MNI EXCLUSIVE: Catalonia Lawmakers See Referendum Going Ahead

--Vote Could Weaken Rajoy Government Further

By Jack Duffy

     PARIS (MNI) - Catalonia's independence referendum will go ahead on Sunday

despite the Spanish government's all-out legal efforts to stop it,

pro-independence lawmakers told Market News International.

     "There may be two million people on the street on Sunday morning at 9 am

when voting begins. How do you stop that?" Ramon Tremosa, a Catalan EU lawmaker

told MNI in an interview. "There is not enough military or Spanish police to

stop that," he said.

     Spain's Constitutional Court has ruled that the referendum is illegal and

Prime Minister Mariano Rajoy has used the full force of the state to block the

vote. Police have seized ballot boxes, arrested Catalan officials and police

from across the country have been deployed around the region to prevent voters

from entering polling stations on Sunday. 

     Tremosa said that with 6,000 polling stations scattered across 1,000

Catalan cities, towns and villages, it won't be enough. 

     "They can't block them all and the more they repress -- shutting web sites,

arresting people for printing and hanging posters -- the more they are enlarging

the pro-independence vote," he said.  

     Spanish debt markets have so far been relatively calm about the vote,

although Catalan bonds have weakened, with yield spreads relative to Spanish

government bonds widening to 277 basis points from around 225 in July for bonds

maturing in 2020.

     A vote on Sunday followed by a statement of Catalan independence could

shake an already wobbly Rajoy government, however, and inject a new premium for

political instability into Spanish yields, traders warn.

     Rajoy's vulnerability was underscored last week when his government failed

to produce a 2018 budget, acknowledging it did not have the votes to pass it.

     Josep Maria Terricabras, a deputy for the Catalan pro-independence party

Esquerra Republicana, said the Catalan government would move quickly whatever

the result of Sunday's vote.

     "Two days after the official result, if it is 'Yes,' we will say that we

consider ourselves an independent country. Then there will be a negotiation with

Spain and with the international community and only then will come the

proclamation of independence," Terricabras said in an interview with MNI

     "If the vote result is 'No,' our government will accept that it has been

defeated and we will go immediately for new elections," he said.

     One key element of the vote, if it occurs, will be turnout. In a nonbinding

ballot in November 2014, about 2.2 million of 5.4 million eligible voters took

part, and about 80% favoured independence. If the Spanish government succeeds in

suppressing turnout well below that level, the result could have little overall

impact. 

     Terricabras said that even if the vote is suppressed it won't be the end of

the issue for most Catalans.  

     "We have tried for years and years to negotiate and now there is no other

possibility for us," he said. "The question is not if but when because I see no

way back."

--MNI Paris Bureau; tel: +33 1-42-71-55-41; email: jack.duffy@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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