Mas Trouble In Little Spain As Country Layers Constitutional Crisis Onto Economic Depression

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Catalonia's exit polls confirm over two-thirds of votes will go to pro-independence parties that will likely push for a referendum to break away from Spain, which the central government will challenge as unconstitutional. The more-populous-than-Denmark region is home to car factories and banks that generate one-fifth of Spain's economic wealth (larger than Portugal's). The incumbent, Artur Mas, has converted to a more radical separatist bias since huge street demonstrations in September showed the will of the people. As Reuters notes, growing Catalan separatism is a huge challenge for Prime Minister Mariano Rajoy, who is trying to bring down painfully high borrowing costs by persuading investors of Spain's fiscal and political stability. Critically, the exit polls suggest the dominance of separatist parties will mean a referendum for secession within two years - leaving us asking the simple question: who will buy any Spanish debt, even fully backstopped by the ECB, if there is a real risk that in under two years, 20% of Spanish GDP will simply pick up and leave.

  • *CATALAN PRO-INDEPENDENCE PARTIES WIN MAJORITY, EXIT POLL SHOWS

Pro-Referendum/Separatists:

  • *CIU WINS 54-57 OF 135 SEATS IN CATALAN VOTE, EXIT POLL SHOWS (Separatist)
  • *ERC HAS 20-23 SEATS IN EXIT POLL BY TV3 (Separatist)
  • *ICV, which backs referendum, wins 10-12
  • *CUP, which backs independence, wins 5-6

Anti-Referendum

  • *PP HAS 16-18 SEATS IN CATALAN EXIT POLL
  •  *SOCIALISTS HAVE 16-18 SEATS IN CATALAN EXIT POLL

Via Reuters:

Spain's Catalonia region, fed up with the tax demands of cash-strapped Madrid, was expected to elect on Sunday a separatist government that will try to hold a referendum on independence.

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"It's time for Catalans to pursue their own nation. When you're in a relationship and you're not getting along you work for mutual respect. We've tried, but Spain hasn't," said Jose Manuel Victoria, 67, who voted for the main pro-independence party.

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With more people than Denmark and an economy almost as big as Portugal's, Catalonia has its own language. Like Basques, Catalans see themselves as distinct from the rest of Spain.

 

Growing Catalan separatism is a huge challenge for Prime Minister Mariano Rajoy, who is trying to bring down painfully high borrowing costs by persuading investors of Spain's fiscal and political stability.

...

 

Up until recently Mas was a moderate nationalist who had pushed Spain to give Catalonia more self-governing powers. He has followed the popular mood in converting to a more radical separatism, but it is not clear he can hold a referendum legally.

 

Many Catalans are angry that Rajoy has refused to negotiate a new tax deal with their largely self-governing region. Annually, an estimated 16 billion euros ($21 billion) in taxes paid in Catalonia, about 8 percent of its economic output, is not returned to the region.

 

Home to car factories and banks that generate one fifth of Spain's economic wealth, ...

 

MONEY PROBLEMS

 

After a decade of overspending, Catalonia's debt has been downgraded to junk. Blocked from the bond markets, Mas has had to seek billions of euros in rescue funds from the central government in Madrid, itself fighting to prevent financial meltdown.

 

But, on the campaign trail, Mas focused on the region's gripes with Madrid. He told supporters he wanted to be the last president of Catalonia within Spain.

 

Wary that separatism could spread to the Basque Country and beyond, Rajoy said this week that the Catalan election is more important than general elections.

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"Don't stay at home (on election day) if you don't want them to kick us out of Spain and out of Europe," she said at a campaign rally this week.

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MAS RISK

 

Enthusiasm for independence could ebb if voters think the price is having to leave the European Union, leaving Mas high and dry.

 

"I have no interest in independence. It's totally irresponsible," said 45-year-old Luis, a Peruvian immigrant and salesman who voted for the PP.

 

"It means exiting the EU and a drop in Gross National Product... Mas is an economist. He knows this but he isn't saying it. Why?" said Luis, who declined to give his last name.

 

After the vote Mas will struggle to push conflicting agendas: his promised referendum on independence and his drive to cut Catalonia's high deficit.

The only possible spin by the statists is that there is a possibility that the CIU and ERC will not come to an agreement over a referendum, and that the wealth redistribution from Europe's solvent to its insolvent can continue under the guise of a common currency:

Mas - who converted to separatism after huge street demonstrations in September - is unlikely to win the 68 seats needed for an absolute majority.

 

He will have to team up with smaller pro-independence groups such as the Republican Left, or ERC, to push ahead with the plebiscite that he promised to voters.

Follow the results live here: