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Catalan declares independence as Spain gets power to strike

Catalan declares independence as Spain gets power to strike

2 min. 27.10.2017 From our online archive
The resolution approved by the parliament in Barcelona said a new republic independent from Spain had been set in motion.

(Bloomberg) Catalonia's parliament voted to declare an independent state, setting up a dramatic confrontation with Spain as the government in Madrid was granted the power to seize control of the insurgent region.

The resolution approved by lawmakers in Barcelona said the establishment of Europe's newest sovereign country had been set in motion. The portion of the text submitted to a vote included measures to ask all nations and institutions to recognise the Catalan Republic.

Meanwhile in Madrid, the Spanish Senate approved measures giving Prime Minister Mariano Rajoy the power to oust the rebel leaders and take over the Catalan administration via Article 155 of the 1978 constitution.

"We constitute the Catalan Republic, as an independent and sovereign country, under the rule of law," speaker Carme Forcadell read out before the secret ballot. Separatist lawmakers broke into the Catalan anthem after the vote, which was boycotted by opposition parties.

Catalonia's tumultuous push for independence reached its climax with regional President Carles Puigdemont squeezed by the irreconcilable demands of his own hardliners and authorities in Madrid. In the past 48 hours, the Catalan leader sought to avoid the chaos of an illegal secession without provoking anger among his base.

Markets fall

Spain's 10-year bonds dropped on the news, with the spread against benchmark German bunds widening by seven basis points to 119 basis points. The country's benchmark stock index, the Ibex, fell 1.8%, erasing Thursday's gain when it looked like all-out declaration of independence might be avoided.

Rajoy called for calm immediately after the vote in Barcelona as crowds swelled in number in support of independence.

"The clash is here and it won't be pretty," Antonio Barroso, a political risk analyst at Teneo Intelligence in London, said in an email to clients. "Tensions are likely to rise significantly over the coming days, especially as secessionist groups mobilise to stop the implementation of Article 155."

Pro-independence activists had called for a human shield around government buildings to thwart Spanish efforts to take control and protect their representatives. Yesterday, they focused their ire on Puigdemont, calling him a "traitor," as his commitment to declaring independence wavered. 

He already had postponed declaring a republic in the aftermath of the illegal referendum on October 1 that set up weeks of brinkmanship. A senior Catalan official made a last-ditch trip to Madrid on Friday in the hope of securing concessions that would help Puigdemont put a brave face on a climb down.

The next move will be Rajoy's. "The rule of law will be restored in Catalonia," he said in a tweet.