Alfonso Llanes, studied at Florida International University
Spain’s IBEX 35 reports that the benchmark lost nearly 2% in the new quarter’s first week as tensions increased between the country’s government and Catalonia’s leaders.
According to Spanish newspaper “El Pais”, Spain’s Prime Minister Mariano Rajoy told Catalonia's leader Carles Puigdemont that he will invoke Article 155 and take back all regional power unless the Barcelona parliament confirms it's not seeking independence weakening the Euro as investors watched and waited for the next shoe to drop.
Bloomberg Politics reports that It has been a critical period of brinkmanship. The Catalan leadership is running out of options while Spain is calmly ready to escalate the conflict in an attempt to bring an end to the country’s most dramatic political crisis for four decades. Spain’s Prime Minister Mariano Rajoy is exercising the never tested powers of Article 155 of Spain’s 1978 Constitution to try to impose central government control on Catalonia. The aim is to trigger regional elections within six months and it is expected that Spain will pursue the application of the clause gradually, but will act against people within the administration who obstruct the Constitutional process.
In northern Spain Basque Nationalists, who endorsed Rajoy’s minority government to pass a budget earlier this year, abandoned the prime minister as the Catalan crisis began to escalate, delaying approval of next year’s budget and adding further uncertainty to the outlook of the IBEX 35 and the Spanish economy in general.
The Digital Forensic Research Lab (DFR) at the Atlantic Council has assessed claims of Russian interference and found some evidence to support a role for the Russian propaganda machine in playing up the tensions in the region. Russian bots employed similar tactics during the U.S. election and have flooded social media with controversial posts, influencing in favor of the Catalan move for independence. Moreover, Wikileaks' founder Julian Assange has been actively supporting Catalonia's push for independence and the Kremlin joined in on Assange's in an effort to destabilize the EU just like in the recent French and German elections or the coming elections in Spain and the Czech Republic. Brett Schaffer, an analyst of the Alliance to Safeguard Democracy, stated that Russia is not necessarily interested in the independence of Catalonia for what it seeks is divisions among EU members to foment political disruption and gradually undermine Europe’s democracy and institutions.
In the meant time, the future of the IBEX 35 and the Spanish economy in general remain in limbo waiting for the political crisis to be resolved.
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