Catalan separatists win snap regional vote
Madrid’s bid to solve crisis thwarted
Separatists looked set on Friday to regain power in Catalonia after voters rejected Spanish Prime Minister Mariano Rajoy’s attempt to defuse the independence movement, instead reigniting the country’s biggest political crisis in decades.
Spanish markets recoiled at a surprise result that is also a setback for the European Union, which must now brace for more secessionist noise as it grapples with the disruption of Brexit and simmering Eastern European discontent.
By risking an election in the wealthy region, Rajoy appears to have made the same mistake that leaders such as Greece’s Alexis Tsipras, Britain’s David Cameron and Italy’s Matteo Renzi have made in recent years: betting that voters would resolve their troublesome do- mestic conundrums for them.
With the count from Thursday’s Catalan parliament election almost complete, separatist parties had secured a slim majority, sending stocks down about 1 percent on fears that the eurozone’s fourth-largest economy will be damaged by rising tensions with Catalonia.
After several strained months that saw secessionists organize an illegal referendum on October 1, and police confiscate urns to try to prevent it from taking place, the regional election has failed to produce a solution to the standoff.
Rajoy is weakened; the secessionists kept a majority, but it was reduced and they may have difficulty forming a government; and support for the unionist Ciudadanos has surged, but not enough to catapult them into power.
“Catalonia is back to square one,” said Marco Protopapa, an analyst at JP Morgan, forecasting that tensions would quickly return between Madrid and an “emboldened pro-independence camp eager to exploit the tactical advantage of a favorable election outcome.”
With Catalonia accounting for one-fifth of its economy, Spain had already trimmed growth forecasts for 2018, and the prospect of prolonged uncertainty worries business leaders.
“More companies leaving, less economic activity there – and worse for everyone,” said the chief executive of a major listed Spanish company, speaking on condition of anonymity because of the tense climate of the independence debate.
More than 3,100 firms have shifted their headquarters out the region since October’s referendum.