Catalonia to move to declare independence from Spain on Monday

[October 04, 2017]  By Sonya Dowsett

MADRID/
BARCELONA (Reuters) - Catalonia will move on Monday to declare independence from Spain, a regional government source said, as the European Union nation nears a rupture that threatens the foundations of its young democracy and has unnerved financial markets.

Pro-independence parties which control the regional parliament have asked for a debate and vote on Monday on declaring independence, the source said. A declaration should follow this vote, although it is unclear when.

Catalan President Carles Puigdemont earlier told the BBC that his government would ask the region's parliament to declare independence after tallying votes from last weekend's referendum, which Madrid says was illegal.

"This will probably finish once we get all the votes in from abroad at the end of the week and therefore we shall probably act over the weekend or early next week," he said in remarks published on Wednesday.

The constitutional crisis in Spain, the euro zone's fourth-biggest economy, has shaken the common currency and hit Spanish stocks and bonds, sharply raising Madrid's borrowing costs.

On Wednesday, the Ibex stock index <.IBEX>, fell below 10,000 points for the first time since March 2015 as bank stocks tumbled. In a sign of the nervous public mood, Catalonia's biggest bank, Caixabank <CABK.MC>, and Spain's economy minister had earlier sought to assure bank customers that their deposits were safe.

EVENING STATEMENT

Puigdemont's comments appeared after Spain's King Felipe VI accused secessionist leaders on Tuesday of shattering democratic principles and dividing Catalan society, as tens of thousands protested against a violent police crackdown on Sunday's vote.

The Catalan leader is due to make a statement at 9 p.m. (1900 GMT) on Wednesday, after an all-party committee of the region's parliament meets to agree a date -- likely to be Monday -- for a plenary session on independence.

Spain has been rocked by the Catalan vote and the Spanish police response to it, which saw batons and rubber bullets used to prevent people voting. Hundreds were injured, in scenes that brought international condemnation.

Catalans came out onto the streets on Tuesday to condemn the police action, shutting down road traffic, public transport and businesses, and ratcheting up fears of intensifying unrest in a region that makes up one-fifth of the Spanish economy.

Road closures related to the protests briefly halted production at Volkswagen's <VOWG_p.DE> Catalonia plant.

As shares in Spain's big lenders fell on Wednesday, Economy Minister Luis de Guindos tried to reassure investors and customers. "Catalan banks are Spanish banks and European banks are solid and their clients have nothing to fear," he said on the sidelines of a conference in Madrid.

Caixabank <CABK.MC>, Catalonia's largest lender, said in a memo to employees late on Tuesday that its only objective was to "protect clients', shareholders' and employees' interests".

People hold on to Catalan separatist flags on top of an air vent two days after the banned independence referendum in Barcelona, Spain, October 3, 2017. REUTERS/Susana Vera

"IRRESPONSIBLE BEHAVIOR"

Spanish Prime Minister Mariano Rajoy, a conservative who has taken a hard line on the issue, faces a huge challenge to see off Catalan independence without further unrest.

European Council President Donald Tusk has backed his constitutional argument but some fellow members of the bloc have criticized his tactics. Tusk has appealed to Rajoy to seek ways to avoid escalation in Catalonia and the use of force.

Brussels has in the past given little or no encouragement to separatist movements inside the European Union, whether those of the Catalans, Scots, Flemings or others.

Pro-independence parties who control the regional government staged the referendum in defiance of a Constitutional Court ruling that the vote violated Spain's 1978 constitution, which states the country is indivisible.

Catalonia has its own language and culture and a political movement for secession that has strengthened in recent years.

Participants in Sunday's ballot -- only about 43 percent of eligible voters -- opted overwhelmingly for independence, a result that was expected since residents who favor remaining part of Spain mainly boycotted the referendum.

Outside Catalonia, Spaniards mostly hold strong views against its independence drive. In his televised address, the king said the "irresponsible behavior" of the Catalan leaders had undermined social harmony in the region.

"Today Catalan society is fractured and in conflict," he said. "They (the Catalan leaders) have infringed the system of legally approved rules with their decisions, showing an unacceptable disloyalty toward the powers of the state."

The king said the crown was strongly committed to the Spanish constitution and to democracy, and underlined his commitment to the unity and permanence of Spain. He had earlier met Rajoy to discuss the situation in Catalonia.

Opinion polls conducted before the vote suggested a minority of around 40 percent of residents in the region backed independence. But a majority wanted a referendum to be held, and the violent police crackdown angered Catalans across the divide.

(Additional reporting by Adrian Croft and Julien Toyer in Madrid; Writing by Mark Bendeich and Sonya Dowsett; Editing by Catherine Evans)

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