Catalans: independence drive will intensify unless Madrid negotiates

By Mike Peacock LONDON (Reuters) - After scuppering a referendum, Spain risks intensifying Catalonia's push for independence unless it negotiates over transferring more powers, the region's economy minister said. Spain's government asked the constitutional court last month to declare a referendum planned for Nov. 9 illegal on the grounds it breached the constitution. The court suspended the vote until it ruled on the case, which could take years. In response, Catalan President Artur Mas has dropped plans for a binding vote and will instead hold a "consultation of citizens" which he said would be within the law. "Sooner or later there will have to be dialogue or negotiation," Catalan Economy Minister Andreu Mas-Colell told Reuters in an interview in London. "We are not going to retire." He hoped the Catalan government would see out its term until late 2016 but said clamour for early elections would grow if the Spanish government refused to discuss greater autonomy for one of its wealthiest regions, with its own language and culture. "If the possibility of consultations is denied to us, the pressure to call elections...will naturally increase," he said. About half of Catalans want more independence from Spain and a vast majority want a say on their future, opinion polls show. Some want Mas to call early elections as a proxy vote on secession, a move likely to benefit the more radical independence party ERC, a coalition partner of Mas's CiU. Spanish Prime Minister Mariano Rajoy said last week a new "chapter of dialogue" was being opened with Catalonia. Mas gave Rajoy a set of economic measures in July, including an increase in central government spending in the region, Spain's economic powerhouse, while Madrid has opened the door to reforms on the way Spanish regions are financed, a long-standing demand from Catalonia. SCOTTISH PARALLELS The Catalans, like Scotland which voted last month against leaving the United Kingdom, had proposed three options -- the status quo, full independence or more powers whereby "Catalonia becomes a state but not an independent state", Mas-Collel said. It was up to Madrid to come up with a blueprint for what that means in practice. The more intransigent it is, the louder calls for full independence will become. "Most Catalans at this point are deeply irritated at all the centralising moves of the Spanish government," he said. "It is a political problem, it will not be solved by judges, it will be solved by political dialogue." As a wealthy region, Catalonia accepted that it should be a net contributor to Spain's coffers, Mas-Collel said. "We realise that ... but the magnitude is excessive," he said. "It is myopic because Catalonia is an engine of the Spanish economy." Scots may have been cowed by suggestions they would not be allowed to join the European Union and that its banks would have relocated elsewhere. Mas-Collel said an independent Catalonia would be different. "We will never take a move that could place us outside the European Union," he said. "And the Spanish government will never call Brussels asking that the Catalans be expelled." Officials note that Catalan-based banks such as Caixabank and Sabadell are also players across Spain while BBVA, Spain's second biggest bank, has bought Barcelona-based Catalunya Bank. Regulators from the European Central Bank down will not want to create unnecessary financial divides, they argue. Mas-Collel said the Spanish and Catalan economies were starting to reap dividends of painful labour reforms and a sharp drop in wage levels. "Spain has made 80 percent of the structural reforms that were required," he said. "We have done what we were asked to do and that wasn't easy." That has restored competitiveness and boosted exports. The domestic economy remains weighed down by private debt. Others, such as France, had to press on with reforms while those who could afford to should boost spending. Germany, the only country in the euro zone with scope to produce a meaningful fiscal shot in the arm, is intent on balancing its budget for the first time since 1969. "Now we ask that Europe do its part. We need a Europe that pushes forward and is not stagnant," Mas-Collel said. (Editing by Louise Ireland)