Catalan leader under pressure to drop independence

[October 09, 2017]  By Sam Edwards and Paul Day

BARCELONA/MADRID (Reuters) - Catalonia's secessionist leader came under intense pressure on Monday to abandon plans to declare independence from Spain after hundreds of thousands of unionists took to the streets at the weekend to protest against the region breaking away.

Spain fears the Catalan parliament will vote for independence on Tuesday, when Catalan leader Carles Puigdemont is due to address the assembly in the wake of a banned Oct. 1 referendum in which Catalan officials say people voted overwhelmingly for secession.

Under Catalonia's referendum law, deemed unconstitutional by Madrid, a vote for independence on Tuesday would start a six-month process that would envisage divorce talks with Spain before regional elections and a final act of separation.

But the Spanish government, buoyed by Sunday's protests in Barcelona, the Catalan capital, made it clear on Monday it would respond immediately to any such vote.

"I'm calling on the sensible people in the Catalan government...don't jump off the edge because you'll take the people with you," Spanish Deputy Prime Minister Soraya Saenz de Santamarķa said in an interview with COPE radio station.

"If there is a unilateral declaration of independence there will be decisions made to restore law and democracy."

Spanish Prime Minister Mariano Rajoy has not ruled out removing Catalonia's government and calling new regional elections if it claims independence.

The stakes are high for Spain as it faces its biggest political crisis since it became a democracy four decades ago.

Losing Catalonia, which has its own language and culture, would deprive Spain of a fifth of its economic output and more than a quarter of exports. A stream of Catalonia-based firms and banks have moved their legal bases outside the region.

The crisis has also reopened old divisions in a nation where fascism is a living memory easily revived by strong displays of nationalism.

Among many moderate Spaniards, though, there is widespread opposition to a breakaway, including in Catalonia. Most of the region's unionists boycotted the Oct. 1 referendum, which was banned by Madrid and marred by a violent police crackdown.

The European Union has also shown no interest in an independent Catalonia, despite an appeal by Puigdemont for Brussels to mediate in the crisis.

France, which borders Catalonia, said on Monday it would not recognize a unilateral independence declaration.

On Sunday, a crowd estimated by local police to number 350,000, took to the streets of the Catalan capital Barcelona, waving Spanish and Catalan flags and carrying banners saying "Catalonia is Spain" and "Together we are stronger".

The show of support for Madrid helped calm Spanish markets on Monday, along with comments on Friday from credit rating agencies Moody's and DBRS that they expected Spain to remain united. Spanish borrowing costs fell to a one-week low and the main share index <.IBEX> touched a week high.

PROTESTS, NO TALKS

With Puigdemont under pressure to back down, there is speculation he may baulk at moving an independence motion on Tuesday and call snap regional polls, turning them into a de facto, legal referendum on independence.

A woman waves Spanish flags at a pro-union demonstration organised by the Catalan Civil Society organisation in Barcelona, Spain October 8, 2017. REUTERS/Enrique Calvo

But Puigdemont appeared resolute in a TV interview on Sunday, saying the region's referendum law called for a declaration of independence in the event of a "yes" vote.

"We will apply what the law says," he said, according to a partial transcript released by TV3.

Catalan authorities say about 90 percent of those who voted on Oct. 1 backed secession, but opinion polls suggest the region is more closely divided. Referendum turn-out was 43 percent.

Sunday's anti-independence demonstration, which included Catalans and people from other parts of Spain, underlined how the dispute has riven the region itself. A month ago, a million people rallied in the city to support independence.

"We feel both Catalan and Spanish," Araceli Ponze, 72, said during Sunday's rally. "We are facing a tremendous unknown. We will see what happens this week but we have to speak out very loudly so they know what we want."

Puigdemont will address the Catalan parliament at 6 p.m. (1600 GMT) on Tuesday on "the current political situation" amid speculation he could ask the assembly to declare independence.

Puigdemont said on Sunday he had not been in contact with the Madrid government for some time because it refused to discuss independence.

"What is happening in Catalonia is real, whether they like it or not. Millions of people have voted, who want to decide. We have to talk about this," he said.

Rajoy has said repeatedly he will not talk to the Catalan leaders unless they drop their plans to declare independence.

Madrid sent thousands of national police to the region to prevent the vote. About 900 people were injured when officers used rubber bullets and batons against voters in scenes that shocked Spain and the world, and escalated the dispute.

The political stand-off has pushed banks and companies to move their legal headquarters outside Catalonia.

The boards of Catalonia-based infrastructure firm Abertis <ABE.MC>, telecoms company Cellnex <CLNX.MC> and property group Inmobiliaria Colonial <COL.MC> will meet on Monday to discuss moving, sources said.

Banks Caixabank <CABK.MC> and Sabadell <SABE.MC> have already resolved to leave the region.

(Additional reporting by Raquel Castillo and Robert Hetz in Madrid, Elisabeth O'Leary in Edinburgh and Madeline Chambers in Berlin; Writing by Mark Bendeich; Editing by Julien Toyer and Angus MacSwan)

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