October 20, 2017
Neither the Catalan regional premier Carles Puigdemont nor Spain's PM Mariano Rajoy blinked yesterday. Shortly after the 10am deadline the Spanish government announced an extraordinary cabinet meeting for tomorrow morning, as Rajoy is otherwise engaged at the European Council in Brussels. The cabinet will propose a raft of corrective measures to the board of the Spanish senate. A senate plenary is now expected to approve the measures no earlier than October 30-31, the week after next.
In the immediate short term, the two major Catalan separatist grass-roots organisations ANC and Ómnium have called on their supporters to cash deposits out of "the five major banks" this morning, to protest the imprisonment of their leaders Jordi Sanchez and Jordi Cuixart pending trial on sedition charges. This extends not only to Caixabank and Sabadell - whose customers are told to express their displeasure at the transfer of company registration outside Catalonia - but also Santander, BBVA and Bankia. While this is not likely to cause solvency problems to the banks, we don't exclude that Catalan branches and ATMs might run out of banknotes. After all, euro banknotes in circulation are under 3% of bank deposits and the ANC and Ómnium have shown their ability to mobilise hundreds of thousands of people on short notice for civil disobedience. We note that similar calls were also made by the indignados in 2011, but without much impact. However, the situation in Catalonia is much more volatile.
Shortly before 10am yesterday, Puigdemont released a letter in which he reiterated his claim that the Catalan people decided on independence on October 1st, asked for dialogue, and said the Parliament of Catalonia can, at any time, declare the independence that it didn't vote ten days ago. Shortly thereafter, the Spanish government acknowledged what they saw as a refusal to return Catalan institutions to the established legal order. Even those who advocate de-escalation and dialogue criticised Puigdemont's implied threat to declare independence at any time. Rajoy was criticised for going ahead with Article 155 of the Spanish constitution despite Puigdemont's admission that independence "was not voted". We would like to point out, however, that the Spanish government's requirement to simply state that independence had not been declared applied to last Monday's deadline. The condition for yesterday was to take measures to return to the constitutional and legal order, which patently has not happened. In any case, this is all going through the motions. The Catalan separatists will only negotiate the terms of independence, and the Spanish government will only accept that the Catalan government cease and desist.
The PP has been negotiating mostly with the PSOE the possible measures to apply in Catalonia under Article 155 of the Spanish constitution. While the PP has the necessary majority in the senate but, politically, it cannot afford to act alone. The PSOE, however, is hedging its bets and saying publicly that they will wait to see the proposed measures before deciding the extent and degree of their support. We won't know the proposed measures until tomorrow, but government sources have told media that one likely course of action is to run the Catalan government from various ministries, without actually removing the Catalan premier from office.
As to the Senate procedure, its board has the option to refer the matter to the territorial committee, or to an ad-hoc committee. The territorial committee could drag out because any of Spain's seventeen regional premiers would have the right to be heard in it, so it is most likely that an ad-hoc committee will be created to deal with the matter over the next week. Puigdemont or a representative will have a chance to present allegations. We suspect Puigdemont will either refuse to appear or turn his appearance into a show trial. The Spanish government has indicated that, were Puigdemont to call snap regional elections, the Art 155 measures would be withdrawn. However, the question is whether Puigdemont would call ordinary regional elections under Spanish law, or pretend to call elections to a Catalan constituent assembly under the law "on legal transition and foundational of the Republic" which the Spanish constitutional court has suspended. There is a scenario in which the Spanish government calls snap elections under Art 155, and there are two competing election authorities simultaneously trying to organise two elections under different laws.
Meanwhile, the Belgium press has reported of diplomatic tensions between Spain and Belgium over an interview that Charles Michel gave to Le Soir and De Standaard last weekend. In it Michel suggested the possibility of international mediation, which to the Spanish government is unacceptable as it put it on an equal footing with one of its own regions which it considers to be operating outside the law. According to the Belgian press, Spain has threatened to withdraw support for the appointment of Belgian Catherine De Bolle to Europol. On the sidelines of the European Council yesterday, Michel said he stood by his remarks and took responsibility for them, but also that he did not think there was a diplomatic conflict with Spain. There had not been any contacts at the ministerial level even if the press had reported on contacts from lower-ranking officials. "Rajoy has my number", he said. Mariano Rajoy made no public statements around the Council.
We also have stories on why everybody in Brussels has been so nice to Mrs May; whether Jamaica will trigger a fiscal expansion; on the haphazard Rutte III coalition agreement; on Macron's attempt to redefine the meaning of equality in France; on the Greek government's decision to redistribute €1bn to crisis victims; on the legal challenge to Irish banks over tracker-mortgages; and on the diesel-lease time bomb.