Catalan election weakens bid for independence from Spain

* Catalan separatist parties win majority in regional

parliament

* Main separatist group CiU loses ground as austerity weighs

* Artur Mas may not have mandate to hold independence

referendum

BARCELONA, Spain, Nov 26 (Reuters) - Separatists in Spain's

Catalonia won regional elections on Sunday but failed to get a

resounding mandate for a referendum on independence, which had

threatened to pile political uncertainty on top of Spain's

economic woes.

Catalan President Artur Mas, who has implemented unpopular

spending cuts, had called an early election to test support for

his new drive for independence for Catalonia, a wealthy but

financially troubled region in northeastern Spain.

Voters frustrated with the economic crisis and the Spanish

tax system, which they claim is unfair to Catalonia, handed

almost two-thirds of the 135-seat local parliament to four

different separatist parties that all want to hold a referendum

on secession from Spain.

But they punished the main separatist group, Mas's

Convergence and Union alliance, or CiU, cutting back its seats

to 50 from 62.

That will make it difficult for Mas to lead a united drive

to hold a referendum in defiance of the constitution and the

central government in Madrid.

"Mas clearly made a mistake. He promoted a separatist agenda

and the people have told him they want other people to carry out

his agenda," said Jose Ignacio Torreblanca, head of the European

Council on Foreign Relations' Madrid office.

The result will come as a relief for Spanish Prime Minister

Mariano Rajoy, who is battling a deep recession and 25 percent

unemployment while he struggles to cut high borrowing costs by

convincing investors of Spain's fiscal and political stability.

Mas, surrounded by supporters chanting "independence,

independence", said he would still try to carry out the

referendum but added that, "it is more complex, but there is no

need to give up on the process."

Resurgent Catalan separatism had become a major headache for

Rajoy, threatening to provoke a constitutional crisis over the

legality of a referendum just as he is trying to concentrate on

a possible international bailout for troubled Spain.

Catalonia shares some of its tax revenue with the rest of

Spain and many Catalans believe their economy would prosper if

they could invest more of their taxes at home. The tax issue has

revived a long-dormant secessionist spirit in Catalonia.

Mas had tried to ride the separatist wave after hundreds of

thousands of people demonstrated in the streets in September,

demanding independence for Catalonia, which has its own language

and sees itself as distinct from the rest of Spain.

In a speech to supporters on Sunday night Mas recognised

that he had lost ground and though CiU is still the largest

group in the Catalan parliament, he said he would need the

support of another party to govern and to pass harsh austerity

measures.

"We've fallen well short of the majority we had. We've been

ruling for two years under very tough circumstances," he said.

Catalonia's traditional separatist party, the Republican

Left, or ERC, won the second biggest presence in the Catalan

parliament, with 21 seats. The Socialists took 20 seats. And

Rajoy's centre-right People's Party won 19.

Three other parties, including two that want a referendum on

independence, split the remaining 25 seats. ECFR's Torreblanca

said the Catalan elections were similar to those around Europe

in that economic woes have benefited marginal political groups,

while larger, traditional parties have lost ground.

MAS MADE BIG BET

Mas's bet on separatism may have helped the big winner of

Sunday's election, the Republican Left, which more than doubled

its seats in the Catalan parliament to 21 from 10,

"He talked about it so much that he ended up helping the

only party that has always been for independence, which is the

Republican Left," said political analyst Ismael Crespo at the

Ortega y Gasset research institute.

Mas's CiU had always been a pro-business moderate

nationalist party that fought for more autonomy and

self-governance for Catalonia without breaking away from Spain.

Mas broke with that tradition in September when he made a

big bet on a referendum, tapping into a centuries old Catalan

dream of independence that is rooted in the Middle Ages when

there was a Principality of Catalonia.

Modern day Catalonia, with 7.5 million people, is more

populous than Denmark. Its economy is almost as big as

Portugal's and it generates one fifth of Spanish gross domestic

product.

Since Spain returned to democracy in the 1970s after the

Francisco Franco dictatorship regions like Catalonia and the

Basque Country, which also has its own language, won significant

autonomy.

For several decades the Catalan independence movement had

died down. But it has flared up again in the economic crisis.

The momentum has been inspired in part by Scotland's plans

to hold a referendum in 2014 and by the break away movement in

Flanders. But it could subside as voters contemplate the

economic realities of independence especially if the price to

pay is leaving the European Union.

Wary that separatism could spread to the Basque Country and

beyond, Rajoy said this week that the Catalan election was more

important than general elections.

Home to car factories and banks and the birthplace of

surrealist painter Salvador Dali and architect Antoni Gaudi, the

region also has one of the world's most successful football

clubs, FC Barcelona.

SPENDING CUTS HURT MAS

After a decade of overspending during Spain's real estate

boom, Catalonia and most of the country's other regions are

struggling to pay state workers and meet debt payments.

Mas was one of the first Spanish leaders to embark on harsh

austerity measures after Catalonia's public deficit soared and

the regional government was shunned by debt markets. He has also

had to take billions of euros in bailout funds from the central

government.

Josep Freixas, 37 and unemployed, voted for CiU but

recognised the party had lost seats "because people have been

really affected by the spending cuts and by the crisis."

At CiU headquarters on Sunday night Freixas carried a rolled

up pro-independence flag - a single star against yellow and red

stripes - that has become a symbol of the separatist movement.

Turnout was very high in the election, 68 percent, 10

percentage points higher than in the previous vote two years

ago.

Raquel Correa, a 30-year-old journalist, said she travelled

home from Brussels for the vote. She cast her ballot for

Republican Left, or ERC. "I think people who want independence

voted ERC because they are the real thing. They have fought for

independence for a long time."

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