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Spanish court suspends Catalan parliament session, throwing independence call in doubt

  • Constitutional court suspends Catalan parliament session
  • Rajoy calls on Catalan leader to scrap independence call
  • Investment in Catalonia paralyzed - economy minister
  • Catalonia-based bank considers moving headquarters

Spain's Constitutional Court on Thursday ordered the suspension of Monday's session of the regional Catalan parliament, throwing into doubt its plans to declare unilateral independence from Spain.

The speaker of the Catalan parliament, Carme Forcadell, accused the Madrid government of using the courts to deal with political problems and said the regional assembly would not be censored. But she said parliamentary leaders had not yet decided whether to defy the central court and go ahead with the session.

The suspension order further aggravated one of the biggest crises to hit Spain since the establishment of democracy on the 1975 death of General Francisco Franco. But Spanish markets rose on perceptions the order might ward off, at least for now, an outright independence declaration.

Spanish Prime Mariano Rajoy called on Catalan leader Carles Puigdemont to drop independence plans or risk "greater evils".

Secessionist Catalan politicians have pledged to unilaterally declare independence at Monday's session after Sunday's referendum, banned by Madrid and marked by violent scenes where Spanish police sought to hinder voting.

The constitutional court said it had agreed to consider a legal challenge filed by the anti-secessionist Catalan Socialist Party.

Spanish shares and bonds, hit by the political turmoil in Catalonia, strengthened after the news of the court's decision. The main IBEX stock index rose 2.5 percent and the yield on Spain's 10-year bond fell.

Spain's Economy Minister Luis de Guindos told Reuters in an interview the turmoil was damaging Catalonia.

"This is generating uncertainty that is paralyzing all investment projects in Catalonia. I'm convinced that, right now, not one international or national investor will take part in a new investment project until this is cleared up," he said.

Some of Catalonia's biggest businesses began taking steps to transfer their registered headquarters to other cities in Spain.

The board of Spain's fifth-largest bank, Sabadell, decided at an extraordinary meeting on Thursday to move the bank's registered head office to Alicante, the bank said.

The board of Caixabank, Spain's third-largest lender, will meet on Friday to study a possible transfer of its legal base away from Catalonia, a source familiar with the situation said.

The Spanish government will approve a decree on Friday making it easier for companies to transfer their legal base out of Catalonia, two sources said, a move that could deal a serious blow to the region's finances as it considers independence.

The new decree is tailor-made for Caixabank, sources familiar with the matter said, as it would make it possible for the bank to change its legal and tax base without having to hold a shareholders' meeting.

Opinion polls conducted before the vote suggest a minority of around 40 percent of residents in Catalonia backed independence. But a majority wanted a referendum to be held, and the violent police crackdown angered Catalans across the divide.

'Greater evils'

In an interview with Spanish news agency EFE, Prime Minister Rajoy said the solution to the Catalan crisis was a prompt return to legality and "a statement as soon as possible that there will not be a unilateral declaration of independence, because that will also avoid greater evils."

He did not elaborate but ruling party lawmakers say Rajoy, a conservative who has taken a hard line on Catalan independence, is considering the unprecedented step of dissolving the Catalan parliament and triggering regional elections.

Catalan officials released preliminary referendum results showing 90 percent support in favour of breaking away. But turnout was only about 43 percent as Catalans who favour remaining part of Spain mainly boycotted the ballot and many polling stations were closed.

Puigdemont said, in response to a question from the German Bild daily, he was not afraid of being arrested.

"And I'm not surprised any more about what the Spanish government is doing. My arrest is also possible, which would be a barbaric step."

Neither the Spanish government nor the judiciary has threatened to arrest Puigdemont, though Madrid accuses him of breaking the law by ignoring a Constitutional Court ruling forbidding the referendum.

On Wednesday, in a televised address, Puigdemont renewed his call for mediation in the dispute but said the results of the referendum would have to be applied.

Rajoy has ruled out international mediation as a format for resolving the future of Catalonia, offering instead all-party Spanish political talks to find a solution, on condition independence is taken off the table.

Barcelona football club joined captain Andres Iniesta in calling for talks between the Spanish government and Catalan leaders to resolve the crisis.

"We will go as far as people want it. But without the use of force," Puigdemont told Bild. "I am sure that Spain will not be able to ignore the will of so many people."