Home Economy Article 155: Spain looks set to trigger its ‘nuclear option’ in the Catalan crisis

Article 155: Spain looks set to trigger its ‘nuclear option’ in the Catalan crisis

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         Article 155: Spain looks set to trigger its ‘nuclear option’ in the Catalan crisis

A churning crisis in Spain looks set to reach yet another head this weekend, as the government set the wheels in motion to suspend the autonomy of the wealthy northeastern region Catalonia, a move not undertaken in the country’s 42-year history of democracy.

What’s the latest? On Saturday, the government of Prime Minister Mariano Rajoy will hold an extraordinary cabinet meeting to decide the measures that may be taken the next few weeks to enact Article 155 of the federal constitution against Catalonia. The move comes after an unauthorized independence vote held in the region on Oct. 1, which resulted, in addition to clashes between police and voters, in a strong majority for independence from Spain. Catalan President Carles Puigdemont’s refused to heed the government’s warning to back down this week.

Article 155 gives the government power to strip away autonomy and take over any region if certain conditions are met. One consequence could be the sacking of the Catalan government and a call for new elections. On Friday, Spain’s main opposition party, the Socialists, said they would support a move by the ruling Popular Party to call for new elections in Catalonia, according to Reuters and other media outlets.

What is the intent of Article 155? Just two paragraphs in Spain’s 1978 constitution, it basically gives the central government the necessary powers to take over a region.

Article 155 is referred to as the “nuclear option” because of its last-ditch nature and politically explosive potential. The provision was put in place as the country made its post-Franco transition to democracy, to help maintain a power balance between the central government in Madrid and its 17 different regions, including Catalonia, or Catalunya in the Catalan language

The article simply states that if an autonomous region acts in a manner that has “gravely attacked the general interest of Spain,” the government could adopt measures needed to force the region to comply. But the government must win approval in the Senate to put such measures in motion, and Rajoy’s party holds a slim majority in that chamber. That vote, it is believed, could transpire as early as Saturday, after the Rajoy government’s introduction of a plan for proceeding toward the suspension of Catalan autonomy.

What happens next? If the central government gets approval, a takeover of Catalonia wouldn’t be immediate, noted Antonio Barroso, deputy director of research at Teneo, in a note. The process by which the government can put Article 155 into effect takes about a month to complete.

Puigdemont has threatened that Catalonia will declare independence if the government goes forward with Article 155. “As both sides battle for control of the narrative, there will be no quick resolution to the ongoing standoff between the central government and the Catalan authorities,” said Barroso.

To be clear, not everyone in Catalonia wants separation, as evidenced by pro-unity protests since the referendum, in which 90% voted for independence but turnout was under 50%. Puigdemont himself is being pulled in several directions, pressured both by hardliners who want to press ahead with separation and others who seek dialogue. Puigdemont has been asking for dialogue with Madrid, to no avail.

As Barroso theorized, Rajoy may be hoping to drag the situation out for some time in order to exploit for political advantage the damage occurring on an economic level, as well as emerging fractiousness in Barcelona and throughout Catalonia. Several major companies, prominently banks, have announced intentions to look into, at minimum, moving headquarters out of the region.

Among items that Rajoy could ask the Senate to vote on Saturday, many believe, is a call for early elections to Catalonia’s regional parliament, while others have speculated that he could ask to take control of the local police force there.


         Article 155: Spain looks set to trigger its ‘nuclear option’ in the Catalan crisis

What’s the atmosphere in the streets? In Barcelona and the rest of Catalonia, as well as in Madrid, protests have been held on both sides of the crisis. Protests in Barcelona have been seen this week over the detention of two political activists arrested by the central government. Madrid has been criticized for its heavy-handed action — via the federal police force — prior to and during the October referendum.

A separatist group in Catalonia was calling for a “run on the banks" on Friday, in which Catalans would withdraw as much as they could from banks that have threatened to pull headquarters out of the region. (Some participants in the ATM protest opted to withdraw the symbolic figure of €155, as in Article 155.)

Spain’s IBEX 35 index

IBEX, +0.25%

has had its ups and downs as the crisis has evolved, drifting between gains and losses on Friday.

“As far as we can see, the bank run did not have a great success rate. Not too many people participated in the idea. It would be like shooting themselves in the foot, so I guess most people are still reasonable,” said Predrag Dukic, senior equity sales trader at CM Capital Markets in Madrid, in emailed comments.

He said his firm did not forecast any immediate implementation of Article 155, given the procedural requirements, but he added that he didn’t expect a “positive surprise” under which the Rajoy government avoids activating that nuclear option..

Analysts expect only further social unrest if and when Article 155 is put into play. .

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