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Currency, United States Finance

Catalan crisis reaches crucial period as Madrid looks to impose direct rule

Spain’s constitutional crisis was back in the spotlight Friday with two crucial votes taking place in both Barcelona and Madrid.

The regional parliament of Catalonia is due to vote Friday on whether it should declare independence. And given that the region has a majority of pro-independence lawmakers “it appears more likely than not” that it will choose to split from the rest of Spain, analysts at Barclays said in a note Friday.

Declaring independence unilaterally will increase the rift with Madrid and is unlikely to not change anything in practical terms. “It would be so illegal (to declare independence); they (Catalan lawmakers) even risk jail,” a European official from Catalonia, who is close to the discussions but didn’t want to be named due to the sensitivity of the issue, told CNBC via phone on Friday morning. Politicians from the region are due to begin debating the issue late Friday morning but a decision is not expected until later in the evening.

Meanwhile, the Spanish Senate in Madrid is also voting Friday on whether to implement Article 155 of the constitution – meaning that central government could be set to remove the regional government, install a technocratic government and call new regional elections. A final vote is due at 2 p.m. local time.

On Saturday, the official publication of the decision will effectively trigger the direct rule, but it’s unclear how this could immediately manifest itself. Theoretically, this will give the regional government more time to potentially revisit its position, according to Barclays.

Speaking at the Senate, Prime Minister Mariano Rajoy said Friday morning: “In Catalonia there have been attempts to ignore the laws, abrogate them, to not follow them.”

“What occurred on the 6 and 7 of September in the Catalan Parliament was the biggest joke to democracy, when two illegal laws were passed and a referendum was called,” he added.

The Senate is likely to vote through the conditions put forward by Rajoy, however, it is unclear how Madrid’s decision to replace the Catalonian government would play out.

“It is not guaranteed that the central government will be able to immediately exercise full control of regional executive powers. Catalonia has a very high degree of self-government, comparable with some of the most decentralized regions in Europe and elsewhere,” Barclays said in a note.

Catalonia has full responsibility for civil law, police, education, health care, industry, trade and consumer affairs, environment, research, local government, tourism, transport, media and several other areas.

The current political crisis facing Catalonia and Spain has been long-coming. There has been a strong sense of separatism and regional identity in Catalonia, a wealthy region in the northeast of Spain, for decades. There have also been several unrecognized and unofficial referenda on independence in recent years.

The latest vote took place October 1 — 90 percent of 2.26 million regional voters opted for independence. Turnout was low at around 43 percent, however, and thousands of Catalans also took to the streets to protest against independence.

Catalan leader Carles Puigdemont caused confusion following the vote by appearing to declare independence and then immediately suspend it, calling for dialogue with Spain, a request so far denied. His request for the European Union to mediate in the dispute has also fallen on deaf ears with the EU supporting the Rajoy government and saying it would not recognize an independent Catalonia.

On Thursday, Puidgemont decided not to call a snap election in the region.

-CNBC’s Holly Ellyatt contributed to this article.

Source: cnbc
Catalan crisis reaches crucial period as Madrid looks to impose direct rule

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