Cat­alo­nia dec­la­ra­tion signed, but sus­pended

Financial Mirror (Cyprus) - - FRONT PAGE -

Cata­lan Pres­i­dent Car­les Puigde­mont and other re­gional lead­ers have signed a dec­la­ra­tion of in­de­pen­dence from Spain, fol­low­ing the dis­puted ref­er­en­dum.

How­ever, they say the move will not be im­ple­mented for sev­eral weeks to al­low talks with the gov­ern­ment in Madrid, the BBC re­ported. The doc­u­ment calls for Cat­alo­nia to be recog­nised as an “in­de­pen­dent and sov­er­eign state”.

The move was im­me­di­ately dis­missed by the Span­ish cen­tral gov­ern­ment in Madrid.

An Oc­to­ber 1 ref­er­en­dum in the north-eastern province - which Cata­lan lead­ers say re­sulted in a Yes vote for in­de­pen­dence - was de­clared in­valid by Spain’s Con­sti­tu­tional Court.

Ear­lier on Tues­day, Puigde­mont told the Cata­lan par­lia­ment in Barcelona that the re­gion had won the right to be in­de­pen­dent as a re­sult of the vote.

The ref­er­en­dum re­sulted in al­most 90% of vot­ers back­ing in­de­pen­dence, Cata­lan of­fi­cials said. But anti-in­de­pen­dence vot­ers largely boy­cotted the bal­lot - which had a re­ported turnout of 43% - and there were sev­eral re­ports of ir­reg­u­lar­i­ties.

Na­tional po­lice were in­volved in vi­o­lent scenes as they man­han­dled vot­ers while im­ple­ment­ing the le­gal rul­ing ban­ning the ref­er­en­dum.

Puigde­mont told the re­gional par­lia­ment that the “peo­ple’s will” was to break away from Madrid, but he also said he wanted to “de-es­ca­late” the ten­sion around the is­sue.

“We are all part of the same com­mu­nity and we need to go for­ward to­gether. The only way for­ward is democ­racy and peace,” he told deputies.

But he also said Cat­alo­nia was be­ing de­nied the right to self-de­ter­mi­na­tion, and pay­ing too much in taxes to the cen­tral gov­ern­ment in Madrid.

rime Min­is­ter Mar­i­ano Ra­joy has called an ex­tra­or­di­nary cab­i­net meet­ing for Wed­nes­day morn­ing to ad­dress the latest moves in the cri­sis.

As Cat­alo­nia’s leader an­nounced he would de­clare in­de­pen­dence, thou­sands of his sup­port­ers, watch­ing his speech nearby, on a big screen, were eu­phoric.

But sec­onds later - when Puigde­mont qual­i­fied his an­nounce­ment - and said the dec­la­ra­tion would be sus­pended for sev­eral weeks, the dis­ap­point­ment was vis­i­ble in the crowd.

Cat­alo­nia’s cen­tre-right, cen­tre-left coali­tion gov­ern­ment only had a ma­jor­ity of MPs in the re­gional par­lia­ment with the sup­port of an­other small pro-in­de­pen­dence party, on the far left. That party is un­happy that there has been no clear dec­la­ra­tion of in­de­pen­dence. And so Cat­alo­nia’s awk­ward coali­tion of pro-in­de­pen­dence par­ties feels more frag­ile.

In­flu­en­tial fig­ures in­clud­ing Barcelona’s mayor Ada Co­lau and Euro­pean Coun­cil Pres­i­dent Don­ald Tusk had urged Puigde­mont to step back from declar­ing in­de­pen­dence.

Cat­alo­nia is is one of Spain’s wealth­i­est re­gions, ac­count­ing for a quar­ter of the coun­try’s ex­ports. But a stream of com­pa­nies have an­nounced plans to move their head of­fices out of Cat­alo­nia in re­sponse to the cri­sis.

The Euro­pean Union has made clear that should Cat­alo­nia split from Spain, the re­gion would cease to be part of the EU.

Mean­while, Bloomberg re­ported that when fi­nan­cial mar­kets opened Oc­to­ber 2, Span­ish eq­ui­ties were down, sov­er­eign yields were up, and the euro weak­ened sig­nif­i­cantly against the dol­lar, as in­vestors wor­ried that the push for se­ces­sion in Cat­alo­nia could lead to a breakup of Spain.

The con­cern is jus­ti­fied, but the cri­sis may also overblown and could of­fer in­vest­ment op­por­tu­ni­ties.

Cat­alo­nia ac­counts for about 16% of the coun­try’s pop­u­la­tion, and more than 20% of GDP. About a quar­ter of Span­ish ex­ports are Cata­lan prod­ucts, and about the same pro­por­tion of in­ward for­eign in­vest­ments to Spain is des­tined to the re­gion. Barcelona, the re­gional cap­i­tal, is a ma­jor Euro­pean city and re­mains an im­por­tant tourist draw.

A trun­cated Spain could lower the coun­try’s debt ser­vice ca­pac­ity, caus­ing rat­ing firms to down­grade the obli­ga­tions, Bloomberg added. In­vestors, in turn, would have to reeval­u­ate risk-ad­justed re­turns in hold­ing sov­er­eign paper, and re­assess the earn­ings po­ten­tial of Span­ish com­pa­nies that would have to deal with a smaller do­mes­tic mar­ket.

What hap­pens in Cat­alo­nia doesn’t just stay in Cat­alo­nia. If the re­gion suc­cess­fully gains in­de­pen­dence from Spain, that could, for ex­am­ple, en­cour­age Scot­land’s ef­forts to se­cede from the U.K., and the Flem­ish sep­a­ratist move­ment in Bel­gium. A Euro­pean Union that is al­ready strug­gling to be­come a uni­fied eco­nomic re­gion could, in­stead, be­come more splin­tered, re­duc­ing prospects for its econ­omy and mar­kets.

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