Spanish Crisis Returns: Separatists Win Catalan Election In Huge Blow To Rajoy

Despite growing expectations that Catalan separatist fervor had abated in the aftermath of the post-independence fiasco, consensus was once again set for disappointment and on Thursday night, Spain was thrown back into chaos after the three Catalan separatist parties, Junts per Catalunya, Republican Catalan Left and the CUP, held on to a small but critical majority in the Catalan regional parliamentary election, dealing a stunning rebuke to Prime Minister Mariano Rajoy and his attempt to bury the Catalan independence movement.

With virtually all of the vote counted, the separatists held on to 70 seats, down from 72 in the 2015 election and 1 less than the initial exit polls predicted, just weeks after PM Mariano Rajoy fired the former first minister, Carles Puigdement and his entire government after the held what Madrid dubbed an "illegal referendum" and declared independence on October 27. Yet while the separatists won as a group, the biggest individual winner was the Ciudadanos party, which gained 300,000 more votes and 12 more seats compared to its 2015 position. It was also the single biggest party to emerge from today"s election with a total of 37 seats. Meanwhile for Rajoy"s People"s Party, the result was a disaster as it finished in last place among the mainstream parties with just three seats.

Source: The Spain Report

But even more importantly, it was a personal victory for Carles Puigdemont, the ousted Catalan president who campaigned in self-imposed exile from Brussels. His Junts per Catalunya emerged as the most-popular separatist party, handing him a mandate to lead the secession campaign, after Junts per Catalunya beat Oriol Junqueras and Republican Catalan Left to lead the separatist block. As The Spain Report noted, Junts per Catalunya obtained slightly more than 900,000 votes and 34 seats. Esquerra won slightly fewer than 900,000 votes but only 32 seats. The radical-left, pro-independence CUP lost six of its ten seats and about half of its votes.

The Catalan Socialist Party (PSC, Miquel Iceta) gained 50,000 votes and one seat.

The Popular Party in Catalonia, led by Xavier García Albiol, lost eight of its eleven seats, dropping to just three, and, like the CUP, approximately half of its votes. As

Catalunya en Comú Podem, the Podemos brand for these regional elections, lost three seats compared to its previous brand result in 2015, falling to eight seats.

Both blocks obtained more votes than in 2015 due to a turnout that rose six points to 82% compared to 2015.

And while the Ciudadanos ascent was remarkable, the take home of the night is that in this implicit referendum, the Catalan separatist sentiment once again prevailed as Carles Puigdement observed.

Speaking in a press conference in Brussels, the deposed Catalan president said that "the people of Catalonia have given a lesson to the world: the Catalan republic has beaten the monarchy of the 155." He was referring to the Constitutional Article 155 which the Spanish government used to take control of Catalan government. "The Spanish state has been defeated" Puigdement said and added that "Election results mean reparation, rectification and restitution are needed."

The deposed leader also said that "the legitimate government must return immediately power in Catalonia", envisioning of course, himself.

He concluded by claiming that "things are even better for secessionists today than they were two years ago, as the group has gained parliamentary power" and threatened that "if PM Rajoy continues to apply the same recipes he will continue to get the same results."

Meanwhile, baffling many traders, the EURUSD has yet to respond to today"s election, having traded in a tight 10 pip range since the unexpected exit polls first came out.  Indeed, as Citi reminds us, "Remember,  Spanish PM Rajoy called this election hoping for this faction to loose momentum."  Considering the separatists preserve their majority, that hardly what happened.

Also observing the inert Euro, Bloomberg cautions that other Spanish assets may well move tomorrow, perhaps violently.

Polls had been pointing to a divided parliament and a confusing mess of options, and some bulls had even been buying Spanish assets as a bet on a good night for the constitutionalists. So the solid win for the separatists should mean Spanish stocks and bonds decline tomorrow.

 

It"s pretty clear that there will be more disruption than markets were pricing in. I would expect Ibex futures to fall on the open. After the referendum in October, the index fell 5.4% in three days before recovering. This selloff should be considerably less dramatic and equally short-lived.

 

Interestingly, Spain"s dollar bonds have been selling off for the last couple of days, while the euro debt has outperformed, suggesting there were different perceptions of the poll among different investor bases.

In summarizing today"s event, Bloomberg asked rhetorically "has there been a shift in Catalan politics" and answered:

After all the drama, the balance of power looks almost the same as two years ago, when the secessionists bloc won 72 seats compared to 70 now. The left-wing radicals of the CUP party saw their support shrivel but Puigdemont will again need their four seats for a majority

So what happens now? Well, the secessionists will seek to overcome their differences to form a government. Rajoy has made his own position clear. He will not tolerate an illegal challenge to the rule of Spanish law and reserves the right to invoke constitutional powers again to ensure it is respected. The bottom line: "nothing was really solved in Catalan politics tonight and the secession crisis continues."

The Spanish Civil War, Revisited: Pepe Escobar Fears "Lethal Response" From Madrid

Authored by Pepe Escobar via The Asia Times,

Puigdemont"s political twist could invoke a lethal response from Madrid: suspension of Catalonia"s government

Call it theatre of the absurd – with a lethal subtext. Under pressure from all corners – even Donald Tusk, president of the EU Council – in his fateful date with destiny Carles Puigdemont, President of Catalonia, came up with some last-minute judo dialectics. He issued a non-denial denial Unilateral Declaration of Independence from Spain. What was declared was immediately suspended; the Republic of Catalonia lasted for six seconds.

The deft political gambit left Madrid predictably bewildered. Prime Minister Mariano Rajoy, a.k.a. nano-Franco, issued an ultimatum; you have five days to say if you declared independence or not.

Independent of the answer, Madrid’s nuclear option remains on the cards; infamous article 155 of the Constitution, which calls for the suspension of Catalonia’s government and parliament from six to 12 months.

Yet that may come with a twist; a 155 in slow motion, parallel to the hazy offer of starting a process, in six months maximum, leading to Spanish constitutional reform. Madrid needs Catalonia for this reform to succeed. So, essentially, Puigdemont just needs to say “no” for the train to start rolling.

It’s way more complex than it seems. The Catalan extreme left, up to the last minute, was trying to convince Puigdemont to proclaim unconditional independence. At the same time, those six seconds left Catalan unionists predictably furious. Moderates for their part prefer to see a faint light at the end of the tunnel.

The problem is that even with discreet back channels in place, Madrid’s strategy is to ultimately force a fissure in the independentist coalition; secession inside Catalonia to prevent secession from Spain. So far, the fissure has been prevented by some members of the Catalonian Parliament signing a declaration of support for the – still non-existent – republic.

Scrap that constitution

The President of the Cantabria region, Miguel Ángel Revilla, sums it all up: Rajoy is to blame. Revilla worries that “50% of Catalans want to leave Spain. Four years ago, that was not the case.” He stresses how a “Catalan statute – approved by the Catalans and the Spanish Parliament – was impugned by the Constitutional court, so they had to be mad, right? It did not deal with independence, it was a pact, delineating a series of obligations.”

So the unwillingness of the Spanish government to talk, according to Revilla, is what led to the current impasse. No wonder; Rajoy is closely advised by former Prime Minister José María Aznar.

The extremely reactionary administration in place in Madrid could have defused the bomb even before the referendum, by mobilizing sectors of the working class in Catalonia whose first language is Spanish, not Catalan; many of these view the independence dossier as a “war of the elites”.

Madrid though opted for Franco-ist repression tactics. King Felipe VI had one chance to appeal for calm and reunite the nation; he chose to play Scaremonger-in-Chief. EU “leaders” stuck to platitudes, like Rothschild favorite Emmanuel Macron extolling his “profound” vision of an integrated Europe and Chancellor Angela Merkel abdicating from her role of Dispenser of Wisdom; after all, this is not Crimea.

The European Commission (EC), losing the scarce credibility it still possessed, sharply ignored its own “core values”; the rights of national minorities enshrined in Article 2 of the EU founding treaty, as well as Article 21 of its charter of fundamental rights.

Podemos has some decent ideas to “save Spanish democracy”.

Yet there seems to be only one sensible road map ahead.

1. Kick out the incompetent, nano-Franco administration, which does not want any dialogue; a tough call in a nation so viscerally conservative as Spain.


2. Explain to everyone in Catalonia, especially the different strands of the working class, what independence would mean in practice – something the current “leaders” are incapable of. Catalonia – one of the EU’s wealthiest regions – in or out of the EU? Trading in which currency? Without an army? Able to manage a neighboring hostile power (Spain) and not recognized by France?


3. Launch a comprehensive national dialogue process to reform the outdated 1978 constitution – privileging a modern, federal charter, emphasizing more consensus among regions, and considering the concerns of at least 25% of hardcore independentists in Catalonia.

None of this seems to be on the cards – and that’s why the real tragedy is only beginning. Spain is already broken – and there will be no turning back.

Calling Rosa Luxemburg

The temptation to strike parallels with Europe a century ago are strong. What about adapting Rosa Luxemburg’s latest, searing essay before she was assassinated in January 1919; “You stupid henchmen! Your ‘order’ is built on sand.” At the same time Rosa Luxemburg warned the Left about the petty-bourgeois nationalisms emerging after the collapse of the Habsburgs (the exception was Czechoslovakia.)

“Catalanism” – which sprang up in the 19^th century – is a different beast though. The Barcelona-Madrid fissure is based on deep economic/fiscal reasons, amplified by the dire consequences of the financial crisis in Spain since 2008. Catalonia’s nationalism is not narrow-minded but inclusive, largely open to The Other – from other parts of Spain and abroad.

The intractability of the political problem is that Catalonia – the most European of all Spanish regions and historically in favor of republicanism and federalism – contests the very essence of the Spanish system. To scrap this outdated constitution – written immediately after Franco’s demise and drenched in amnesty for Franco-ists – is as important as self-determination. To say that the Bourbons face a legitimacy crisis is a major understatement.

Madrid’s actions on Referendum Repression Day – led by a Franco-ist partisan of torture, infamous General Bum-Bum – could not but revive the memory of Catalonia as the key anarchist/republican hub during the Spanish Civil War; the Civil Guard in itself represents the memory of Francoism. It’s understandable how separatists prefer to discard the historic/ financial heavy load when they see the impossibility of a true modernization of Spain.

The prospect of an implosion of this current Spanish state – with repercussions everywhere from the Basque country to Scotland –   should be driving Europeans east and west to think hard about all the interconnections between city, territory, nation, state and (European) union; a healthy exercise in political economy thinking.

Instead, once again, we have total Brussels paralysis. There’s no plan B. Worse; there’s no political will, as some Greens at the European Parliament have remarked. No wonder, with EU “leaders” as mediocre as the Juncker/Tusk bunch, and the number two of the EC, Dutch jurist Frans Timmermans, saying that “sometimes the rule of law must be preserved by a proportionate use of force.”

Brussels, facing the prospect of a region that may leave in one go not only the EU but also the euro, is incapable to see that the Spanish fracture is a microcosm of the nation-state fracture inside the EU. The Juncker/Tusk unconditional support for nano-Franco cannot but be interpreted all across progressive European circles for what it is; what good could possibly emerge out of “mediation” by these non-entities? It’s civil society, in tandem, in Spain and Catalonia, that should be the mediators. One wonders if they’re up to the task.