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Currency, United States Finance

Article 155: What Spain's 'nuclear option' really means

The constitutional crisis between Spain and Catalonia could result in the now-mythical “Article 155” being invoked by the Spanish government as a last resort to bring the region’s pro-independence government to heel.

Here, CNBC explains just what Article 155 is and how it could affect Spain and Catalonia’s futures.

The term Article 155 has been thrown about in media reports as the Catalania crisis has grown. It has come to signify a powerful weapon in Spain’s arsenal that Madrid can use to stop the separatist movement in Catalonia from declaring and pursuing a unilateral secession from Spain.

Article 155 refers to the section within Spain’s constitution where it states that any largely autonomous community must fulfill its obligations to the Spanish state, or else risk having its powers taken away.

In plain English, the article means that if a self-governing community, like Catalonia, has acted in any way to undermine the interests of Spain, the national government will “take all measures necessary” to force it to meet its obligations to the state.

Here is the actual wording of Article 155 in the Spanish constitution:

“If a self-governing community does not fulfill the obligations imposed upon it by the constitution or other laws, or acts in a way that is seriously prejudicial to the general interest of Spain, the government, after having lodged a complaint with the president of the self-governing community and failed to receive satisfaction therefore, may, following approval granted by the overall majority of the senate, take all measures necessary to compel the community to meet said obligations, or to protect the above mentioned general interest.”

It adds: “With a view to implementing the measures provided for in the foregoing paragraph, the government may issue instructions to all the authorities of the self-governing communities.”

Spanish Prime Minister Mariano Rajoy has given Catalonia an ultimatum asking it to clarify whether or not it has declared independence following an ambiguous statement by Catalan President Carles Puigdemont earlier this week.

Rajoy responded by stating Wednesday that if Catalonia had declared independence, he was ready to invoke Article 155 to seize powers back from Catalonia; the move would see him sack the regional government and call fresh elections.

Article 155 has never been invoked before but as tensions have grown between Spain and Catalonia a constitutional crisis has become more of a possibility.

If Puigdemont refuses to reply to Spain’s demands, Rajoy is expected to submit a list to the Spanish senate of the specific actions that the government is planning to take under Article 155, according to Antonio Barroso, deputy director of research at risk consultancy Teneo Intelligence.

“The list must then be debated and approved by a specific committee, after which it will be sent to the plenary for discussion and a final vote,” Barroso said. “As Article 155 has never been implemented before, its timeframe is unclear. However, some estimates consider that the whole procedure could be wrapped up in five days.”

It’s still unclear how the Catalan government will respond to Rajoy’s ultimatum and Rajoy’s next moves will be dictated by that response. Analysts were unsure about what specific measures the Spanish government could take, but expected the situation to deteriorate.

“The list of measures that Rajoy might take under Article 155 remains unclear, but it is likely that he would use it to trigger early elections in the region at some point before the end of the year,” Barroso said.

Marco Protopapa, an economist at JPMorgan, agreed that it was difficult to know exactly what measures the Spanish government could take.

“It is hard to predict the intensity of the central government response with Article 155 and the law of national security. We expect a gradual approach, which might involve the trial by the constitutional court of the leaders of the Catalan government for sedition and rebellion, and the automatic suspension from their functions,” he said in a note Wednesday.

Protopapa believed disorder was “very likely, but it will be important to watch intensity and duration” and that the crisis was nowhere near over. “Even though we continue to believe that Catalan independence remains only a remote tail risk (due to the economic damage it would involve), we expect things to remain very uncertain for a long time. Over that period of time, things may get worse before they get better,” Protopapa warned.

Source: cnbc
Article 155: What Spain's 'nuclear option' really means

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