Catalonia baulks at formal independence declaration to allow talks

Catalonia's leader balked at making a formal declaration of independence from Spain on Tuesday, calling for talks with Madrid over the region's future in a gesture that eased fears of immediate unrest in the heart of the euro zone.

In a much-anticipated speech to the Catalan parliament, ringed by thousands of protesters and hundreds of armed police, Carles Puigdemont made only a symbolic declaration, claiming a mandate to launch secession but suspending any formal steps to that end.

His remarks disappointed many of his supporters who had gathered outside, waving Catalan flags in the expectation that he would move a formal independence motion to the assembly.

But the speech pleased financial markets, boosting the euro on hopes that his gesture would mark a de-escalation of Spain's worst political crisis since an attempted military coup in 1981.

Tensions have been climbing in Catalonia since it went ahead on Oct. 1 with an independence referendum that Madrid had deemed unconstitutional. Despite a violent police crackdown, Catalan officials say the result was an overwhelming "yes" vote.

But instead of moving a motion in regional parliament on Tuesday, as Spanish unionists had feared, Puigdemont and other regional politicians signed a proclamation of "full sovereignty" for Catalonia. Its legal value was unclear.

"I am disappointed. I hoped for a declaration of independence and it didn't happen," said 18-year-old student Julia Lluch, among a crowd of independence supporters who were rolling up their flags and drifting away from the assembly.

In Brussels, though, there was a sense of relief that the euro zone's fourth-largest economy now had at least bought some time to deal with a crisis that was still far from over.

One EU official said Puigdemont "seems to have listened to advice not to do something irreversible".

However, the prospects for political talks still appeared remote on Tuesday despite Puigdemont's gesture, with Madrid insisting on talks to be held "within the law", a phrase that is widely interpreted as ruling out independence as an option.

Deputy Prime Minister Soraya Saenz de Santamaria also rejected the Catalan leader's proposal for talks to be conducted by an international mediator. "Neither Mr. Puigdemont nor anybody else can claim ... to impose mediation," she said.

The Spanish government will meet on Wednesday to decide on its response to Puigdemont's declaration.

STOCKS, EURO RISE

Both Spanish Prime Minister Mariano Rajoy's government and European Council President Donald Tusk had urged Puigdemont not to proclaim independence. And French President Emmanuel Macron rejected Puigdemont's call for European Union mediation, saying he was confident Madrid could handle the situation.

The Catalan government said 90 percent of those who voted backed independence but turnout was only 43 percent as many opponents of independence stayed at home.

Puigdemont told the Barcelona regional parliament that the result provided a popular mandate for independence and he called for talks and reduced tensions.

"We aren't criminals, nor crazy, nor coup plotters, nor abducted," he said. "We are normal people who ask to be allowed to vote and who have been ready for all the dialogue necessary to achieve it in an agreed way.

"I assume ... the mandate that Catalonia become an independent state in the form of a republic," he said to prolonged applause.

"I propose suspending the effects of the declaration of independence to undertake talks in the coming weeks without which it is not possible to reach an agreed solution."

After Puigdemont's speech, stocks around the world rose as Wall Street eked out record highs ahead of earnings season, while U.S. Treasury prices pared gains.

Some analysts, however, said Puigdemont's stance would prolong the uncertainty and risk from the Catalan impasse.

It could also rock his Catalan government, with one far-left party inside his coalition, the pro-independence CUP, saying he may have missed an historic opportunity and giving him one month to find a negotiated solution the CUP doubts will ever come.

"You say we are suspending the effects because we are going to negotiation and mediation. Negotiation and mediation with whom? With a Spanish state that continues to harass and persecute us?" CUP leader Anna Gabriel said.

The Catalan crisis has deeply divided the northeastern region as well as the Spanish nation. Opinion polls conducted before the vote suggested a minority of around 40 percent of residents in Catalonia backed independence.

The stakes are high - losing Catalonia, which has its own language and culture, would deprive Spain of a fifth of its economic output and more than a quarter of exports.

Some of Catalonia's largest companies have moved their head offices out of the region this week and others were set to follow if he had declared independence.

Independence supporters watched Puigdemont's speech on large screens outside the 18th-century parliament building. Initially, people chanted "independence", cheered and kissed each other, but as it became clear there would be no formal declaration of independence, some people whistled and shook their heads.

Pensioner Marisol Rioja, 65, said: "We would have liked more. But he (Puigdemont) couldn't do it."

Eric Martinez, a 27-year-old manager, also wept as he watched the speech with his girlfriend. "There is no solution through mediation with Spain. Mediation with Spain is useless," he said.