Last updated: 07:14 / Friday, 25 September 2015
The analysis by AXA IM

Catalonia: Expect Noise, Not Secession

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Catalonia: Expect Noise, Not Secession
  • Contrary to other regions, attention in the elections on Sunday is not focused on emerging parties like Podemos and Ciudadanos but completely monopolized by the independence question
  • Hence, if the situation is to remain volatile in the short term, it may ease and stabilize in the medium term once negotiations are engaged with the central government, probably about additional political and fiscal autonomy

Catalonia is voting to renew its parliament this Sunday. Contrary to other regions, attention was not focused on emerging parties like Podemos and Ciudadanos but completely monopolized by the independence question. Debates have mostly opposed the pro-independence list “Together for Yes”, led by current President Artur Mas, to the rest of parties that defend the unity of Spain. "We expect the current uncertainty to ease in the medium term, in particular after the general elections of December, since the next central government should take note of the Catalan elections and start negotiations for additional political and fiscal autonomy", explains Jean-Alexandre Vaglio, member of the Research team at AXA IM.

The Catalan political landscape is facing an almost unprecedented situation. The ruling Convergence and Union (CiU), that federated the Democratic Convergence of Catalonia (CDC) and the Democratic Union of Catalonia (UDC) since the first post-Franco elections, was dissolved due to diverging opinions regarding the Catalan independence process. Artur Mas, President of Catalonia and leader of the CDC, is now running the pro-independence joint list “Junts pel Si” (JS, Together for Yes) that gathers the centrist CDC and the Republican Left of Catalonia (ERC). In addition to this move, Mas directly called for a plebiscitary vote to turn this regional election into the referendum he wanted last year and that he had rebranded in a “participation process”, to abide by the Spanish Constitution.

As yet, polls suggest that JS will not be able to get the absolute majority, even though it is leading polls and that the Catalan system favours more than proportionally the party that ends up with the most votes. The Popular Unity Candidacy (CUP), an emerging extreme-left party, chose not to ally with JS but might support it just for the sake of the unilateral independence declaration, such that latest polls found JS-CUP might get a short absolute majority (set at 68 seats). Parties opposed to independence, Popular’s Party (PP), Spanish Socialist Workers’ Party (PSOE) and Ciudadanos gather roughly the same votes than three years ago, though the breakdown is different, to the advantage of Ciudadanos and mostly at the expense of PSOE. Lastly, Podemos joined ecologists to form Catalunya Si que es Pot (“Catalonia Yes we can”), with a moderate stance as regards independence, not supporting it but letting voters decide through a referendum. However, to the contrary of what happened in Barcelona, Podemos does not seem to get much traction, since this joint list currently polls at 13-14%, while its allies already got 10% in the 2012 elections.

"Overall, such reshuffle of parties casts some shadow on the final output of these elections which look like a very close call, in a very fragmented context.

As for last year’s “participation process”, debates have experienced a significant escalation, with strong stances adopted by opposing parties in the run-up to elections. Hence, if the situation is to remain volatile in the short term, it may ease and stabilize in the medium term once negotiations are engaged with the central government, probably about additional political and fiscal autonomy. The stability of the forthcoming government will also be questioned as electoral themes outside independence were neglected while they can differ very significantly between the parties that have similar positions on independence, in particular for JS and CUP, which would find very difficult to coordinate and rule Catalonia together".

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