A referendum was held in Catalonia on Sunday for independence from Spain for the strong economic region that is also seeking greater autonomy. Despite the huge numbers of Guardia Civil officers deployed (under the authority of the central government in Madrid), the referendum went ahead even though Prime Minister Rajoy had announced that he would prevent it. According to the central government, 2.26 million Catalans went to the polls, with an overwhelming majority (90%) voting in favour of independence from Spain. This result comes as no surprise: those opposing independence stayed away from the ballot boxes, as was the case with the “consultative” survey held in 2014.
The conflict has therefore escalated even further. Based on the referendum law that regional president Puigdemont passed in September, a majority vote by the pro-independence camp could lead to the announcement of the region’s independence from Spain within 48 hours (in other words today or tomorrow). Following yesterday’s election day, where the separatists were able to further their cause with pictures of heavily armed police using batons and rubber bullets, Puigdemont is also expected to actually make a declaration to this end. Assuming Rajoy’s government sticks to its current hard line in the negotiations, Madrid will not recognise the results of this referendum – despite all attempts at relativisation, the referendum and a unilateral declaration of independence by one of the country’s regions is not compliant with the Spanish constitution. Madrid could therefore be forced to trigger article 155 of the constitution and withdraw control from the regional government. However, yesterday’s referendum has already demonstrated the resolute stance of the relatively broad mass of Catalans who took to the streets in support of the independence project (or of the protest against Madrid). In a further show of power by the separatists, the general strike that has been called for in Catalonia this Tuesday should fuel this conflict.
Where will it go from here? The fallout from a de facto split would be serious economic turbulence in the fourth largest Eurozone country. However, this is unlikely to happen. I believe that even though the regional government will start the corresponding process of independence, it will use this to renegotiate Catalonia’s autonomy and to strengthen the region. Backed by the “yes” vote in the referendum, the Catalan government is clearly in a position to negotiate the development of the Statute of Autonomy of Catalonia. The goal here could be to achieve greater fiscal autonomy akin to the Basque Country or Navarro.
All in all, although turbulence is on the cards in Spain in the weeks ahead, the country’s economic success should not be jeopardised in the long run. For the ECB, the latest events in Spain no doubt represent another argument for it to take a very prudent approach with regard to the announced tapering of its bond purchases.