It’s D-Day for Catalan President Carles Puigdemont who has just a few hours left until 10 am on Monday (4am ET) to respond to the Spanish government’s ultimatum delivered last week by the prime minister, demanding to know whether Puigdemont did, indeed, declare independence last week. If Puigdemont says yes, fails to respond, or provides another meandering answer, Rajoy will start the process under Article 155 to seize control of the breakaway administration in the coming weeks.
While Catalan television station TV3, which is controlled by the regional government, said Puigdemont will not give Rajoy a clear ‘Yes’ or ‘No’ according to Bloomberg, shortly after Jordi Sanchez, leader of separatist group Catalan National Assembly, denied the report and said that, after speaking to Puigdemont on Sunday, the Catalan reply to Rajoy “will be clear.” Speaking to Spanish broadcaster La Sexta, Sanchez said he agrees 100% with Puigdemont’s reply to Spanish Prime Minister Mariano Rajoy, and that the response will be dignified and clear with no surprises, adding that a will for dialogue exists but the Catalan government will not renounce mandate given by the Oct. 1 independence referendum.
Meanwhile, El Mundo reported that Spain’s central government in Madrid is weighing two options it may impose on Catalonia if the region’s government unequivocally declares independence, El Mundo reported, without saying where it got the information. Madrid would either name a caretaker administration or a unity government made up of representatives of all parties, the newspaper said per Bloomberg. Regional elections would then be called in three to six months, according to the report. It adds that while Replacing the rebel government would require the state using special powers under Article 155 of the Spanish Constitution. that action is not imminent, and may not be taken if the Catalan government demonstrates it hasn’t broken away from Spain and instead will abide by Spanish law.
Earlier on Sunday, Puigdemont appealed for calm ahead of Monday’s deadline: “The (Catalan) Government and I want to reiterate our commitment to peace, civility and serenity, and also to (…) democracy as inspiring the decisions we have to make,” Puigdemont said during at a memorial event at Barcelona’s Montjuic cemetery. “In these difficult hours of hope in Catalonia, let’s take a clear attitude against violence (…) in favour of civility, hope, serenity and respect.”
In any event, Rajoy will demand that Puigdemont clear up his “deliberate” confusion over Catalan independence.
“The pressure building on Puigdemont is absolutely enormous,” Angel Talavera, an analyst at Oxford Economics in London, told Bloomberg. “Anything that looks at all non-committal is going to make the government act” against his regional government.
As Bloomberg adds, “this week is shaping up to be a possible watershed for the region, a $250 billion economy that’s seen dozens of its largest companies announce they’ll move elsewhere in Spain rather than face the legal limbo of secession.”
Here are the three possible outcomes tomorrow:
- The best case for Spain is that Puigdemont, 54, renegs on his referendum promise and states clearly he didn’t actually declare independence for Spain’s largest regional economy. At that point his separatist alliance might start to unravel. That sets Catalonia on track toward early regional elections with an uncertain outcome to the balance of power, which currently runs in favor of separatism.
- Alternatively, the worst case is – obviously – the opposite: should the Catalan leader and fomer journalist assert he did declare independence, Rajoy will use Article 155 of the Spanish Constitution to take direct control of the Catalan administration and sideline Puigdemont and his team. In that scenario, Rajoy eventually would have to call regional elections himself in order to return to normality.
- A third option would be for Puigdemont to call regional elections himself. That would bring the Catalan political process back in line within the Spanish rule of law, allow a more measured debate on the rebel region’s future and may buy the president a couple more months in office at least.
To summarize Puigdemont’s deilmma, if he says he does proclaim independence, the central government will step in. If he says he did not, the far-left Catalan party CUP would probably withdraw its support for his minority government.
“The end-game looks the same whatever Puigdemont does, Catalonia is probably headed for regional elections,” said Talavera.
And as the world, and traders, await with bated breath to hear Puigdemont’ answer, at least 531 companies have already made their decision and transferred their legal bases out of Catalonia to other parts of Spain since the Oct. 1 referendum, according to El Mundo citing data from Spain’s College of Registrars. Furthermore, Spain’s largest banks have agreed not to recognize the government of Catalonia if it declares independence this week.
However, in a sign that Puigdemont may just force Rajoy to activate the “nuclear option”, late on Sunday Spain’s Efe news agency reported that the Catalan government believes the region would continue within the European Union and euro zone if it declared independence, which would require the creation of a Central Bank of Catalonia (BCC) “as a monetary authority of the new country”, with a staff of 500 employees.
While it is unclear if the proposition is a bluff, EFE cited a document that was prepared by the department of the Vice Presidency and Economy and Finance, directed by Oriol Junqueras, which was obtained by EFE, and which detailed what the Catalan economy would look like in a hypothetical republic. It was also unlear if there is any particular role for bitcoin or some other altcurrency in Catalonia’s immedia future, if for some reason, the ECB decided that the breakaway territory would no longer be part of the eurozone, leaving a major question mark over what its future currency would be.
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