Moment of truth for independence drive as divided Catalonia votes

Voters in a deeply divided Catalonia flocked to the polls on Thursday with support for its separatist and unionist camps running neck-and-neck, leaving prospects of an end to Spain's worst political crisis in decades looking slim.

Final pre-election surveys published last Friday showed parties backing the region's independence drive, galvanized by an autumn referendum, could lose absolute control of its parliament but might be able to form a minority government.

That would keep national politics mired in turmoil and raise concerns in European capitals and financial markets, though the secessionist campaign has lost some momentum since the Oct. 1 plebiscite, which Madrid outlawed, and investors gave Thursday's events in the region a muted reception.

Catalonia's pro-independence President Carles Puigdemont, deposed by authorities in Madrid following the region's referendum and a unilateral declaration of independence, rallied supporters from self-imposed exile in Brussels.

"Today we will demonstrate the strength of an irrepressible people. Let the spirit of 1 Oct guide us always," he said on Twitter. He voted through a proxy cast by an 18-year-old, Laura Sancho, at a polling station on the outskirts of Barcelona.

Another secessionist leader, Puigdemont's former deputy Oriol Junqueras, took a more conciliatory tone toward Madrid in comments published earlier this week.

Long queues formed outside voting stations in the affluent region of northeastern Spain shortly after they opened at 0800 GMT.

They will close at 1900 GMT (2 p.m. EST) in an election expected to draw a record turnout, which the regional government said had reached 34.5 percent by 1200 GMT.

"I'm not very optimistic that these elections will return a stable government," said 53-year-old doctor Miguel Rodriguez, queuing to vote in L'Hospitalet de Llobregat, a working class suburb south of Barcelona.

"We've had all our rights taken away," said Rodriguez, who voted for independence in October's referendum, irked that the Spanish government had fired Puigdemont's administration.

International investors showed few signs of nerves on Thursday, with Spanish debt and the euro in demand though the Madrid stock market lagged it eurozone counterparts.

"(The election) cannot be ignored going into year-end," said Orlando Green, European fixed income strategist at Credit Agricole in London. "But the secession movement has been significantly diminished and would need a decisive move to revive it."

'Normality'

The independence campaign pitched Spain into its worst political crisis since the end of fascist rule and the return of democracy in the 1970s.

Conservative Spanish Prime Minister Mariano Rajoy called Thursday's vote after sacking Puigdemont's government for holding the referendum and declaring independence.

The election has become a de facto referendum on how support for the independence movement has fared in recent months.

Rajoy hopes it will return Catalonia to what he has called "normality" under a unionist government or separatist government that will not seek a unilateral split.

None of the six parties in the Catalan parliament are expected on their own to come close to a 68-seat majority.

Offering a different interpretation of "normality," Puigdemont told reporters in Brussels: "Today is not a normal … democratic day: there are candidates in jail, there is fear … but we're hoping that by the end of the day we'll be back to some normality."

The past few months' independence crisis has damaged Spain's economy and prompted a business exodus away from Catalonia, its wealthiest region, to other parts of the country.

A new separatist majority might further dampen investor confidence.

However, separatist leaders — who have campaigned while Spanish courts investigate them on allegations of rebellion for their roles in the Oct. 1 referendum — have recently backed away from demands for unilateral secession.    

In a written interview with Reuters on Monday Junqueras, who has been campaigning from a prison outside Madrid, struck a conciliatory tone and opened the door to building bridges with the Spanish state.

Haggling

Analysts expect the next Catalan government to emerge from weeks of haggling between parties over viable coalitions.

"I want a change, because things are going from bad to worse here and it's the young people that carry the brunt of it," said Manuela Gomez, 71, who voted for unionist favorites Ciudadanos, which could emerge as the biggest party but would find it almost impossible to form a governing coalition.

An analysis of polling data by the Madrid daily El Pais published on Tuesday found that the most likely scenario was separatists securing a majority with the backing or abstention of the Catalan offshoot of anti-austerity party Podemos.

Podemos backs the unity of Spain but says Catalans should be able to have a referendum authorized by Madrid to decide their future. At the same time, Podemos favors a left-wing alliance of Catalan parties that both back and reject independence.

In this, analysts say, Podemos is caught between two options it does not particularly like, but would prefer to back the separatists rather than a coalition involving Rajoy's PP.

By Sonya Dowsett and Sam Edwards/Reuters

Additional reporting by Angus Berwick in Madrid, Dhara Ranasinghe in London and Robert-Jan Bartunek in Brussels; Writing by Paul Day and Ingrid Melander; Editing by Julien Toyer and John Stonestreet.