Spain Can't Get Over Its Catalan Problem as Elections Loom

(Bloomberg) -- Catalan nationalism is the cause that keeps dividing Spain as the country faces its third election in less than four years.

Prime Minister Pedro Sanchez is set to call a snap vote on Friday after parliament exposed the dwindling authority of his minority government by rejecting his budget plan in a vote yesterday. Talks with Catalan independence parties broke down last week, leaving him short of the support he needed to pass his spending plan for 2019.

Tensions in Catalonia have been simmering ever since separatist groups attempted to engineer a split from Spain at the end of 2017 in defiance of the constitution. As Sanchez weighs his options for calling elections, he will be conscious how the regional conflict continues to influence the national political scene in ways he may find hard to predict.

Spain Can't Get Over Its Catalan Problem as Elections Loom

"The Catalan crisis is an open issue," Ignacio Jurado, an analyst with political risk consulting firm Quantio in Madrid, said. “And it’s a very fruitful issue for the right.”

Since taking office last June, Sanchez has made making peace with Catalan nationalists a cornerstone of his domestic policy, claiming Spain will emerge stronger from efforts to rebuild relations with the region following the conflicts of 2017.

Even so, the tactic has always been tinged with pragmatism: with just 84 deputies in the 350-seat chamber, his Socialist government was always going to need the votes of Catalan separatist parties to pass key legislation.

Snatched Power

Sanchez had snatched power last year by persuading a loose coalition that included the separatists to oust his predecessor Mariano Rajoy in a no-confidence vote following a string of graft revelations. Still, the secession issue reared its head again this week as a trial of Catalan politicians accused of rebellion against Spain during 2017’s bid for independence got underway in Madrid.

Sanchez’s overtures to Catalonia have enraged many Spaniards who believe the Catalans should be punished, not wooed.

A proposal last week by Sanchez’s administration to have a mediator help guide conversations between the government and Catalan officials triggered a furious backlash from opposition parties and opened up rifts within the Socialist party.

Government officials said they were putting talks with Catalan leaders on hold but opposition leaders sought to harness the rage of conservative Spain by holding a rally in Madrid on Sunday in favor of national unity. A widely-circulated photo from the event showed the leaders of the People’s Party, Ciudadanos and Vox standing together, in what could have been a dress rehearsal for Spain’s next government.

The fact that the government was unable to get its budget approved is proof that there was no secret pact with Catalan nationalists, Budget Minister Maria Jesus Montero said on Thursday.

“The vote highlighted the lies that had been said that there had been concessions, blackmail, secret pacts with the independence parties,” Montero said.

Without a budget, the government can only continue to operate for a short time, Montero said. It’s not a question of if Sanchez will curtail his term by calling an early vote but when in 2019 those elections will take place, she said.

“On Friday we will know the date of the elections,” Montero said.

Powerful Sentiment

Sanchez has already had a taste of how powerful sentiment can be in relation to the Catalan issue. After an election held in December, the Socialists lost control of Andalusia for the first time in 36 years as fury at Catalan independence campaign helped spur support for Vox, an emerging party that’s fast attracting conservative voters.

During the budget debate on Tuesday and Wednesday in Madrid, the focus often shifted from the details of Sanchez’s spending plan to a debate about how he has handled Catalan leaders’ demands for an independence referendum. "The budget played an irrelevant role," Jurado said. The debate was "a covert no confidence vote," he said.

There’s no law that forces Sanchez to call elections because he doesn’t have a budget. In theory, he could try to extend the existing spending plan approved in the final days of Mariano Rajoy’s government and see out his term. But Pablo Simon, a Madrid-based professor of Political Science at Carlos III University, thinks he will try to use the defeat to press home the idea that extremism on both sides of the nationalist debate is harming the country’s economy.

“The election call has to be imminent, so he can use the budget narrative to insist that he gave up nothing to separatists, but has tried to maintain a moderate stand between two nationalisms, the Spanish and the Catalan,” Simon said in a phone interview. “That’s the only card he can play, so the least worst scenario is to call elections now.”

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