Catalonia Result Is Bad for Spain

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By Marc Champion

Catalonian President Artur Mas's decision to call early elections for Sunday has backfired, muddying the future for Spain and Catalans alike.

Mas and his Convergence and Union party hoped to ride a sudden groundswell of separatist feeling in the region to secure a clear majority in the 135-seat regional parliament. Instead, the party looks set to lose 12 seats, falling from 62 to 50.

Mas's problem appears to be that people who really want independence took his call for a referendum on Catalonia's status as an opportunity to vote for parties with deeper roots in the separatist cause. (Mas was a recent convert.) He was also burdened -- like so many other incumbent European leaders -- by the unpopularity that comes from implementing austerity measures. He'll now have to govern in an awkward coalition, probably with the viscerally pro-independence and anti-austerity Catalan Republican Left, which looks set to more than double its representation in parliament, to 21 from 10.

This is not a good outcome for Spain. Mas has used vague language on the independence issue, suggesting a four-year process that might, or might not, lead to a demand for complete independence. Speaking at a conference in Brussels recently, he presented a conciliatory face to an EU worried over the prospect of political instability in Spain at a time when it's on the brink of needing a bailout. There's good reason to believe Mas might have used a majority to negotiate a better deal with the Spanish government in Madrid on tax transfers and other issues, in exchange for referendum terms and timing acceptable to the central government.

That approach would have disappointed determined separatists, who want independence in 2014, a historically resonant anniversary year for Catalans. But Mas's caution is probably more in line with an ambivalent public, which polls suggest is split roughly down the middle on the question of secession. Now that more measured course is harder to imagine. Not only does the Republican Left reject Spain's, and Catalonia's, current economic policies, in government they would also make it harder for Mas to negotiate any deal that compromises independence.

It's possible that Mas will abandon the referendum effort. But that option probably just got harder for Mas, as well as running the economy.

Prime Minister Mariano Rajoy also has lost from the vote. His ruling People's Party has played a poor hand in all this. It took a hard stance on the proposed Catalan referendum, insisting that any decision to hold one would be illegal. This was and remains a mistake. Much of the frustration among Catalans is over what they perceive as the central government's arrogance in refusing to let Catalans decide their own nationality. As we've said before, granting the right to a referendum would have been the best step toward defeating separatists in the vote that followed.

The Spanish government also sought to benefit from an unsigned, unstamped police report of dubious provenance that the conservative Spanish newspaper El Mundo published days before the election. The report suggested that Mas had a Swiss bank account for kickbacks. Weakening Mas in such an underhand way may have helped less biddable opponents.

Spain, on top of its economic woes, faces nationalist movements in at least two regions: Catalonia and the Basque region. When ETA, the Basque terrorist group, this weekend offered to disband and disarm in exchange for certain conditions, the government dismissed the offer out of hand, repeating the mantra: "We don't negotiate with terrorists." ETA is weakened and has lost support to non-violent nationalist parties. That, as the U.K. discovered with the Irish Republican Army, is the time to talk.

In Catalonia and in the Basque country alike, Spain's government appears to be overplaying a strong political hand at a moment when economic weakness leaves it especially vulnerable to instability.

(Marc Champion is a member of Bloomberg View's editorial board. Follow him on Twitter.)

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-0- Nov/26/2012 15:01 GMT