Spain fears the Catalan parliament could declare independence on Tuesday, when the regional government’s leader is due to speak to the assembly in the wake of a banned referendum on Oct. 1. Catalan officials say people voted overwhelmingly for secession.
However, on the eve of Tuesday’s parliamentary session, neither Prime Minister Mariano Rajoy nor Catalan leader Carles Puigdemont showed signs of entering into talks, with each buoyed by large protests on both sides of the independence divide.
The Catalan crisis has presented Spain with its biggest political challenge since it became a democracy four decades ago.
Losing Catalonia, which has its own language and culture, is almost unthinkable for Madrid. It would deprive Spain of a fifth of its economic output and more than a quarter of its exports. A stream of Catalonia-based firms, including its two largest banks, have moved their legal bases outside the region.
There is widespread opposition to a Catalan breakaway among people in the rest of the country and also among a large section of the Catalan population. The majority of the region’s unionists boycotted the Oct. 1 referendum, which was banned by Madrid and disrupted by a violent police crackdown.
The European Union has also shown no interest in an independent Catalonia, despite an appeal by Puigdemont for Brussels to mediate in the crisis.
France, which borders Catalonia, said on Monday it would not recognize a unilateral independence declaration.
On Sunday, a crowd estimated by local police to number 350,000, took to the streets of the Catalan capital Barcelona, waving Spanish and Catalan flags and carrying banners saying “Catalonia is Spain” and “Together we are stronger”.
The show of support for Madrid helped calm Spanish markets on Monday, along with comments on Friday from credit rating agencies Moody's and DBRS that they expected Spain to remain united. Spanish borrowing costs fell to a one-week low and the main share index .IBEX touched a week high.
PROTESTS, NO TALKS
With Puigdemont under pressure to back down, there is speculation he may baulk at moving an independence motion on Tuesday, or that he might call snap regional polls, turning them into a de facto, legal referendum on independence.
Spanish Prime Minister Rajoy has not ruled out removing Catalonia’s government and calling fresh regional elections himself if the region claims independence. He says he could also suspend the region’s existing autonomous status.
The Catalan authorities say more than 90 percent of those who voted backed secession, but opinion polls on the issue suggest the region is more closely divided. Turn-out for the referendum was 43 percent.
Sunday’s anti-independence demonstration, which included Catalans and people from other parts of Spain, underlined how the dispute has riven the region itself. A month ago, a million people rallied in the city to support independence.
“We feel both Catalan and Spanish,” Araceli Ponze, 72, said during Sunday’s rally. “We are facing a tremendous unknown. We will see what happens this week but we have to speak out very loudly so they know what we want.”
Puigdemont will address the Catalan parliament at 6 p.m. (5.00 p.m. ET) on Tuesday on “the current political situation” amid speculation he could ask the assembly to declare independence.
Puigdemont said in an interview broadcast on Catalan television on Sunday that a law passed by the Catalan parliament preparing the way for the referendum called for a declaration of independence in the event of a “yes” vote.
“We will apply what the law says,” he said, according to a partial transcript released by TV3.
Puigdemont said he had not been in contact with the Madrid government for some time because Spain refused to discuss independence.
“What is happening in Catalonia is real, whether they like it or not. Millions of people have voted, who want to decide. We have to talk about this,” he said.
Rajoy has said repeatedly he will not talk to the Catalan leaders unless they drop their plans to declare independence.
Madrid sent thousands of national police to the region to prevent the vote. About 900 people were injured when officers used rubber bullets and batons against voters in scenes that shocked Spain and the world, and escalated the dispute.
The political stand-off has pushed banks and companies to move their legal headquarters outside Catalonia.
The boards of Catalonia-based infrastructure firm Abertis (ABE.MC), telecoms company Cellnex (CLNX.MC) and property group Inmobiliaria Colonial (COL.MC) will meet on Monday to discuss moving, sources said.
Major lenders Caixabank (CABK.MC) and Sabadell (SABE.MC) have already resolved to leave the region.
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