UPDATE 2-Catalonia to test Spanish unity with separatist vote

Sun Nov 25, 2012 1:02pm EST

* Catalan separatist parties seen winning most votes

* Pro-independence flags adorn buildings all over Barcelona

* Newly converted separatist Artur Mas set to be re-elected

* Mas's CiU not seen winning control of regional Parlament

By Fiona Ortiz and Braden Phillips

BARCELONA, Spain, Nov 25 (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.

Pro-independence flags, a star against red and yellow stripes, hung on balconies in Catalonia's capital, Barcelona, as people cast ballots in a vote that could plunge Spain into a constitutional crisis even as it struggles to avoid an international bailout.

An economic downturn and 25 percent unemployment in Spain have reignited long-dormant separatism in industrial Catalonia, where people widely believe the tax system run by Madrid has held back development in a region which has its own financial crisis.

"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.

Opinion polls show two-thirds of votes will go to pro-independence parties that will push for a referendum to break away from Spain, which the central government will challenge as unconstitutional.

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.

Catalan regional President Artur Mas is expected to win re-election since his conservative Convergence and Union party, or CiU, is projected to take the most seats in the 135-seat regional assembly, or Parliament.

But 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.

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, and birthplace of surrealist painter Salvador Dali and architect Antoni Gaudi, the region also has one of the world's most successful football clubs, FC Barcelona.

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.

The recession and a high public deficit have pushed Spain to the heart of the euro zone debt crisis, and Rajoy is weighing asking for an international bail-out.

Alicia Sanchez-Camacho, the candidate for Rajoy's People's Party (PP) in Catalonia, warns of economic disaster if Catalonia tries to leave Spain. The PP looked set to be the second biggest party in Parliament with polls forecasting it will win 17 seats.

"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.

Some 5.2 million Catalans are eligible to vote in the polls, which opened at 0800 GMT and close at 1900 GMT.

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.

While the Republican Left may ally with him to push a referendum, it may pressure him to give up some spending cuts in exchange. The PP may support budget cuts but will try to block the referendum.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.