UPDATE 2-Catalonia to test Spanish unity with separatist vote

Fiona Ortiz and Braden Phillips
Reuters Middle East

* 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

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 crisis 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


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


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.


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


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.


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.

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