FILE PHOTO: "Junts x Catalunya" members raise up an "Estelada" flag (Catalan separatist flag) as they celebrate the results of the European Parliament elections in Barcelona, Spain, May 27, 2019. REUTERS/Albert Gea/File Photo
BARCELONA/MADRID (Reuters) - Spain may be heading for a repeat of Sunday's inconclusive election unless Catalan separatist parties compromise on their demands for an independence referendum in exchange for their support.
After neither the right nor left bloc won enough seats to form a majority, Catalan separatist parties Esquerra Republicana de Catalunya (ERC) and Junts have emerged as kingmakers. Acting Prime Minister Pedro Sanchez needs their 14 parliamentary votes to support a left-wing coalition government.
Junts - which controls seven seats and is the more hardline of the two on the subject of independence - said on Monday its conditions for helping Sanchez get over the line in an investiture vote were permission to hold a referendum in Catalonia on independence and an amnesty for all separatists facing legal charges related to the region's 2017 failed independence bid.
Junts was founded that same year by former Catalan regional head Carles Puigdemont, who is living in self-imposed exile in Belgium to avoid prosecution in Spain for leading the breakaway attempt.
Junts' rival ERC, which currently runs the regional government and also controls seven seats in the national parliament, played an instrumental role in 2020 by voting in favour of Sanchez's investiture in exchange for talks on Catalonia's political conflict.
Unlike Junts, it has sometimes helped Sanchez pass legislation. To renew its support, it wants talks to harmonise relations, to cut the region's contributions to the national public purse, and to take control of the inter-city train system from the central government.
Ramon Tremosa, a lawmaker for Junts in the Catalan parliament, said Sanchez's Socialists would have to improve significantly on previous concessions or face going to the polls again.
"It's filet mignon or elections," Tremosa said, adding that the Socialists could begin by making symbolic gestures - for instance by allowing the use of the Catalan language in the European Union parliament.
Junts Vice President Josep Rius, who was Puigdemont's chief of staff during the failed separatist bid, said the party's demands were clear: "An agreed, binding and verified referendum on independence."
But granting a referendum would be anathema for many Spaniards already angry at Sanchez's pardon of nine jailed leaders of the independence bid and for annulling the crime of sedition under which they were sentenced.
"The fourth (largest) economy in the eurozone cannot be subjected to politicians who are fugitives or who say they are not interested in Spain," the conservative People's Party leader Alberto Nunez Feijoo, who won the most seats on Sunday, said on Tuesday.
Feijoo is also attempting to form a government but several regional parties have said they will not support him because it would mean allowing in the far-right Vox.
It would be premature to write off Sanchez's chances of striking a deal. He has proved to be a canny political operator - reclaiming the leadership of the Socialist party after being ousted in 2016 and grabbing power two years later by persuading many parties, including Catalan separatists, to club together to expel former Prime Minister Mariano Rajoy of the PP.
Sanchez on Monday told his party's board that he is sure he can avoid a repeat election because a deal will be struck, a Socialist source said. The prime minister has no immediate rush to make a move, the source and another source said.
However, Sanchez, who rejects Catalan independence, has long said he opposes a referendum or an amnesty.
For this reason, a third Socialist source said any deal with Junts was far from certain and two separatist sources said the sides are unlikely to ever agree.
"Junts will maintain its line of referendum or nothing," said Joan Esculies, a Catalan political analyst. "I think we will go towards an electoral repeat".
INDEPENDENCE SUPPORT DECLINING
Even if Sanchez were willing to concede, a referendum could prove difficult to implement. After separatists held a referendum not agreed with Madrid in 2017, the Constitutional Court ruled it was illegal.
Isabel Rodriguez, spokesperson for the national acting government, said on Tuesday the government would only operate within the constitutional framework to address the Catalan conflict.
But Yolanda Diaz, leader of the Sumar party that would rule in coalition with the Socialists if they can reach a majority, said her party would enter talks "without any red lines."
In a nod to the separatists, Diaz has assigned lawmaker Jaume Asens, a lawyer who advised Puigdemont in 2017 on where to flee to avoid extradition to Spain, to lead the negotiations with Junts, a Sumar source said. An adviser close to Asens declined to comment.
The separatists' window of opportunity comes at a time when appetite for independence is waning. A May 29-June 26 survey by Catalonia's regional-run polling firm CEO found 52% of people in the region declared themselves against the idea and 42% in favour, down from a high of 49% support in October 2017.
However, a separate poll from April by CEO showed support for a referendum remains high, at 77%.
Separatist parties lost a significant share of their vote in Sunday's election to the Socialists, which the government says is a reflection of support for their efforts to lower the temperature and confirms there is little appetite for a referendum.
It is a sentiment shared by Catalonia's business sector, which has lost ground to Madrid since the 2017 political crisis.
"What we certainly don't want is to be going back to where we were a few years ago because that level of instability and disruption is really bad for investments," said the head of Volkswagen's Barcelona-based Spanish unit SEAT, Wayne Griffiths.
ERC and Junts lost 550,000 votes in Sunday's election compared to 2019, and a third of their 21 seats, while the Socialists gained 418,000 votes in Catalonia.
But separatist sources said they believe Catalans voted tactically to stop Vox from entering government and that they can woo back their base.
Rius said his party's willingness to compromise depended on Sanchez.
"The ball is in Pedro Sanchez's court," Rius said. "If there is a repeat of elections it won't be on Junts."
(Reporting by Joan Faus in Barcelona and Belen Carreno in Madrid; Writing by Charlie Devereux; Editing by Aislinn Laing and Rosalba O'Brien)
