Spain imposes financial controls on Catalonia

The Spanish government said on Friday it had passed measures to increase control over how Catalonia spends its money in an effort to block the regional government from using state cash to pay for an independence referendum, which Madrid has called illegal.

Catalan Governor Carles Puigdemont on Thursday opened the "yes" campaign for the October 1 referendum, despite Spain’s Constitutional Court ordering the suspension of the vote pending a formal decision by judges.

"These measures are to guarantee that not one euro will go toward financing illegal acts," Spain’s Budget Minister Cristobal Montoro said following the weekly cabinet meeting.

"The state will pay to a great extent (civil servants) salaries. That's what the spending control means and that will be in place as long as the exceptional situation continues," Montoro added.

Spain's 17 regions pay taxes to the central government which then redistributes funds back to regional heads for local social security, police and emergency services and education, a system that Catalans claim is weighed against it.

Since July, Madrid has obliged the Catalan government to provide weekly spending reports in an attempt to guarantee that public cash is not used to organise the referendum.

On Thursday, Catalan regional Vice President Oriol Junqueras said the arrangement implied "political control" and had nothing to do with budget stability, though Montoro on Friday disagreed, saying the measures were within budget stability rules.

Catalonia, an industrial region with a strong export sector and a thriving tourist destination, produces about a fifth of the country's total economic output but complains it receives a lot less back.

Montoro said he would appear before parliament next week to give the full details of the measures which would also include a demand by Madrid that the central government oversees all short-term debt operations by the regional government.

Government spokesman Inigo Mendez de Vigo on Friday also said that the Spanish government will not rule out taking "exceptional measures" on Catalonia ahead of the referendum. 

“We are acting firmly to ensure the rights and liberties of everyone and will react to whatever the secessionists do," he said. 

Royal intervention

Catalonia's governor and the mayor of its biggest city Barcelona appealed to Spain's premier and king on Friday for dialogue to resolve the region’s increasingly bitter tussle with Madrid.

The appeal comes at the end of a week in which the state prosecutor summoned mayors for questioning, and Catalonia rebelled against Madrid's fiscal rules.

Governor Carles Puigdemont and Mayor Ada Colau said in a letter addressed to Prime Minister Mariano Rajoy and also sent to King Felipe that they wanted support from the Spanish state for the referendum.

"We call for ... open and unconditional dialogue. A political dialogue, based on the legitimacy we all have, to make possible something that in a democracy is never a problem and even less a crime: listening to the voice of the people," the officials wrote in the letter.

Two new laws clearing the way for the vote have been suspended while judges consider whether holding it would breach Spain's constitution, which states that the country is indivisible.

King Felipe was widely quoted praising Spain's democracy and social harmony at an awards ceremony on Wednesday, saying "the constitution will prevail over any rupture in that."

The letter accused the Spanish state of "an unprecedented repression offensive."

Most of Catalonia's 5.5 million voters want to have a say on the region's relationship with Spain, but the independence cause has lost support in recent years and surveys now indicate less than half the population would choose full self-rule.