Financial Times

August 28, 2014 3:10 pm

Catalan leader warns Madrid on economy

By Tobias Buck in Barcelona

A senior leader of the Catalan independence movement has warned Spain that it faces a backlash from international investors – and renewed market pressure over its debt load – if it refuses to allow an independence referendum in the northern region.

The remarks by Oriol Junqueras, the leader of the Catalonia’s Esquerra Republicana party, mark a new escalation in the simmering conflict over the region’s political future. They are designed to raise pressure on Madrid by linking the independence debate directly to what the government of Mariano Rajoy regards as its principal achievement to date – lifting Spain out of recession and winning back the trust of international investors.

Spanish government debt

“The Spanish state has €1tn of debt. This debt will have to be paid with our taxes, so I don’t believe that the best way for the Spanish state to meet its financial obligations is to clash with its own citizens,” Mr Junqueras told the Financial Times in an interview.

“If I was an investor I would be more calm knowing that there is an independent Catalonia that is ready to comply with its obligations than having a kingdom of Spain that is in confrontation with its own citizens.”

The Catalan government has promised to hold an independence referendum in November, less than two months after the Scottish plebiscite over a possible break with the UK. Unlike the British government, however, Madrid has insisted that a regional vote on independence is illegal, and that the Catalan referendum will not go ahead.

The looming clash has so far failed to dent investor enthusiasm for Spain, which has seen yields on sovereign bonds fall to historic lows as well as impressive stock market gains over the past two years. But some bankers and business leaders warn privatelythat the Catalan stand-off could damage confidence in Spain’s nascent economic recovery, a concern that Mr Junqueras now seems keen to turn to Catalonia’s advantage.

The independence process is formally fronted by Artur Mas, the Catalan president and leader of the centre-right Convergència i Unió party. Over the past two years, however, Mr Mas has come to rely increasingly on the support of Mr Junqueras and his ERC, a leftwing pro-independence party that has seen a surge in support at the polls. ERC scored an upset victory at the European elections in May, when it won 25 per cent of the Catalan vote and beat CiU into second place. Many analysts argue that Mr Junqueras is now the most powerful politician in the region, and the most likely candidate to succeed Mr Mas should the crisis trigger an early election in Catalonia.

Buoyed by the surge in popular support, the ERC leader has upped his rhetoric in recent months, calling on Mr Mas to go ahead with the November referendum even if Spain’s constitutional court decides to prohibit the vote.

Speaking to the FT, Mr Junqueras dismissed the court as a “political tribunal”, pointing out that most judges are elected by Spain’s two main political parties, both of which are opposed to the referendum. “It cannot be normal that the PP [Popular party] and the PSOE [Socialists] want to be players and referees in the same match,” he said.

Mr Junqueras added: “How can the constitutional tribunal say that it is illegal for citizens to vote? It just makes no sense . . . I believe the right to vote stands above the decisions of a political tribunal.”

The issue of what to do if the Madrid-based court rules against the Catalan referendum has emerged as a key point of division between the region’s pro-independence parties. Mr Mas himself has made clear repeatedly that he has no intention of holding an “illegal” referendum. But Mr Junqueras said the two sides had signed an agreement to hold a plebiscite in 2014 “and I am convinced that it will be complied with”.