The Catalan crisis was sparked by a disputed referendum held in the region in October, which had been barred by the Spanish courts.
According to Catalan officials, the independence campaign won 92% of the vote, from a turnout of 43%. Many of those who were against independence did not cast votes, refusing to recognize the legitimacy of the referendum.
Spain’s government responded to the referendum by dissolving the Catalan parliament, imposing direct rule, and calling a snap regional election on December 21.
Since the crackdown by Madrid, Catalonia’s sacked President Carles Puigdemont has gone into self-imposed exile in Belgium, and his top allies have been prosecuted.
The crisis began on October 1, when Catalan leaders held an independence referendum, defying a ruling by the Constitutional Court which had declared it illegal.
According to the Catalan government, of the 43% of potential voters who took part, 90% were in favor of independence. Others boycotted the vote after the court ruling.
On October 27, the Catalan regional parliament voted to declare independence from Spain.
Soon after, the Spanish Senate granted Mariano Rajoy’s government the power to impose direct rule on Catalonia.
It did so on October 28 by publishing an official bulletin that dismissed Carles Puigdemont and all government members.
The announcement came hours after Spain’s government removed Josep Lluís Trapero Álvarez as chief of Catalonia’s autonomous Mossos police force.
Josep Lluís Trapero Álvarez was already under investigation for sedition, accused of failing to help Spain’s Guardia Civil police tackle thousands of pro-independence protesters in Barcelona during the run-up to the referendum.
Pere Soler i Campins, the Mossos director general, has also been dismissed.
Regional elections are scheduled for December 21.
Carles Puigdemont has urged supporters to “maintain the momentum” in a peaceful manner, but Spanish prosecutors say they will file charges of “rebellion” against him next week.
Separatists say the independence move means they no longer fall under Spanish jurisdiction.
However, Spain’s Constitutional Court is likely to declare it illegal, while the EU, the US, the UK, Germany and France all expressed support for Spanish unity.
Spanish law dictates that elections must be held within six months of Article 155 being triggered, but the prime minister said it was imperative that the vote be held much sooner.
Catalonia’s regional government held a referendum to ask residents of the region if they wanted to break away from Spain.
Of the 43% of Catalans said to have taken part, 90% voted in favor of independence. However, many anti-independence supporters boycotted the ballot, arguing it was not valid.
Carles Puigdemont and other regional leaders then signed a declaration of independence, but immediately suspended it in order to allow for talks.
He then defied two deadlines set by the national government to clarify Catalonia’s position, and the government announced it would pursue Article 155.
Article 155 of the Spanish constitution allows the national government to impose direct rule over Spain’s semi-autonomous regions in the event of a crisis. It has never before been invoked in democratic Spain.
The article says that if a region’s government “acts in a way that seriously threatens the general interest of Spain”, Madrid can “take necessary measures to oblige it forcibly to comply”.
Catalonia currently enjoys significant autonomy from Spain, including control over its own policing, education and healthcare.
Mariano Rajoy’s conservative Popular Party (PP) holds a majority in the Senate, meaning the proposals are likely to pass.
Catalonia accounts for about a fifth of Spain’s economic output, and supporters of independence say the region contributes too much to the national economy.
Opponents argue that Catalonia is stronger as a part of Spain, and that breaking away would lead to economic disaster for the country as a whole.
Nearly 1,200 companies based in Catalonia have re-registered in other parts of Spain since the referendum, hoping to minimize instability, according to the AFP.
This week, Spain cut its national growth forecast for 2018 from 2.6% to 2.3%, blaming uncertainty over the future of Catalan independence.
Spanish voters are going back to polls after the country’s four main parties failed to break the political deadlock from December’s inconclusive general election.
More than 36 million of voters are called on to cast their ballot.
Opinion polls have suggested that June 26 election may still not overcome the stalemate.
Spain’s conservative Popular Party (PP) is tipped to win, but to fall short of a parliamentary majority.
Polls indicate the left-wing Unidos Podemos (United We Can) alliance is edging ahead of the Socialists (PSOE) for second place.
The two could potentially form a broad left-wing coalition.
The center-right, pro-business party Ciudadanos (Citizens) is forecast to take fourth place.
Analysts say many voters are disillusioned and a high turnout is not expected.
December’s election was a watershed for Spain, because the PP and the PSOE had previously alternated in power since the restoration of democracy in the 1970s.
Unidos Podemos and other leftists argue that the PP, under acting PM Mariano Rajoy, has been discredited because of austerity and the chronic unemployment that has plagued Spain since the 2008 financial crisis.
The PP, however, says the country’s improved economic performance is proof that its policies have worked.
PM Mariano Rajoy said it was “important to convey a message of institutional and economic stability”.
Meanwhile, Unidos Podemos leader Pablo Iglesias said Europe had to “change course”, adding: “No-one would want to leave Europe if it were fair and united.”
Polls open at 07:00 GMT and close at 18:00 GMT with results expected two to three hours later.
Spain faces political uncertainty after new movements Podemos and Ciudadanos won nearly a third of the seats in the country’s election.
Anti-austerity Podemos and liberal Ciudadanos made big gains as the conservative Popular Party (PP) lost its majority.
“Spain is not going to be the same anymore and we are very happy,” said Podemos leader Pablo Iglesias.
The PP and the Socialists had alternated running the government for more than three decades.
The parties must now embark on negotiations to form a coalition.
The PP had 28.72% of the vote, the Socialists 22.01%, Podemos 20.66% and Ciudadanos 13.93%.
PP leader Mariano Rajoy said he would try form a government, insisting: “This party is still the number one force in Spain.”
However, Mariano Rajoy admitted that his party had taken some “difficult and even unpopular decisions” over the past four years as Spain struggled through an economic crisis.
Socialist leader Pedro Sanchez said his party was ready to start negotiations.
“Spain wants a move to the left,” he said.
Many Spaniards are poorer now than they were at the time of the last election, fuelling the rise of Podemos.
Spain’s unemployment remains high at 21%, the second-highest rate in the EU after Greece, although it has fallen from its 2013 peak of 27%.
The economy, corruption allegations and a separatist drive in the prosperous north-eastern region of Catalonia were all dominant issues in the election.
Podemos claimed it won more votes than any other party in Catalonia and the Basque region and came second in Madrid.
“Many people have lost their confidence in traditional parties,” said deputy leader Inigo Errejon.
“The two-party system has ended.”
Podemos’s rise was also hailed by Greek PM Alexis Tspiras, whose Syriza party is its ally.
“Austerity has been politically defeated in Spain,” said Alexis Tsipras, adding that the result was a sign that “Europe is changing”.
Albert Rivera, leader of the fourth-placed party Ciudadanos, meanwhile said the election marked a new era for young Spaniards like him, who were born after the country’s dictatorship ended in 1975.
“Those of us who didn’t experience the first democratic transition are experiencing a second one,” he said.
Election turnout was 73.2% – up slightly compared to the 2011 election.
In line with Spain’s constitution, after talking to each party, King Felipe VI will nominate a candidate for prime minister. This cannot take place until after the new Congress holds its inaugural meeting on January 13.
The nominee must then win a vote of confidence in parliament. If this fails, another candidate can be nominated and seek parliamentary approval.
If no administration can be formed within two months of the election, another must be held.
Spanish voters are to go to the polls in a landmark election that will see more than two parties compete for power for the first time in decades.
Newcomers Podemos, an anti-austerity party, and Citizens, a liberal party, are challenging the ruling Popular Party (PP) and the Socialists.
Opinion polls have put PM Mariano Rajoy’s PP narrowly ahead.
While he has been in power, Spain has emerged from a financial crisis into a period of economic growth.
The conservative PP currently has a majority in Spain’s lower house of parliament.
Podemos and Citizens are fielding national candidates for the first time.
Both Podemos and Citizens look set to take a take a large chunk of the vote, ending the power monopoly of Spain’s traditional heavyweights.
It is almost certain that no party will get a majority of lawmakers in the parliament meaning some form of coalition will have to be agreed before a government can be formed.
Spanish politics have been dominated by the economy, corruption allegations and a separatist drive in the prosperous northeastern region of Catalonia.
Mariano Rajoy’s administration adopted unpopular austerity measures and job reforms that have been credited with returning the Spanish economy to growth.
Pablo Iglesias, 37, university lecturer, leader of new anti-capitalist party Podemos. Sound-bite: “The problem isn’t Greece, the problem is Europe. Germany and the IMF are destroying the political project of Europe.”
Pedro Sanchez, 43, academic, leader of established Socialist party (PSOE). Sound-bite: “The head of the government, Mariano Rajoy, has to be a decent person, and you are not.”
Albert Rivera, 36, lawyer and former competitive swimmer, leader of new Citizens (Ciudadanos) party. Sound-bite: “They [Podemos] blame the system – we blame the people who have corrupted the system.”
Mariano Rajoy, 60, current prime minister and leader of established, conservative Popular Party. Sound-bite: “Who today is talking about bailout Spain? No-one.”
However, unemployment remains high at 21%, the second-highest rate in the EU after Greece, although it has fallen from its 2013 peak of 27%.
The PP has also been damaged by corruption scandals.
The central government in Madrid has also had to contend with an attempt by Catalonia to breal away from the rest of Spain.
Pro-independence parties in Catalonia won an absolute majority in regional elections in September and a month later passed a motion to begin the process of declaring independence.
Spain’s Constitutional Court has revoked that motion, but Catalonia’s leaders said they would ignore it.
Mariano Rajoy has vowed to quash the threat to Spanish unity, but other parties favor negotiations to devolve more power to the region, which accounts for about a fifth of Spain’s economic output.
Ahead of the vote, the party leaders made a point of relaxing as they observed a “day of reflection”.
Mariano Rajoy said he wanted some fresh air and went for a jog around the official prime minister’s residence.
However his campaign was marred last week after a teenager punched him in the face during a visit to the town of Pontevedra in the northwest.
Mariano Rajoy has also raised questions about his future by including his deputy, Soraya Saenz de Santamaria, on campaign posters and fielding her in his place during a leaders TV debate.
Meanwhile Socialist leader Pedro Sanchez, a 43-year-old former basketball player, watched his daughters play basketball match and Pablo Iglesias booked a ticket for the new Star Wars movie.
Polling stations open at 9AM and close at 8PM. Exit polls are expected minutes afterwards and complete results are due two days later.
Spain’s government is to challenge in the Constitutional Court a motion passed in the Catalan parliament backing the region’s independence.
PM Mariano Rajoy said he would not allow the secessionists to achieve their aim.
“They want an end to democracy,” he said.
Mariano Rajoy said Catalan vote on November 9 was a “clear violation” of the constitution.
The motion called on the regional parliament to aim for independence within 18 months.
It gives the assembly 30 days to start legislation on a Catalan constitution, treasury and social security system.
Catalan nationalist parties secured a majority of seats in September elections but fell short of winning half the vote. They had said before the vote that they considered it a de facto referendum on independence from Spain.
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Spain’s state prosecutor had called on the Constitutional Court on November 11 to suspend the Catalan resolution immediately, the prime minister said after an emergency cabinet meeting.
Opinion polls suggest a majority of Catalans favor a referendum on independence, but are evenly divided over whether to secede.
The Constitutional Court, which was due to hear the government’s appeal on November 11, is expected to rule against the Catalan motion.
However, the pro-secession parties had fully expected the motion to be declared illegal and as part of the motion argued that the court lacked legitimacy.
Two big separatist parties make up the “Together for Yes” (“Junts pel Si”) coalition but they needed the help of the far-left CUP (Popular Unity) party to secure an absolute majority in the Catalan parliament.
Catalonia’s acting president Artur Mas, who has spearheaded the drive for secession, has been trying to win re-election but has failed to secure the approval of the far-left party.
The CUP has called for another Together for Yes candidate, Raul Romeva, to take over the leadership role.
Several parties oppose secession in Catalonia, including the Catalan Socialists and Citizens (Ciudadanos), a center-right party which was born in the wealthy north-eastern region but has attracted increasing popularity across Spain.
Its leader, Albert Rivera, said earlier this week: “To those Catalans who want independence: the solution is not to break up the country, it is to reform it.”
Catalonia’s planned independence referendum has been suspended by Spain’s Constitutional Court.
Spain’s Constitutional Court said it first needed to consider arguments whether the November 9 vote breached the country’s constitution.
It acted on a request from the Spanish central government in Madrid.
Catalonia leader Artur Mas signed a decree on September 27 calling for the referendum.
However, Spanish PM Mariano Rajoy told reporters that the vote was not “compatible with the Spanish constitution”.
“Nobody and nothing will be allowed to break up Spain.”
Mariano Rajoy was speaking in a televised statement to the nation after holding an emergency cabinet meeting.
Catalonia’s planned independence referendum has been suspended by Spain’s Constitutional Court
Hundreds of thousands of Catalans joined a protest in Barcelona recently, calling for their right to vote.
Unhappy at Spain’s refusal to give Catalans more powers, protesters have been energized by Scotland’s recent independence referendum and many also waved the Scottish flag.
Catalonia’s 7.5 million inhabitants make up approximately 16 % of the population of Spain. Yet it is one of Spain’s richest and most highly industrialized regions, as well as one of its most independent-minded.
Spain’s deepening economic crisis, though, has seen a surge in support for separation.
A recent poll for Spain’s El Pais newspaper showed that 45% of Catalans were in favor of suspending the referendum if the Constitutional Court declared it illegal.
Only 23% would like the referendum to go ahead regardless, the survey suggested.
Artur Mas has only recently become a supporter of full independence. Since 2007, he has spearheaded a push to revitalize Catalan nationalism known as the Refoundation of Catalanism.
Spanish PM Mariano Rajoy has admitted to MPs that he made a “mistake” in trusting disgraced former colleague Luis Barcenas.
Mariano Rajoy also told MPs that claims he was corrupt were “lies and manipulations”, and defied calls for his resignation.
He is appearing in parliament to answer claims over illegal payments from a slush fund run by the Popular Party’s ex-treasurer, Luis Barcenas.
The claims sparked widespread anger and anti-government protests.
Revelations of apparent corruption have touched a nerve in Spain, hit by a double-dip recession and high unemployment.
Clashes erupted between anti-government protesters and police in mid-July after more than 1,000 people gathered outside the Partido Popular (Popular Party, PP) headquarters calling on the government to quit.
Mariano Rajoy appeared before MPs after threats of a no-confidence vote.
In opening remarks, he said he was appearing to rebuff the “lies, manipulations and malicious insinuations encouraged by certain political leaders” over the scandal.
Mariano Rajoy suggested that the Spanish economy was beginning to recover from years of crisis, and expressed concern that a continued focus on the scandal was damaging Spain’s image.
For the first time, he admitted making a mistake by putting trust “in someone who we now know did not deserve it”. But he denied “committing the criminal offence of covering up for someone who is alleged to be guilty”.
Mariano Rajoy has admitted to MPs that he made a “mistake” in trusting disgraced former colleague Luis Barcenas
Luis Barcenas is in custody while being investigated over other corruption allegations.
Mariano Rajoy repeated that he would not resign, and concluded by saying a package of measures would be implemented to strengthen anti-corruption safeguards.
In response, the leader of the country’s main opposition Socialist Party, Alfredo Perez Rubalcaba, said Mariano Rajoy was not in the chamber to debate the state of the Spanish economy.
He said it was Mariano Rajoy’s “resistance” to answering parliament that was causing damage to Spain, and said the PP had won elections over 20 years on the back of a system of illegal financing.
Even if Mariano Rajoy did not respect parliament, he said, “he should respect the intelligence of Spaniards”.
“You must go, Mr. Rajoy,” he said.
Each parliamentary group will have 10 minutes to ask questions and set out its own position, with individual deputies also allowed to put a limited number of questions.
On Wednesday, the deputy leader of the opposition Socialists, Elena Valenciano, said her party’s aim was “two-fold – that the prime minister tell the truth and that he quit his post.
“If we don’t get that [on Thursday], we will keep insisting and fighting for it.”
The scandal originated in a 2009 judicial investigation into corrupt payments involving PP members.
In January this year, El Pais newspaper published an alleged list of illegal payments within the party.
The list was signed off by Luis Barcenas, who is currently in custody on corruption and tax fraud charges, with his role in the scandal still being investigated.
He originally denied allegations that he wrote documents, but later admitted they were in his handwriting.
The former party treasurer now says he made numerous bonus payments – in cash – to Mariano Rajoy and other senior party members, out of the party slush fund of donations by businesses.
Mariano Rajoy and other PP members have repeatedly denied that they received illegal payments and have accused Luis Barcenas of trying to blackmail them.
The PP’s deputy leader, Maria Dolores de Cospedal, has been summoned to appear before investigating judge Pablo Ruz on August 14.
Calls for Mariano Rajoy to resign intensified after private text messages published by El Mundo newspaper suggested that he had friendly ties to Luis Barcenas from May 2011 to March 2013.
Mariano Rajoy admitted sending messages of support to Luis Barcenas.
However, throughout the scandal, Mariano Rajoy has at no point given any indication he would resign.
The PP was handed a clear mandate by Spanish voters at the end of 2011 and as a result Mariano Rajoy and his party enjoy a clear majority in parliament.
The corruption allegations coincide with Spain’s worst economic crisis for decades, and have threatened to destabilize government attempts to shore up public finances and bring the recession to an end.
Francisco Jose Garzon Amo, the driver of Spanish train that derailed near Santiago de Compostela killing 78 people, has been accused of “reckless manslaughter”, Interior Minister Jorge Fernandez Diaz has said.
Jorge Fernandez Diaz said Francisco Jose Garzon Amo, who was slightly hurt in Wednesday’s accident, had been taken to a police station.
Francisco Jose Garzon Amo is suspected of driving too fast on a bend. Reports say the train was travelling at more than double the speed limit at the time of the crash.
The 52-year-old driver has refused to answer questions.
At least 130 people were taken to hospital after the accident near the north-western city of Santiago de Compostela.
Thirty-two people were seriously injured, including children.
People from several nationalities were among the wounded, including five Americans and one Briton. One American was among the dead.
Prime Minister Mariano Rajoy, who hails from the city of the crash, declared three days of official mourning on Thursday.
A judge was due to interview Francisco Jose Garzon Amo on Sunday, the interior minister said.
Spanish train driver Francisco Jose Garzon Amo has been accused of reckless manslaughter
“He has been detained for the alleged crimes of reckless manslaughter,” Jorge Fernandez Diaz said.
“There are reasonable grounds to consider that he may have been responsible for what happened, which must be established by a judge and the investigation.”
The driver had been under police surveillance in hospital since the accident but he was discharged on Saturday and taken to a police station.
Police said Francisco Jose Garzon Amo had refused to answer their questions while he was in medical care.
State rail operator Renfe said the train came off the tracks about 3 or 4 km (2-2.5 miles) from Santiago de Compostela station at 20:41 local time on Wednesday.
The accident occurred on the express route between the capital, Madrid, and the port city of Ferrol on the Galician coast, with 218 passengers on board and four crew.
Footage captured by a security camera shows the train crashing as it hurtled round a bend.
The train’s data recording “black box” is with the judge in charge of the investigation.
It is unclear whether anyone else is subject to investigation.
Renfe president Julio Gomez Pomar was quoted by El Mundo newspaper as saying the driver had 30 years of experience with the company and had been operating trains on the line for more than a year.
Gomez Pomar said the train had no technical problems.
The derailment happened on the eve of Santiago de Compostela’s main annual festival where thousands of Christian pilgrims were expected to flock to the city in honor of St James.
The local tourism board cancelled all festivities as the city went into mourning.
According to official figures, the crash is one of the worst rail disasters in Spanish history.
Spanish PM Mariano Rajoy is facing renewed calls to resign after El Mundo newspaper published text messages allegedly linking him to Luis Barcenas, the man at the centre of a secret payments scandal.
The El Mundo report said Mariano Rajoy sent words of support to Luis Barcenas, former treasurer of the governing Popular Party (PP).
Lui Barcenas is in custody facing trial for corruption and tax fraud. He denies the allegations.
Mariano Rajoy, too, denies any wrongdoing.
The PP’s former treasurer was due to appear before a judge on Monday, a week after he admitted for the first time that handwriting in a ledger detailing payments belonged to him.
A series of newspaper allegations that Mariano Rajoy and other top politicians received illicit payments has enraged a country in the depths of recession and record unemployment.
It is claimed that Luis Barcenas ran a PP slush fund that took donations from construction magnates and distributed them to party leaders in cash.
PM Mariano Rajoy is facing renewed calls to resign after El Mundo newspaper published text messages allegedly linking him to Luis Barcenas
El Mundo newspaper said last week it had delivered documents with Luis Barcenas’s original ledger entries to the High Court.
Another Spanish paper, El Pais, published similar documents earlier this year.
The leader of the country’s main opposition Socialist Party, Alfredo Perez Rubalcaba, called for Mariano Rajoy’s immediate resignation on Sunday “given the unsustainable political situation in Spain”.
“Mr. Rajoy’s conduct in this situation can be summarized quite simply: silence, lies, and after what we have learned today, collusion, extremely serious collusion,” Alfredo Perez Rubalcaba said.
El Mundo‘s most recent report includes a text message Mariano Rajoy apparently sent to Luis Barcenas in January this year – when the slush fund allegations broke.
He said: “Luis, I understand. Stay strong. I’ll call you tomorrow. A hug.”
The paper said the conversations showed Mariano Rajoy maintained “direct and permanent contact” from at least May 2011 to March 2013.
Luis Barcenas is being investigated over allegations he stashed up to 48 million euros in secret Swiss bank accounts. Prosecutors allege that some of the funds stem from illegal party donations or kickbacks.
He and his wife are also suspected of falsifying documents on their tax statements between 2002 and 2006.
Luis Barcenas and his wife deny the charges.
In June, a judge ordered Luis Barcenas to be held in jail until his trial starts after prosecutors argued that he was a flight risk.
Spanish newspaper El Mundo has published what it alleges are documents showing PM Mariano Rajoy and other top politicians received illicit payments.
El Mundo said it had original ledger entries handwritten by the former treasurer of the governing Popular Party (PP), Luis Barcenas.
It said it had delivered the documents to the High Court.
Mariano Rajoy and other PP members have repeatedly denied that they received illegal payments.
Another Spanish paper, El Pais, published similar documents earlier this year.
It is claimed that Luis Barcenas ran a PP slush fund that took donations from construction magnates and distributed them to party leaders in cash.
Luis Barcenas is in custody facing trial for corruption and tax fraud. He denies the allegations.
El Mundo has published what it alleges are documents showing PM Mariano Rajoy and other top politicians received illicit payments
However, in an interview published in El Mundo on Sunday, Luis Barcenas for the first time admitted that the handwriting in the ledger was his.
Luis Barcenas added that the photocopies originally published by El Pais were a fraction of the documents he had in his possession.
El Mundo said the documents it had seen showed that Mariano Rajoy received payments in 1997, 1998 and 1999 when he was a minister in the government of Jose Maria Aznar.
They included, it said, two payments to Mariano Rajoy of 2.1 million pesetas (12,600 euros; $16,000) in 1998.
The alleged payments are said to have been undeclared and untaxed.
Spanish opposition leader Alfredo Perez Rubalcaba in February called on Mariano Rajoy to resign over the allegations.
“The Luis Barcenas originals published by El Mundo today pulverize the alibi used until now by the PP to deny the authenticity of its ex-treasurer’s papers,” the newspaper wrote.
The PP responded with a statement saying: “The Popular Party reiterates that it does not know of the notes nor their content, and it does not in any way recognize them as the accounts of this political organization.”
The allegations have caused anger among Spaniards already suffering a deep and long recession and biting austerity cuts.
Prime Minister Mariano Rajoy has strongly denied Spanish media claims that he and other members of the governing Popular Party received secret payments.
“I have never received nor distributed undeclared money,” Mariano Rajoy said, stressing that he would not resign.
El Pais newspaper published photographs of ledgers showing payments to Popular Party figures on Thursday.
It said Mariano Rajoy had collected 25,200 euros ($34,000) a year between 1997 and 2008.
Mariano Rajoy and his party were elected by a landslide in November 2011 on a promise to reduce the high public deficit.
Addressing the PP national executive meeting in an extraordinary session to discuss the El Pais allegations in Madrid, Mariano Rajoy said: “It is not true that we received cash that we hid from tax officials.”
He added he would publish on the party’s website full details of his income and assets.
PM Mariano Rajoy has strongly denied Spanish media claims that he and other members of the governing Popular Party received secret payments
As Mariano Rajoy spoke, several hundred demonstrators gathered outside the party headquarters shouting “thieves” and “resign”.
El Pais said the photographs it had published were of ledgers kept by former treasurers Luis Barcenas and Alvaro Lapuerta between 1990 and 2009.
Money was allegedly paid by firms via Luis Barcenas, who stepped down in 2009 and is currently under investigation for money-laundering.
Investigators recently revealed that Luis Barcenas held a Swiss bank account which at one point held as much as 22 million euros ($30 million).
Until 2007, Spanish political parties were allowed to receive anonymous donations.
Spaniards have been asked to accept painful austerity measures as the government battles to avoid an international bailout. Meanwhile, the unemployment rate has reached a record 26%.
The allegations raise ethical questions about the Popular Party’s dealings during the period of Spain’s building boom, when politicians granted large numbers of development contracts.
The party has denied making any “systematic payment to certain people of money other than their monthly wages”.
Spain will set out today its austerity budget for 2013, against a backdrop of a deteriorating economy and 25% unemployment rate.
Madrid is expected to outline 39 billion euros ($50 billion) worth of savings, tax rises, and structural reforms.
It comes amid further protests this week, and growing expectations that Spain will seek a bailout from its eurozone partners.
On Friday, results of a stress test on Spain’s banks are due to be released.
The Spanish stock exchange’s Ibex index held steady in morning trading on Thursday, having lost 3.9% the previous day.
Other European stock markets experienced modest rebounds of about 0.5%.
Spain will set out today its austerity budget for 2013
Stocks fell sharply on Wednesday, as markets were rattled by violent protests in Madrid and Athens, as well as a statement from the Spanish central bank that the country’s economy had continued to shrink in the third quarter of the year.
However, the more optimistic sentiment was boosted on Thursday when the Greek finance minister, Yannis Stournaras, said that a “basic agreement” had been reached with lenders on the austerity measures required for the release of Greece’s next tranche of bailout money.
On the bond markets, the Spanish government’s long-term cost of borrowing stabilized in early trading, at an implied interest rate of just over 6% for 10-year debt.
The 10-year rate had risen by a quarter percentage point on Wednesday, as lenders’ fears over the government’s ability to repay its debts, or stay within the euro, resurfaced.
However, it seems investors are losing patience.
Spain will hope that Thursday’s austerity measures will mean fewer economic conditions if it asks for a second bailout.
Prime Minister Mariano Rajoy fuelled expectations that Spain would ask for a bailout when he told the Wall Street Journal on Wednesday that if borrowing costs were “too high for too long”, then “I can assure you 100% that I would ask for this bailout”.
The economic situation remains grim, with comments from the central bank on Wednesday indicating that the country’s recession deepened in the last three months.
“Available data for the third quarter of the year suggest output continued to fall at a significant pace, in an environment in which financial tension remained at very high levels,” the Bank of Spain said in a monthly report.
Last week, Spain’s second biggest bank, BBVA, estimated that up to another 60 billion euros ($78 billion) will be needed to bail out the banking sector.
About 20 billion euros has already been allocated to troubled banks.
Spain, the eurozone’s fourth largest economy, fell back into recession in the last quarter of 2011, the second recession since the bursting of the country’s property bubble.
But with a shrinking economy and unrest in the country, reducing the deficit via further austerity measures may prove a difficult task for the government.
The government has predicted a budget deficit this year of about 6.3%, but many analysts estimate it will be nearer 7% or higher.
The basic outline for the budget has been known since July, but not exactly where the cuts and savings will come from.
There has been speculation that the budget could include such measures as taxes on shares transactions, “green taxes” on emissions or eliminating tax breaks, and even possibly ending inflation-linked pensions.
Madrid has already said that it wants to claw back a total of more than 150 billion euros between 2012 and 2014: 62 billion euros this year, 39 billion euros in 2013, and 50 billion euros in 2014.
But many analysts remain skeptical that this will be enough to resolve Spain’s economic woes.
Despite the public anger, PM Mariano Rajoy said sacrifices were necessary.
“We know what we have to do, and since we know it, we’re doing it,” he said in a speech in New York.
“We also know this entails a lot of sacrifices distributed… evenly throughout the Spanish society,” he said.
But Boris Schlossberg, managing director at New York-based BK Asset, said: “Spain is in a vicious cycle, because austerity is hurting economic activity and revenues, which causes greater fiscal gaps.”
“People are starting to realize this, and the political will to absorb these sacrifices is diminishing by the hour,” he said.
Spanish region of Catalonia has asked for a bailout of 5 billion euros ($6.3 billion) from the central government.
This summer, an 18 billion-euro public fund was set up by Madrid to aid its 17 autonomous regions, which are in deep debt.
Catalonia represents one-fifth of the Spanish economy.
It comes as official figures showed that Spain’s economy contracted further in the second quarter.
The economy shrunk by 0.4% between April and June after a 0.3% drop in the previous three months, the Instituto Nacional de Estadistica said.
Spanish region of Catalonia has asked for a bailout of 5 billion euros from the central government
The nation’s struggling economy has now declined for three straight quarters. On an annual basis, Spain’s economy contracted by 1.3% in the second quarter.
Speculation has persisted that the country will have to request a full financial rescue.
In June, Spain requested 100 billion euros ($122 billion) of loans from the eurozone’s bailout fund to help support its banks, which are struggling with bad debts from loans made in the property sector.
Despite this, the official figures show that Spain grew during 2011 as a whole despite earlier statements that it had shrunk for the year. But the economy contracted in 2010 more than had been stated.
The European Central Bank has said it will come up with ways to help eurozone countries, leading to raised hopes that it will buy Spanish debt to push down the cost of borrowing.
Prime Minister Mariano Rajoy has said he will do “what was best for the Spanish people” and is considering all options regarding a bailout, which has helped calm markets.
On Tuesday, the interest that Spain pays to borrow for three months fell to 0.946%, from 2.434% at a similar auction in July. Six-month debt dropped to 2.026%, from 3.691%, at the sale.
But the rate of interest Spain pays on longer-term borrowing has remained high because of investor concerns, making it difficult for the nation to service its debts.
Last month, Madrid announced additional spending cuts and tax rises worth 65 billion euros.
Meanwhile, the so-called troika – the International Monetary Fund, the ECB and the European Commission – are in Lisbon to monitor the progress that Portugal is making on its commitments under its bailout.
Last week, official figures indicated that the government would probably miss its target of deficit target unless it found ways to tighten the budget further.
This comes after the troika visited Greece last week.
Greece’s continued access to the bailout packages depends on a favorable report from the troika.
Athens is trying to finalize a package of 11.5 billion euros of spending cuts over the next two years to qualify for the next 33.5 billion-euro installment of its second 130 billion-euro bailout.
Spanish coal miners came to march in Madrid with helmets on their heads and the worried look of men with no future on their faces.
But they were clear that they would not give up on their life-or-death struggle for the future of their collieries.
“We’ll keep going and, if nothing happen, the fight will just get harder,” said Jórge Exposito, a helmeted miner from Mieres, northern Spain, as fireworks crackled and twitchy riot police stood by with shields and guns loaded with rubber bullets.
A tense standoff saw occasional police charges, rubber bullets and demonstrators hurling objects at police. At least 76 people were injured in clashes along Madrid’s central Castellana Boulevard, but the march on Madrid eventually ended with nothing more violent than a rousing sing-song.
The miners had brought with them the dust of Castile, the sun-baked central region of Spain that 200 of them had walked through on their 400 km, three-week march to reach the capital. Many had wept when they were greeted by crowds of supporters in Madrid.
Spanish coal miners came to march in Madrid with helmets on their heads and the worried look of men with no future on their faces
Thousands more came in buses that made the long trip from the northern regions of Asturias and Leon or the collieries of eastern Aragon and southern Puertollano.
Industry minister José Manuel Soria declined to meet the protesters and the ministry itself was protected with temporary fencing.
The miners had arrived in the hope that the centre-right government of Mariano Rajoy could be persuaded to return to a programme of subsidies to mining companies that has been dramatically chopped by 60% this year.
Instead, the prime minister devoted the morning to announcing a further austerity package to save the government €65 billion over the next two and a half years.
“All we are asking for is that they stick to the agreement,” said Isidro Castro, a former miner from the northern region of Leon.
“That is not so difficult.
“If the mining companies don’t get their subsidies this year, then there will be nothing to negotiate next year as they will have to close,” he said.
Celestino Duran, a miner from the Sant Lucía de Gordón coalfield, said: “Now they can see the support that we have, then maybe they will change.
“If the mine closes then the whole community will disappear. We saw that happen in the neighboring colliery at Cistierna. They closed it and a community of 2,000 people now has just 150 inhabitants.”
With Spanish unemployment at 24%, few miners believe they can find jobs elsewhere.
“I have two children. They are already taking away grants for school and university,” said Celestino Duran.
“If there are no jobs in the mine, what future will they have?”
Angelita Arias, from Santa Lucia de Gordon, said: “The trouble is that everyone depends on the mine and if it closes then the town dies. My daughter used to work for the regional television station, but she was laid off. Now she has opened a bar, but, if the mine closes, she will have to close that, too.”
Tens of thousands of people turned out on Tuesday night to greet the miners who, with their helmet lanterns ablaze, strode into the city’s central Puerta del Sol, famous as the centre of Spain’s indignado protest movement.
Now many see the miners as in the vanguard of the fight against austerity measures which were made still more drastic on Wednesday and threaten to deepen a double-dip recession.
But the government argues that Spain’s coal mines are making losses and European Union rules do not allow it to subsidize them much longer.
“We think they should keep the mines running because who knows what might happen to the supplies from other countries?” said Jorge Exposito.
“If they suddenly dry up, for whatever reason, Spain will need its own stock of coal.
“Mining is all we know. My wife, for example, is the daughter, granddaughter, sister, sister-in-law and wife of miners.”
But the chances that their children would also be miners are slim.
Spain’s Prime Minister Mariano Rajoy has begun addressing parliament, setting out a new raft of austerity measures aimed at balancing the budget.
His speech comes as hundreds of Spanish miners arrived in Madrid to protest against government cuts to subsidies.
Mariano Rajoy is expected to unveil a rise in VAT as well as cuts to social security and unemployment benefits.
The measures are in return for a eurozone bank bailout and an extension to Spain’s deficit reduction targets.
Eurozone finance ministers have agreed to provide 30 billion Euros for Spain’s troubled banks by the end of the month and to give Madrid an extra year – until 2014 – to hit its budget targets.
Mariano Rajoy told parliament that the measures he was announcing had to be adopted without delay.
Spain’s Prime Minister Mariano Rajoy has begun addressing parliament, setting out a new raft of austerity measures aimed at balancing the budget
“The excesses of the past are being paid for right now,” he said, adding that Spaniards had never before experienced such a recession.
Without a cut in Spain’s budget deficit, public services would be put at risk.
The door had been opened to a new EU model, he said, and the summit agreements had committed everyone equally.
Analysts say European leaders want to see a credible Spanish plan for viability and deficit reduction.
Mariano Rajoy warned on Saturday that further austerity was on its way, in a country with unemployment running at more than 24% and rising street protests over drastic spending cuts.
On Monday, budget minister Cristobal Montoro warned of an impending VAT rise, telling a business forum: “If VAT was paid by more of those who are supposed to pay, it would not have to be raised by so much.”
Most of the miners arriving in Madrid late on Tuesday had walked hundreds of miles since 22 June from northern Spain where protests outside coal mines have resulted in clashes with police.
They were greeted by thousands of supporters as they marched on Gran Via in the centre of the Spanish capital.
A second mass rally of miners is due to take place on Wednesday and unions hope it will draw at least 25,000 people.
The miners are angry at plans to slash coal industry subsidies from 301 million Euros last year to 111 million Euros this year.
Unions say the cuts threaten 30,000 jobs and could destroy their industry.
The Spanish government argues that it pays disproportionately high subsidies to a small and unprofitable part of the economy.
Overnight the miners streamed down Madrid’s streets with their helmet lamps shining in the dark.
Crowds lined the streets, chanting support.
“We didn’t expect such a big welcome,” said Roberto Quintas, a miner of 22 years from Villablino near Leon.
“The fact that people are coming into the street and mobilising is a good sign.”
Manuel Cinoceda, a retired miner from the Aragon region, added: “The fight is for something just, we are just coming to claim what is ours.”
Spain’s 30 billion-euro bank bailout will be the first installment of a package worth up to 100 billion Euros agreed in June.
Eurozone ministers must get approval from their own parliaments and hope to make the payment by the end of July.
Eurozone finance ministers have decided to lend Spain 30 billion Euros ($37 billion) this month to help its troubled banks.
It will be the first installment of a bailout of up to 100 billion Euros, which was agreed in June.
The ministers will need to get approval from their own parliaments and hope to make the payment by the end of July.
The eurozone finance ministers also agreed to extend the 2013 deadline for Spain to cut its budget deficit to the EU limit of 3% by one year.
The yield on Spanish bonds rose sharply on Monday ahead of the meeting, with many fearing that little concrete action on Spanish banks would be reached.
Eurozone finance ministers have decided to lend Spain 30 billion Euros this month to help its troubled banks
“We are aiming at reaching a formal agreement in the second half of July, taking into account national parliamentary procedures, allowing for a first disbursement of 30 billion Euros by the end of the month to be mobilized as a contingency in case of urgent needs in the Spanish banking sector,” Eurogroup President Jean-Claude Juncker said.
“There will be specific conditions for specific banks, and the supervision of the financial sector overall will be strengthened,” he added.
The exact amount that Spain needs for the bailout of its banks may not be known until September.
Jean-Claude Juncker also said that Madrid should implement measures needed to bring its public finances into line with EU norms.
On Saturday, Spanish Prime Minister Mariano Rajoy announced that he would take further steps soon to cut the country’s public deficit.
In a news conference at the end of Monday’s marathon meeting, a number of appointments were also announced.
The ministers reappointed Jean-Claude Juncker as their chairman and picked German Klaus Regling to head the permanent bailout fund, the European Stability Mechanism, which is due to come into force this month.
The conclusions of the finance ministers from the 17 countries that use the euro will be submitted to a meeting of all 27 EU finance ministers later on Tuesday.
On Monday, the yield on Spanish 10-year bonds, which are taken as a strong indicator of the interest rate the government would have to pay to borrow money, had risen above 7%, while Italian bond yields had reached to 6.1%.
Yields above 7% are considered to be unsustainable in the long term.