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Catalonia nears possible independence proclamation despite Madrid warnings
October 10, 2017 / 10:04 AM / 7 days ago

Catalonia nears possible independence proclamation despite Madrid warnings

* Catalan leader could declare independence on Tuesday

* Pro-independence demonstration planned outside assembly

* Spain PM Rajoy does not rule out suspending Catalan autonomy

* More firms move HQs outside Catalonia

By Angus Berwick

BARCELONA, Oct 10 (Reuters) - Police tightened security at Catalonia’s parliament on Tuesday as regional leader Carles Puigdemont prepared to address a session that may unilaterally declare independence from Spain despite Madrid’s warnings of counter-measures.

Puigdemont, a 54-year-old former journalist, was holding a cabinet meeting on Tuesday morning to decide how to press an independence drive that has stirred powerful emotions in the region and raised concern in European Union partner states.

Catalan police armed with automatic rifles stood guard at Barcelona’s Parc de la Ciutadella which houses the elegant 18th century building. Spanish national police, decried by separatists over their use of force at an Oct. 1 referendum, were not to be seen.

A declaration of independence would deepen Spain’s biggest political crisis since an attempted military coup in 1981 and would almost certainly draw tough counter-measures from Madrid, possibly including suspension of the regional government. Pro-independence demonstrators were due to gather before the parliament building under the slogan “Hello Republic” to mark Puigdemont’s speech at 6 p.m. (1600 GMT).

Hundreds of thousands of people demonstrated against breaking away in Barcelona at the weekend, bearing red-yellow Spanish flags through the city centre. That rally fell a week after some 900 people were injured when police fired rubber bullets and stormed crowds with truncheons to disrupt a referendum ruled illgal in Madrid.

Puigdemont has said he is determined to apply a law passed by the Catalan assembly which called for a declaration of independence within days if Catalans voted in favour in the Oct. 1 referendum.

The government of Spain’s wealthiest region says 90 percent of those who voted backed independence, but turnout was only 43 percent as many opponents of independence stayed at home.

The Madrid government has said it will respond immediately to any unilateral declaration.

Ruling party lawmakers say Prime Minister Mariano Rajoy is considering taking the unprecedented step of dissolving the Catalan parliament and triggering new regional elections, the so-called nuclear option.

BUSINESS CLIMATE

Markets have been rattled by the Catalan crisis, raising Spain’s borrowing costs and pushing down shares. Yields, which move inversely to prices, have fallen over the last couple of trading sessions.

But yields on benchmark 10-year bonds were a touch higher and the benchmark Ibex was down 0.6 percent in early trading on Tuesday ahead of Puigdemont’s speech.

The tension is taking its toll on the business climate. On Monday, three more Catalonia-based companies joined a business drift from the region that has gathered steam since the Oct. 1 referendum.

Property group Inmobiliaria Colonial and infrastructure firm Abertis both decided to relocate their head offices to Madrid and telecoms firm Cellnex said it would do the same for as long as political uncertainty in Catalonia continued.

Publishing house Grupo Planeta said it would move its registered office from Barcelona to Madrid if the Catalan parliament unilaterally declared independence.

Spain’s finance minister said it was the Catalan government’s fault the companies were leaving.

The issue has deeply divided the northeastern region as well as the Spanish nation. Opinion polls conducted before the vote suggested a minority of around 40 percent of residents in Catalonia backed independence.

Officials say a vote for independence in the assembly on Tuesday would start a process leading to divorce talks with Spain before regional elections and a final act of separation.

Losing Catalonia, which has its own language and culture, would deprive Spain of a fifth of its economic output and more than a quarter of exports.

The crisis has reopened old divisions in a nation where the right-wing dictatorship of General Francisco Franco, who died in 1975, is a living memory easily revived by strong displays of nationalism.

Additional reporting by Rodrigo de Miguel, Paul Day, Blanca Rodriguez, Emma Pinedo, Jesus Aguado, Carlos Ruano and Alba Asenjo; Writing by Adrian Croft; editing by Ralph Boulton

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