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The tensions in Catalonia, Spain’s northeastern region, are mounting. The main players in the conflict are aggravating the situation and not backing down.

King Felipe VI, made a televised and closely watched speech on Tuesday. The head of state missed an opportunity to calm things down and unite the country. He did not mention the violence, did not offer warm wishes to those injured and also refrained from a call to a dialog. He blatantly put the blame on the Catalan side and sided with the Spanish government. His speech received negative reactions in Catalonia.

And in Catalonia, President Carles Puigdemont gave an interview to the BBC in which he reiterated that a unilateral declaration of independence is “a matter of days”. Needless to say, such a move makes mediation and negotiations even harder.

The only voice of reason comes from Barcelona Mayor Ada Colau. After showing leadership in the terror attacks in August, the mayor called for dialog but her words did not impact the hardline leaders. Spain’s main opposition leader Pedro Sanchez could have put pressure on Mariano Rajoy’s minority government, but his words were lukewarm, to say the least.

On Sunday, around 2.26 million Catalans went to vote in a referendum deemed illegal by the Spanish constitutional court. The reinforced Spanish police and the paramilitary Guardia Civil used force to prevent some voters from casting their votes in a chaotic day.

EUR/USD opened the week lower but then recovered, while Spanish stocks are falling. A further deterioration could already send ripples outside the Spain, the eurozone’s fourth-largest economy.

More:  Catalan Independence Referendum – My Thoughts