Spain: Catalonia crisis heading towards Article 155 - HSBC

If the Catalan government doesn't backtrack on independence, implementation of Article 155 seems likely, according to Fabio Balboni, European Economist at HSBC. This would allow the central government to take control of Catalonia and could eventually lead to regional polls and rather than being the beginning of the solution to the Catalan crisis, they see a risk of further escalation of political tensions, he further adds.

Key Quotes

“Heading towards Article 155

• Today, 19 October, is decision day for Carles Puigdemont, the leader of the Catalan government. Either he backtracks on his push for independence, or Article 155, which allows the central government to take control of Catalonia, will be implemented. The deadline set by the Spanish PM Mariano Rajoy for the decision is 10am local time.
• Implementation of Article 155 seems likely. Mr Puigdemont did not provide a categorical answer to whether he had declared independence or not ahead of the previous deadline on 16 October, but has said that he remained committed to implementing the referendum result, and is under strong pressure particularly from the most radical elements in the Catalan government, to proceed unilaterally towards independence (El Mundo, 13 October). 
• The central government has said that another way to prevent Article 155 being triggered would be if the Catalan government called a snap regional election, but so far Mr Puigdemont has ruled out this option. Catalan Foreign Affairs Minister Raül Romeva has confirmed more recently that "we will not back-track in front of Article 155, and early elections are not in our agenda" (El Mundo, 18 October).
• Failure by Mr Puigdemont to backtrack on independence could lead to the immediate application of Article 155. Effectively the procedure was triggered last week, with Mr Rajoy giving an ultimatum to Mr Puigdemont. The next step would be the approval by an overall majority of the senate. The ruling party, Partido Popular (PP), has a majority (149 MPs in the 266-seat house) and the main opposition party, PSOE, with 62 MPs, has said that it will support the application of Article 155 (El País, 16 October). So this should be relatively straightforward.”

“What happens if Article 155 is invoked?

• Article 155 has never been invoked before, so we are in uncharted territory. Although it is ambiguous in its formulation, effectively it enables the central government to take over control of certain functions of the regional government. Mr Rajoy would be expected to lay out to the upper house which specific measures he intends to take. 
• The Spanish press has suggested that Mr Puigdemont could be replaced by a delegate of the central government, and that the central government would "prioritise control of the regional armed forces and the budget" (El País, 16 October).”