Home Economy Spain acts to sack Catalonia’s government, take control of the region

Spain acts to sack Catalonia’s government, take control of the region

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         Spain acts to sack Catalonia’s government, take control of the region

The Spanish government has revealed plans to remove the leaders of Catalonia and to take control of the region until early elections can be held, as it tries to stifle a push for Catalan independence.

The move, which needs to be approved by lawmakers, would grant Prime Minister Mariano Rajoy unprecedented powers in his bid to halt Catalan authorities from declaring a split from Spain.

What’s the latest?

Rajoy said Saturday the government wants to dismiss the Catalan president and his cabinet “in order to protect the general interest.” The powers of those officials will be assumed by ministers in central government until new regional elections can be held, hopefully within six months.

That would let central government take temporary control of bodies such as Catalonia’s police, as well as its health and education systems, according to a Wall Street Journal report. Security, public order and financial management are key focuses of the measures, the report said.

“The government has had to apply Article 155 of the constitution,” Rajoy said. “It was not our wish, it was not our intention — it never was. And I think public opinion knows that.”

Earlier Saturday, Rajoy held 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 meeting was scheduled after Catalan President Carles Puigdemont refused to heed the government’s warning to back down on Catalonia’s push for independence.

Ministers were expected to set the wheels in motion to suspend the autonomy of the wealthy northeastern region, a move not undertaken in the country’s last 42 years of modern democracy. However, Rajoy said the plan did not do that.

“Autonomy and self-government are not being suspended. This puts a stop to people operating on the margins of the law. It restores legality,” Rajoy said.

On Friday, Spain’s main opposition party, the Socialists, said they would support a move by the ruling Popular Party to hold new elections in Catalonia, according to Reuters and other media outlets.

What happens next

Catalan President Carles Puigdemont, one of the leaders under threat of removal, is scheduled to give a statement at 9 p.m. local time, or 3 p.m. Eastern Time. Before that, he is expected to participate in a pro-independence rally in Barcelona.

Puigdemont has vowed to hold a formal vote on secession from Spain if Article 155 is invoked, and this could lead to a declaration of independence.

Rajoy’s plan must go to Spain’s upper house of parliament, the Senate, for approval. The vote will be held on Oct. 27, reports said.

The reaction to Rajoy’s move

Public demonstrations are already being organized, and people in Barcelona have been banging pots and pans in the streets in spontaneous protest, the Associated Press reported.

Spain is seen as making a bold bid to remove the Catalan leaders and to bring separatist forces in the region to heel. But some believe it will test the strength of Spain’s democracy for the first time in the post-Franco era.

Others suspect Rajoy’s move will fail to resolve the standoff between Spain and Catalonia, and will only increase tensions.

“Assuming the participation of all parties, voters would be bound to interpret the [new] election as a de facto vote on independence. If a separatist majority emerged once again, it is hard to see how the conflict could be considered closed,” said BBC News’s James Badcock in an article.

However, not everyone in Catalonia wants separation. There have been pro-unity protests since the referendum, in which 90% voted for independence, but turnout was under 50%.

What is Article 155?

Just two paragraphs in Spain’s 1978 constitution, the article 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 transition from Franco’s dictatorship to democracy. It aimed to help maintain a power balance between the central government in Madrid and its 17 different regions, including Catalonia — “Catalunya,” in the local 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. A vote on the matter could take place as early as Saturday, it is believed.

What brought us here

The move comes after an unauthorized referendum on secession was held in Catalonia on Oct. 1. That resulted, in addition to clashes between police and voters, in a strong majority for independence from Spain.

After days of back-and-forth over the matter, Puigdemont refused to heed the government’s warning to back down by Thursday, prompting Rajoy to call the special meeting of ministers.

What’s been the market reaction?

Spain’s IBEX 35 index

IBEX, +0.25%

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

EURUSD, -0.5906%

  has also come under pressure as the standoff continued.

“With uncertainty potentially mounting after Spain’s government triggers Article 155 this weekend, the euro remains exposed to downside risks,” said Lukman Otunuga, research analyst at FXTM, in a note to clients on Friday.

“Investors should keep in mind that although the Catalan drama is limited to Spain, it could still spark fears over the rise of other separatist movements in Europe. Such a situation is likely to threaten the stability of the European Union,” Otunuga added.

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