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With renewed support from #Catalan separatists, Spain's #Sanchez seeks backing as PM

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Spain’s acting prime minister Pedro Sanchez (pictured), seeking parliament’s backing to form a government, pledged to resolve the Catalan dispute through dialogue as he received renewed support from separatists in the restive region, write Jessica Jones and Jesús Aguado.

As Sanchez set out his priorities on Saturday (4 January) in an attempt to end several months of political gridlock, he assured lawmakers that neither Spain nor its constitution would break.

“What is going to break is the blockade of a progressive government democratically elected by the Spanish people,” Sanchez told deputies in opening remarks as he kicked off several days of debates and votes in parliament.

Earlier this week, the Socialist Party leader Sanchez and Pablo Iglesias, the head of the far-left party Unidas Podemos, restated their intention to form the first coalition government in Spain’s recent history.

Since the two parties together fall short of a majority with 155 seats in a 350-member parliament, victory for Sanchez hinges on the votes of small regional parties.

Catalonia’s largest separatist party, Esquerra Republicana de Catalunya (ERC), on Saturday confirmed it would abstain rather than vote against Sanchez in the second and decisive vote on Tuesday.

The party’s support had been called into question by a last-minute decision by Spain’s electoral board on Friday (3 January) to block ERC’s jailed leader Oriol Junqueras from becoming a member of the European Parliament.

The board also decided to strip the head of Catalonia’s pro-independence regional chief Quim Torra - an ERC ally - of his position as a regional lawmaker.

On Saturday, the leader of the conservative People’s Party (PP), Pablo Casado, said Sanchez should ensure the decision to unseat Torra in Catalonia was enforced.

“Surrendering to the worst radicals may make you prime minister, but you will not be able to govern,” Casado said during the debate.

Tensions over Catalonia highlight the struggles a Socialist-led minority government would have to pass legislation as it would depend on the support or abstention of small regional parties with competing agendas.

A few hundred people joined a rally in Madrid on Saturday calling for a “united Spain” and the leader of the far-right party Vox, Santiago Abascal, demanded Torra be arrested.

Meanwhile, the Catalan parliament was due to convene for a special session following the electoral board decision.

Sanchez said he wanted to resume dialogue over Catalonia’s future rather than hammer out the dispute through Spain’s courts, but said he would address the issues within Spain’s constitutional framework.

The constitution prohibits regions from breaking away and the Catalan independence drive, including a banned referendum in 2017, has triggered Spain’s worst political crisis in decades.

Among his priorities, Sanchez mentioned increases in corporate tax, more worker-friendly labour legislation, fighting climate change and gender equality. He pledged to lift the minimum wage to 60 percent of average national wages by the end of the government’s four-year term.

Sanchez is not expected to win the first confidence vote on Sunday, in which he would require an absolute majority of 176 members among all 350 lawmakers in the Spanish parliament. But he aims to win a second vote on Tuesday (7 January) which would only require him to obtain more votes in favour than against.

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Catalan separatists increase majority, dialogue with Madrid in sight

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Separatist parties won enough seats on Sunday in Catalonia’s regional parliament to strengthen their majority, although a strong showing for the local branch of Spain’s ruling Socialists pointed to a dialogue, rather than breakup, with Madrid, write and
Candidates vote in Catalonia regional election

With over 99% of ballots counted, separatists won 50.9% of the vote, surpassing the 50% threshold for the first time. The most likely scenario was for the two main separatist parties to extend their coalition government.

The final outcome is unlikely, however, to lead to any repeat of the chaotic, short-lived declaration of independence from Spain that took place in 2017. Tensions have ebbed and most voters were more concerned about the COVID-19 pandemic than independence.

Low turnout of 53% amid the pandemic, down from 79% in the previous election in 2017, may have favoured separatist parties, whose supporters were more mobilised.

Election monitors swapped face masks for full-body protective suits during the final hour of voting, “the zombie hour”, which was reserved for people with confirmed or suspected COVID-19. Other precautions during the day included temperatures taken on arrival, hand gel and separate entries and exits.

Leftist separatist party Esquerra Republicana de Catalunya (ERC) said it would lead the regional government and seek the support of other parties for a referendum on independence.

“The country starts a new era with (separatists) surpassing 50% of the vote for the first time. ... We have an immense strength to achieve a referendum and the Catalan republic,” said acting regional chief Pere Aragones, who led his party’s slate of candidates.

He urged Spanish Prime Minister Pedro Sanchez to enter into talks to agree on a referendum.

But the fragmented vote, which saw the Socialists win the highest percentage of votes, 23%, and the same number of seats as ERC - 33 in the in the 135-seat assembly - means they will also try to form a government.

Socialist candidate Salvador Illa, who until recently led Spain’s coronavirus response as health minister, argued there was a broad call in Catalonia for reconciliation after years of separatism and said he would try to seek a majority in parliament.

That would require an unlikely alliance, however, with other parties.

The centre-right pro-independence Junts won an estimated 32 seats, while far-left separatist party CUP got nine. Both those parties are considered key to achieving another separatist coalition government.

Spanish nationalist far-right party Vox won 11 seats in Catalonia’s parliament for the first time, ahead of the People’s Party, the main Spanish conservative party, and the centre-right Ciudadanos. Vox is already the third-largest party in Spain’s national parliament.

But with ERC seen getting more lawmakers than Junts this time, that could boost the stability of Spain’s central government.

The result could be seen as good news for Sanchez as his Socialist party won almost double the 17 seats it got in 2017.

ERC has provided key votes to the Socialists in the Spanish parliament in exchange for talks on the Catalan political conflict.

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Commission approves support scheme for energy-intensive companies in Spain

EU Reporter Correspondent

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The European Commission has approved, under EU state aid rules, a Spanish scheme to partially compensate energy-intensive companies for the costs incurred to finance support to (i) renewable energy production in Spain, (ii) high-efficiency cogeneration in Spain, and (iii) power generation in Spanish non-peninsular territories. The scheme, which will apply until 31 December 2022 and will have a provisional annual budget of €91.88 million,  will benefit companies active in Spain in sectors that are particularly energy-intensive (hence with high electricity consumption relative to the value added of production) and more exposed to international trade.

The beneficiaries will obtain compensation for up to a maximum of 85% of their contribution to the financing of support to renewable energy production, high-efficiency cogeneration and power generation in Spain's non-peninsular territories. The Commission assessed the measure under EU state aid rules, in particular, the Guidelines on State Aid for environmental protection and energy 2014-2020, which have been extended until the end of 2021. The Guidelines authorise reductions – up to a certain level – in contributions levied on energy-intensive companies active in certain sectors and exposed to international trade, in order to ensure their global competitiveness.

The Commission found that the compensation will only be granted to energy intensive companies exposed to international trade, in line with the requirements of the Guidelines. The measure will promote the EU energy and climate goals and ensure the global competitiveness of energy-intensive users and industries, without unduly distorting competition. On this basis, the Commission concluded that the measure is in line with EU state aid rules. In connection to this scheme, the Spanish authorities have also notified to the Commission a measure granting guarantees in relation to long-term power purchase agreements concluded by energy-intensive companies for electricity from renewable energy sources, the so-called Reserve Fund to Guarantee Large Electricity Consumers (FERGEI).

This guarantee scheme aims to facilitate the production of energy from renewable sources. The Commission assessed the measure under EU state aid rules, in particular, the 2008 Commission Notice on state aid in the form of guarantees, and concluded that the state guarantee scheme does not constitute aid within the meaning of Article 107(1) TFEU. More information will be available on the Commission's competition website, in the State Aid Register.

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Commission approves €2.55 billion Spanish guarantee scheme to compensate certain self-employed and companies for damages suffered due to coronavirus outbreak

EU Reporter Correspondent

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The European Commission has approved, under EU state aid rules, a €2.55 billion Spanish scheme to compensate certain self-employed and companies, which are following judicial composition agreements, for damages suffered due to coronavirus outbreak. The compensation will take the form of public guarantees for repayable new loans granted by supervised financial institutions, and new notes issued on the Alternative Fixed-Income Market. Under the scheme, around 15,000 self-employed and companies with endorsed composition agreements with creditors following judicial insolvency proceedings will be compensated for damages incurred between 14 March and 20 June 2020.

This period coincides with the period when the Spanish government implemented restrictive measures to limit the spread of the virus. The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union, which enables the Commission to approve state aid measures granted by member states to compensate specific companies or specific sectors for the damages caused by exceptional occurrences, such as the coronavirus outbreak. The Commission found that the Spanish scheme will compensate damages that are directly linked to the coronavirus outbreak restrictions.

It also found that the measure is proportionate, as the envisaged compensation does not exceed what is necessary to make good the damages. The Commission therefore concluded that the scheme is in line with EU state aid rules. More information will be available on the Commission's competition website, in the public case register, under the case number SA.59045.

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