Rajoy demands clarity after ambiguous declaration by Catalan president

By Fortune Editors and Reuters
October 11, 2017

Spain’s Prime Minister took the first step on Wednesday towards suspending the political autonomy of the breakaway region of Catalonia after its leader issued, then immediately suspended, a unilateral declaration of independence late on Tuesday.

Mariano Rajoy demanded that the regional government clarify whether it now considers itself independent following a speech by Catalan president Carles Puigdemont Tuesday night.

This requirement is a necessary step before triggering Article 155 of the constitution, which would allow Madrid to suspend the region’s political autonomy.

Rajoy‘s move could deepen the confrontation between Madrid and Catalonia but it also signals a way out of Spain’s biggest political crisis since a failed military coup in 1981. Puigdemont made a symbolic declaration of independence from Spain on Tuesday night but then immediately suspended it and called for talks with the Madrid government.

Read: Hostage to Catalonia? No Way, Says the EU

Financial markets across Europe reacted positively to both declarations, seeing them as inching towards a negotiated settlement that would avoid a disorderly breakup of the Eurozone’s fourth-largest economy, and the best-performing large economy in Europe for the last three years.

“The cabinet has agreed this morning to formally request the Catalan government to confirm whether it has declared the independence of Catalonia, regardless of the deliberate confusion created over its implementation,” Rajoy said in a televised address after a cabinet meeting to consider the government’s response.

Without giving a specific deadline for the Catalan government to reply, Rajoy said: “The answer from the Catalan president will determine future events, in the next few days.”

It is not yet clear if and when the Catalan government would answer the requirement but it now faces a conundrum, political analysts say.

Read: Catalonia’s President Carles Puigdemont Hits Pause on Independence

If Puigdemont says he did declare independence, the government would likely trigger Article 155. If he says he did not declare it, then the far-left CUP party would likely withdraw its support for Puigdemont’s minority government in the region.

“Rajoy has two objectives: if Puigdemont remains ambiguous, the pro-independence movement will get more fragmented; if Puigdemont insists on defending independence then Rajoy will be able to apply Article 155,” said Antonio Barroso, deputy director of London-based research firm Teneo Intelligence.

“Either way Rajoy‘s aim would be to first restore the rule of law in Catalonia and this could at some point lead to early elections in the region.”

Puigdemont had been widely expected to unilaterally declare Catalonia’s independence on Tuesday after the Catalan government said 90 percent of Catalans had voted for a breakaway in an Oct. 1 referendum that Spain had declared illegal and which most opponents of independence boycotted.

Read: Spanish King Denounces Catalan Vote As Puigdemont Insists Independence Is Near

 

Puigdemont’s speech had disappointed supporters of independence, thousands of whom watched proceedings on giant screens outside parliament before sadly leaving for home.

The Catalan crisis has deeply divided the northeastern region itself, as well as the Spanish nation. Opinion polls conducted before the vote suggested a minority of about 40 percent of residents in Catalonia backed independence.

The stakes are high: losing Catalonia, which has its own language and culture, would deprive Spain of a fifth of its economic output and more than a quarter of exports. Catalonia generates more in taxes for Madrid than it gets back in government spending. As a result, the central government would struggle to sustain spending in Spain’s poorer southern and western regions if Catalonia secedes.

Some of Catalonia’s largest companies and its two largest banks have moved their head offices out of the region already in order to protect themselves against the consequences of independence. Others remain set to follow.

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