a toll on Spain’s economic growth.