Spain Will Not Be Divided, PM Rajoy Promises After Huge Demonstration

October 9, 2017, 8:07 AM UTC

Spanish Prime Minister Mariano Rajoy promised that Spain would not be divided, a week after Catalonia held a referendum that the regional governments claimed supported its push for independence

Asked if there was a risk that Spain would be divided, Rajoy said in an interview published in German daily Die Welt, Monday: “Absolutely not. Spain will not be divided and national unity will be preserved. We’ll do everything that legislation allows to ensure that.”

Catalonia, which has its own language and culture and is led by a pro-independence regional government, held the Oct. 1 referendum over secession in defiance of Spain’s constitutional court which had declared the vote illegal. Barely 40% of eligible voters turned out, as the pro-union majority largely boycotted the vote, but over 90% of those that voted did so in favor of independence.

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

Rajoy’s comments come a day after hundreds of thousands of people took to the streets of Catalonia‘s capital Barcelona to express their opposition to declaring independence, an event that showed how divided the region is on the issue.

A crowd estimated by local police to number 350,000 waved Spanish and Catalan flags and carried banners saying “Catalonia is Spain” and “Together we are stronger.” They poured into the city center after politicians on both sides hardened their positions in the country’s worst political crisis for decades. The rally was addressed by Nobel prize-winning novelist Mario Vargas Llosa, who has dual Spanish and Peruvian nationality. He told reporters it showed many Catalans “don’t want the coup d’etat the Catalan government is fostering.”

A month ago, however, a million people rallied in the city to support independence.

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

Regional leader Carles Puigdemont will address the Catalan parliament at 6 pm local time (1000 ET) on Tuesday on “the current political situation” amid speculation he could ask the assembly to declare independence.

Losing Catalonia is almost unthinkable for the Spanish government. It would deprive Spain of about 16 percent of its people, a fifth of its economic output and more than a quarter of its exports. There is widespread opposition to a Catalan breakaway among people in the rest of the country.

The political stand-off has pushed banks and companies to move their headquarters outside Catalonia. The region’s two largest banks, Caixabank and Banco de Sabadell, have already decided to relocate. Infrastructure firm Abertis, telecom company Cellnex and real estate company Inmobiliaria Colonial will also hold board meetings Monday to discuss similar steps, according to Reuters‘ sources.

The exodus adds to pressure on Catalan leaders by potentially undermining tax revenues paid by companies.

Concern is growing in EU capitals about the impact of the crisis on the Spanish economy, the fourth largest in the euro zone, and on possible spillovers to other economies.

Read: Catalan Banks May Move Elsewhere in Spain Thanks to Independence Crisis

Some European officials are also worried that any softening in Spain’s stance towards Catalan independence could fuel secessionist feelings among other groups in Europe, with EU founder members Belgium and Italy among the countries most at risk.

Rajoy has so far remained vague on whether he would take the unprecedented step of triggering Article 155 of the constitution, the so-called nuclear option which enables him to sack the regional government and call a local election. However, he appears to be inching towards such a threat. Rajoy told El Pais newspaper on Saturday: “I don’t rule out anything that is within the law … Ideally, we shouldn’t have to take drastic solutions but for that not to happen there would have to be changes.”

Rajoy also said he planned to leave in Catalonia the 4,000 national police the government had shipped in for the referendum, until the crisis was over. He ruled out using mediators to resolve the crisis – something Puigdemont has said he is open to –and added the issue would not force a snap national election.

Financial markets are increasingly willing to bet on a peaceful compromise: Spain’s benchmark stock index rose 0.8% at opening on Monday and is now up 0ver 3% from last week’s low. The yield on the 10-year Spanish benchmark government, a bellwether of political risk, has meanwhile fallen to 1.65% from over 1.80% at the end of last week.