Catalonia's Stalemate and Why Both Sides Are Stuck: QuickTake

(Bloomberg) -- Catalonia has replaced Greece as Europe’s never-ending crisis. It’s been almost three months since Spanish Prime Minister Mariano Rajoy cracked down on the regional Catalan government after it briefly declared independence, but there’s still no clear answer as to what comes next. The standoff comes down to this: Rajoy was able to block independence but couldn’t persuade Catalan separatists to give up the idea. Meanwhile, the pro-independence parties who won a victory at the ballot box still can’t figure how to put their exiled leader into office instead of prison.

1. How is the process stuck?

Three pro-independence parties won 70 of the regional parliament’s 135 seats in a Dec. 21 election ordered by Rajoy after he dissolved Catalonia’s government for declaring independence on Oct. 28. The vote put ousted Regional President Carles Puigdemont back in the game, but he’s in a bind. He faces the threat of arrest if he returns to Barcelona to be sworn in as president. And even if he were to take office, Rajoy has shown that he’s prepared to use the law to stop Puigdemont from implementing his plans for independence.

2. What can Puigdemont do?

To be sworn in again as regional president, he would have to leave his self-imposed exile in Brussels and physically show up in the chamber -- risking arrest if he does so. His allies in the separatist camp also worry about increasing legal jeopardy for the four other independence leaders already in jail. A scheduled Jan. 30 vote in parliament has been postponed indefinitely. A Spanish television station filmed a text message Puigdemont sent to an associate that day that it said read, “I suppose it’s clear that this has come to an end.”

3. Does he have other options?

A spokesman for Junts per Catalunya, Puigdemont’s party, said that talks are continuing with ERC, another separatist party, to explore forming a government. According to news reports, one option is for some lawmakers to symbolically elect Puigdemont while a government is installed that complies with Spanish law.

4. What’s the legal threat to Puigdemont?

A court in Madrid issued an arrest warrant after Puigdemont failed to obey an order to testify in a criminal investigation into the events surrounding an independence referendum on Oct. 1 and the subsequent declaration. A judge in the Supreme Court is looking at charges including rebellion and sedition; former Catalan Vice President Oriol Junqueras is in jail on remand along with three other separatist leaders.

5. So who is running Catalonia at the moment?

Rajoy and his Madrid-based national government remain in charge until there’s a new government. Rajoy invoked emergency powers under article 155 of Spain’s constitution and has said he’d be willing to deploy them again if necessary. Rajoy’s move in October drew a line in the sand: Should a pro-independence government emerge from the elections and openly challenge Spain’s constitutional order, he may disband it again. The separatists won 47.5 percent of the vote between them, enough to control the regional legislature, though short of the majority that would boost their claims to a democratic mandate to break away.

6. What’s the way out of this mess?

It’s complicated. Dialogue and a reform of Spain’s system of government might appear to offer a way forward but it was never going to be that straightforward. Rajoy has said he won’t agree to any step -- such as allowing Catalans to vote on independence in a referendum -- that goes against the 1978 Constitution. The appropriate place for Catalans to voice their demands is -- according to him -- the Spanish parliament, which, unsurprisingly, is overwhelmingly in favor of keeping the country whole. But Rajoy is facing pressure too -- from the embarrassment of having a vocal Puigdemont at the center of attention, and on a political level from the liberals of Ciudadanos, which made strong gains in the Catalan regional election and are building support at national level fast.

7. Why won’t Spain offer Catalonia more autonomy?

It’s tricky to devolve more powers to Catalonia, which makes up about a fifth of Spain’s economy. For instance, granting the regional government powers to raise its own taxes risks upsetting the delicate equilibrium of constitutional powers and may lead to other regions demanding the same privileges. Rajoy’s base in the rest of Spain would be enraged by anything that looks like a concession to the Catalans.

The Reference Shelf

• A QuickTake explainer on Catalonia’s history and the battle that divides Spain.
• Bloomberg View columnist Leonid Bershidsky on Rajoy’s election strategy in Catalonia.
• The dispute over Catalonia may take a toll on Spain’s economic growth.

To contact the reporters on this story: Charles Penty in Madrid at cpenty@bloomberg.net, Esteban Duarte in Madrid at eduarterubia@bloomberg.net.

To contact the editors responsible for this story: Vidya Root at vroot@bloomberg.net, Leah Harrison Singer, Ben Sills

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