Catalan President calls non-binding independence vote: legal battle with Madrid looms

The signature of Catalan President Mas on today's decree

The die is cast in Barcelona. Catalan President Artur Mas has just signed the decree calling an independence vote on 9 November.

The Spanish government will hold an emergency cabinet meeting on Monday, once Prime Minister Mariano Rajoy is back from his state visit to China, to officially announce that it will lodge a legal challenge at the Spanish Constitutional Court.

The immediate effect of the move will be that the decree signed by Mas today will be suspended until the Constitutional Court issues its ruling. However, Catalonia's pro-independence parties are expected to keep campaigning while waiting for the verdict.

It is important to bear in mind that, based on a separate Catalan law that came into effect this morning, the legal status of the 9 November vote is 'non-referendum consultation' (consulta no referendaria). This means the vote would not be binding.

The Catalan government believes this should provide a sufficient safeguard against legal challenges from Madrid, but is clearly also taking a gamble: even if non-binding, the outcome of an independence vote would be politically very difficult to ignore.

A legal battle is most certainly ahead, and we will keep monitoring the situation very closely. If you want more background on Catalonia, you can read our previous blog posts (see here and here).

Scotland votes, Catalonia waits: Will there soon be another independence referendum in Europe?

FC Barcelona supporters waving Scottish flags at Camp Nou

The world is watching Scotland today, and the Catalans will watch closer than most.

Spanish news sites are featuring pictures of FC Barcelona supporters waving Scottish flags during their team's Champions League game yesterday, and it is widely reported that delegations from the Catalan (and Basque) nationalist parties have travelled to Scotland to follow the latest developments on the ground.

This is because the debate around Catalonia's independence referendum is approaching its own moment of truth:

• Catalonia's ruling parties agreed long ago that the independence referendum (carefully described as la consulta, the consultation) would take place on 9 November. However, the Catalan government has yet to officially call such a referendum. 

• The Spanish government maintains the referendum is unconstitutional (and as we explained here, the Spanish Constitution is actually on Prime Minister Mariano Rajoy's side).

• The Catalan government will tomorrow try to get around the legal obstacles by asking the Catalan parliament to adopt a new law on 'non-referendum consultations' (consultas no referendarias). Catalan President Artur Mas is then expected to convene one of these consultations for 9 November. However, the legal status of the result of such a consultation is unclear at the moment.     

• Reports in the Spanish press suggest the Spanish government has everything ready to launch a legal challenge against la consulta at the Spanish Constitutional Court, as soon as it is officially announced.

• If the Spanish Constitutional Court were to strike down the referendum (which is what Rajoy expects), the 'Plan B' of Artur Mas would be to resign and call early regional elections - and then present the election results as a referendum on Catalonia's future. Recent polls suggest the strongly pro-independence Catalan Republican Left (Esquerra Republicana de Catalunya, ERC) would come out as the largest party, albeit short of an absolute majority. For Rajoy, having to deal with ERC instead of Mas would be like jumping out of the frying pan and into the fire.

Are the Scottish and the Catalan cases similar?

There are similarities between Catalonia and Scotland. Both are proud regions with long histories of independence movements, and both have also been embedded in decentralised systems. Also with respect to the consequences of leaving there are similarities, not least the prospect of joining the EU and the difficulties that could potentially arise.

However, there are at least two fundamental differences:

• The Spanish government has never considered accepting the outcome of an independence referendum in Catalonia. On the contrary, it is determined to use all the legal instruments at its disposal to stop the referendum taking place. Spanish Foreign Minister José Manuel García-Margallo has not even ruled out making use of Article 155 of the Spanish Constitution - which gives the central government the power to "adopt the necessary measures" to force a regional government to comply with its constitutional obligations. In practice, despite the planned date for the referendum being less than two months away, the Catalans still don't know whether - and in what form - it will actually happen.

• Constitutional reform and greater devolution of powers to Spanish regions as an alternative to independence has so far not been discussed properly, mainly because the Spanish and Catalan governments have never really engaged in negotiations. 

Will there be a 'contagion effect'?

Pro-independence Catalans would no doubt get a boost in case of a 'Yes' victory in the Scottish referendum, whilst, naturally, Madrid would love to see the 'No' camp win. Irrespective of the outcome in Scotland, the status quo doesn't seem to be an option anymore for Catalonia. Just think of the 500,000 to 1.8 million people, depending on the estimates, who took to the streets last week to celebrate La Diada, Catalonia's National Day.

Sooner rather than later, the Spanish and Catalan governments will need to give up posturing and start talking to each other. At that point, reforming the Spanish Constitution to give regions greater power to set and collect taxes may well appear as a valid alternative. The Scottish episode, whichever way the referendum goes, may ultimately serve to accelerate further devolution in Spain.

The Catalans have voted: for what exactly?

It does not happen very often, but the final result of yesterday's Catalan elections was almost completely unpredicted by polling. Artur Mas (in the picture) and his centre-right Convergència i Unió (CiU) party were always going to win - and they did so. However, according to most opinion polls, Mas was, at worst, going to consolidate the 62 seats that his party currently holds in the Catalan parliament - but he failed to do so, and by a wide margin.

CiU only secured 50 seats - 18 short of the 68 needed to command an absolute majority. Needless to say, Spanish Prime Minister Mariano Rajoy's party has immediately described the result as a bofetada (a "slap in the face") to Artur Mas - claiming he has failed in his attempt to lead Catalonia towards independence.

So have the Catalans suddenly given up on independence? Not quite. The exploit of the left-wing independentist, anti-austerity and anti-monarchic Esquerra Republicana de Catalunya (ERC, Catalan Republican Left) won them 21 seats - eleven more than in the previous elections. Therefore, Mas could certainly try to push ahead with his plans for a referendum on Catalonia's independence with the support of ERC. 71 votes from a total of 135 seats in the Catalan parliament (without counting the smaller pro-independence parties) is not the "exceptional sovereignist majority" Mas hoped for - but is a majority nonetheless.

This is exactly what the Catalan President noted in his first remarks after the election results were made official yesterday night. He said,

Those who want to abort the [sovereignist] process should take into account that…the sum of political forces in favour of the [Catalans’] right to decide is very much a majority in the parliament.

However, CiU and ERC are hardly natural allies or the makings of a stable and durable coalition. In particular, the two parties clearly do not see eye-to-eye on the need for Catalonia to continue with fiscal consolidation. At this stage, it is difficult to predict how things will evolve within the next few weeks or months. But the following should be kept in mind:

• Under the Spanish Constitution (see here, Article 149.1), any referendum needs to be authorised by the central government. During the electoral campaign, Artur Mas has repeatedly suggested that he would get around the problem by holding such a referendum within an 'alternative' legal framework - i.e. a new Catalan law which would provide for the necessary legal base. However, this would be unlikely to stop the Spanish central government from taking the referendum to the Constitutional Court to invalidate it.

• Great uncertainty remains over how Catalonia would declare its independence in practice - not least because an amicable divorce seems to be out of the question for Rajoy and his cabinet. In any case, it would be wrong to see Catalan independence as a short-term prospect.

• Finally, and most importantly, an independent Catalonia would find itself out of the EU. Many have argued that the EU would have a strong interest in letting Spain's economic powerhouse back in as quickly as possible. A fair point, but under the current EU Treaties, Catalonia's accession would need to be endorsed by all member states - including Spain. This is arguably the biggest stumbling block for Artur Mas's hope of making Catalonia "a normal nation in Europe". Crucially, previous opinion polls have showed that the prospect of continued EU membership would be a big factor in a hypothetical referendum on independence.

Everything else, at this stage, is far from clear - especially given that the new Catalan government is not yet in place, and forming one may not be the easiest of tasks.  

Pressure mounts again for Don Mariano

Spanish Prime Minister Mariano Rajoy's trip to New York for the meeting of the UN General Assembly is coinciding with a particularly eventful week for Spain, on several fronts.

The Rodea el Congreso ('Encircle the Congress') anti-austerity rally outside the Spanish parliament building in Madrid turned violent yesterday, with 35 people arrested and 64 injured. The day before the rally, the Secretary General of Rajoy's party, María Dolores de Cospedal, recalled that the last time the Spanish parliament was 'encircled' was on the occasion of the failed military coup on 23 February 1981. The day after the rally, Spanish Interior Minister Jorge Fernández Díaz congratulated the police for handling the situation "magnificently". We assume these remarks have not done much to placate the protesters.

The demonstrations are clearly not good news for Rajoy and his cabinet. The Spanish government is due to unveil a new reform plan tomorrow, which may constitute the basis of the new Memorandum of Understanding, if (or should we say 'when'?) Spain decides to make its official request for EFSF/ECB bond-buying. As Rajoy himself anticipated in an interview with today's WSJ, the plan will include measures to cut the number of early retirements and the creation of an independent body in charge of monitoring Spain's compliance with EU-mandated deficit targets. Expect further protests fairly soon.

Meanwhile, the deficit of the Spanish central government stood at 4.77% of GDP at the end of August - with the target for the entire 2012 fixed at 4.5% of GDP. The Bank of Spain has this morning warned that, based on data available so far, Spanish GDP is continuing to fall "at a significant pace" during the third quarter of the year.

On the regional front, the rift between the Spanish government and Catalonia seems to be widening by the day. Catalan President Artur Mas announced yesterday that early elections will take place in Catalonia on 25 November. The autumn is going to be very tense, given that the Basque Country and Galicia will also hold early elections on 21 October. Crucially, Mas went one step further this morning, when he made clear that the Catalan people will be consulted on the issue of independence, with or without the authorisation of the Spanish government.

Furthermore, Andalusia's Treasury Minister Carmen Martínez Aguayo said yesterday that the region will “very likely” seek a bailout from the Spanish government. If confirmed, the request would be for a loan of over €4.9 billion. This means that Catalonia, Comunidad Valenciana, Murcia and Andalusia would, in total, need around 80% of the money in the bailout fund set up by the Spanish government to help all the 17 Comunidades Autónomas.

What else? Oh yes, in case you were wondering, Spain's borrowing costs are going up again. The interest rate on ten-year bonds is above 6% today.

In this context, it looks like Rajoy will not be able to hold out for much longer. The time for key decisions looks to be approaching - potentially marking a turning point for the future of Spain and the eurozone crisis.