Carles Puigdemont, Catalonia’s president, speaks during a news conference at the Generalitat in Barcelona, Spain. (Photographer: Angel Garcia/Bloomberg)

Catalan Leader Runs Out of Options as Streets Demand Secession

(Bloomberg) -- Catalonia’s tumultuous push for independence is on a knife edge after separatists turned on their leader with Spanish authorities just hours away from getting the political power to crush their movement.

Senators in Madrid are expected to pass legislation on Friday allowing Prime Minister Mariano Rajoy to seize control of everything from the insurgent region’s budget to its police force and state-run media. Backed into a corner by his own hardliners and Rajoy’s refusal to give him a dignified way out, Catalan President Carles Puigdemont will address the regional parliament in Barcelona as demonstrators clamor for a declaration of independence.

Catalan Leader Runs Out of Options as Streets Demand Secession

After a day of high drama that saw Puigdemont caught between the might of the Spanish state and the anger of the street, western Europe’s worst constitutional crisis for decades may be coming to a head with the separatist leader running out of options.

"This was a now or never moment for Puigdemont,” said Ignacio Molina, senior analyst at think tank Elcano Institute in Madrid. “Even if there’s a declaration of independence, it won’t have the epic factor. It comes with serious internal divisions within his coalition and a renewed sense of unity in Spain.”

Barcelona Braces

Catalan lawmakers will debate motions put forward by political groups from noon with the separatists holding the majority in the chamber. Those motions could include some form of secession -- though that would have no legal basis outside Catalonia and wouldn’t be recognized by any other nations.

"We are winning," Lluis Corominas, the head of Puigdemont’s PDeCat group, told lawmakers on Thursday night. "We should materialize the effects of the Oct. 1 referendum and implement them." That’s code for declaring independence.

In Madrid, the Senate is due to reconvene earlier and vote around the time Catalan lawmakers meet. On Thursday, it passed an amendment to the government’s plan to use powers in Article 155 of the constitution that allow Madrid to take control of any rebellious region. The change says it should "take into account how events evolve."

Protesters meanwhile are scheduled to gather in Barcelona. Earlier this week, groups had called for a human shield around government buildings to thwart Spanish efforts to take control. Yesterday, they focused their ire on Puigdemont, calling him a “traitor” after reports he was planning to back down from independence and call an election.

“Anyone who has doubts, should go out into the streets and look into the eyes of the people,” separatist lawmaker Gabriel Rufian said on Twitter, adding the hashtag "RepublicNow" in Catalan.

Under Fire

The day of confusion saw the president make a televised address after two postponements, lawmakers quit his party and a senior Catalan official jump ship, all while Spanish ministers were repeating their mantra that the Catalans must be brought to heel. The Spanish stock market posted its biggest gain since Oct. 5 only to pare the advance as events unfolded.

Puigdemont said he had considered calling the regional vote, but he didn’t get the concessions he sought from officials in Madrid. "I tried to get the guarantees to carry out these elections, but didn’t get a responsible answer,” he said.

Indeed, he cut an isolated figure on Thursday in the Catalan legislature. When he took his seat for the evening debate, his political opponents sought to expose the failures of his back-channel talks with Madrid. They cited media reports that he had tried and failed to bargain for the release of two activists being investigated for sedition.

"What sort of guarantees were you looking for? Freedom for the two people who are in jail?” asked Xavier Garcia Albiol, the Catalan leader of Rajoy’s People’s Party. "If you think that history will judge you, you are wrong. You will be judged by a court.”

Twists and Turns

During a week of brinkmanship, there were signals from Madrid that an election might deescalate tensions. Some within the opposition Socialist Party balked at Rajoy’s tough approach and didn’t want to leave the separatists with no other option than to unilaterally declare independence after their illegal referendum on Oct. 1.

Left-wing lawmaker Albano Dante Fachin said the Socialists should have threatened Rajoy with a no-confidence motion to force him to withdraw Article 155. The Catalans have been offering, without success, to support a Socialist government in Madrid to prise the party away from Rajoy.

Catalan pro-independence parties have clashed with Spain regularly, though not to this extent. In 2014, former President Artur Mas called a consultation vote before moving to a regional election. He lost his job.

Spanish shares rallied, with the IBEX Index rising 1.9 percent, though it was up as much as 2.7 percent earlier in the day. The spread between Spain’s 10-year government bonds and benchmark German bunds narrowed by four basis points to 112 basis points.

"The spat between Madrid and Barcelona has seen so many turns, we cannot rule out anything except that independence is actually going to happen," said Florian Hense, an economist at Berenberg in London. “A lot will depend on the reaction -- civil disobedience or short protests."

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