Spanish Turmoil Continues Over Catalonia

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By Jason Coreas

October 26, 2017

The Catalan independence referendum held on October 1st sent chills throughout the European Union, as policy makers in EU capitals grow concerned over the financial and political upheaval that could result from an independent Catalonia.

The semi-autonomous region is one of the wealthiest and most productive in Spain, and its output accounts for close to 19% of the nation’s GDP. European markets had initially reacted negatively to the possibility of Catalan independence, consequently hobbling Spanish shares.

The Catalan regional government’s initial refusal to make a formal declaration, and subsequent calls for negotiation with Madrid caused Spanish shares to rebound earlier in the week, however as of October 19th, a break-down in talks forced Spain’s benchmark stock IBEX 35 down 0.8%. The Spanish government cut its projected annual growth outlook for 2018 from 2.6% to 2.3% in light of the uncertainty in Catalonia, according to Bloomberg.

Frustrated by the central government’s hardline stance on independence, Catalan President Carles Puigdemont announced October 19th that the region could declare independence as soon as Monday, October 23rd if Madrid did not establish a dialogue with the Catalan Parliament. Puigdemont also called for an end to Madrid’s “repression” of Catalan pro-independence leaders, in reference to the arrest of two Catalan activists who were suspected of sedition.

Spanish Prime Minister Mariano Rajoy responded by invoking what has been dubbed Spain’s “nuclear option” Article 155, which would suspend Catalonia’s autonomy if the regional government does not fall in line. In an emergency meeting held over the weekend, the Spanish Prime Minister stated his intention to proceed with triggering Article 155.

During the emergency meeting, Rajoy proclaimed triggering Article 155 was “the only option” to restoring Spanish authority to the region. The Spanish Senate is expected to approve the implementation of Article 155 by Friday.

Rajoy stated the Spanish government also plans to remove the Catalan President as well as his cabinet from office to further consolidate Madrid’s administrative control of Catalonia and hopes to hold regional elections in six months.

Politicians across the economic bloc are worried that the break-up of the fourth largest economy in the Eurozone will not only have negative effects on European markets, but will also result in calls from semi-autonomous regions across Europe with similar nationalist sentiments to hold referendums of their own.

Speaking to students at a forum October 13th in Luxembourg, President of the European Commission Jean-Claude Junker voiced such concerns by stating if Catalonia were allowed to obtain independence, “others will do the same and I wouldn’t like that,”. The President of the European Parliament, Antonio Tajani echoed Juncker’s response by stating that “nobody could accept” a Catalan declaration of independence.

Seeking a lifeline in the face of pressure from Madrid, The Catalan government sent an urgent plea to the European Union to intervene, however leaders of individual EU member states have responded lukewarmly.

Many leaders, such as Belgian PM Charles Michel have expressed “concern” over the political tension between Madrid and Barcelona, but have characterized the matter of Catalan independence as an internal affair that the EU cannot intercede. President of the European Council Donald Tusk highlighted the EU’s position October 19th by stating there is no role for the union in the dispute, and the situation in Catalonia would not be discussed during the EU summit in Brussels.

Further dampening Catalan hopes of EU support is the fact that leaders from influential EU member states have voiced unequivocal support for Madrid, most notably Angela Merkel and Emmanuel Macron respectively.

Unlike the 2014 Scottish independence referendum which had the blessing of the British government, The Catalan referendum was conducted without Madrid’s consent. The Spanish government considers the referendum unconstitutional, and asserts the results of the referendum are invalid due to only a 43% turnout.

If Puigdemont and the Catalan parliament elect to declare independence, EU membership would not carry over to the new state, and Catalonia would have to formally apply for membership. Said Juncker in a Youtube video broadcast by Euronews, “If there were to be a ‘yes’ vote in favor of Catalan independence, then we will respect that opinion. But Catalonia will not be able to be an EU member state on the day after such a vote,”.

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