Spain's minority government was set to win parliamentary approval Wednesday for its 2018 budget after Basque nationalists did a last-minute U-turn on a vow to withhold their crucial support unless Madrid lifts direct rule on Catalonia.
After months of suspense, the Basque Nationalist Party (PNV) said in a statement it had "decided, out of a sense of responsibility, to vote yes to the budget", in a parliamentary vote scheduled for later Wednesday.
Approval of the budget is crucial for the survival of the government of Prime Minister Mariano Rajoy until the next scheduled general election in 2020, according to analysts.
Rajoy's Popular Party (PP) lost its absolute majority in parliament two years ago, forcing it into a difficult balancing act to obtain the support of tiny regional groupings like the PNV.
But the PNV, which rules the northern Basque Country region, had for months threatened to withhold its support unless Madrid lifted its direct rule on Catalonia imposed last October after a failed secession bid.
Rajoy is not willing to give Catalonia back its autonomy after the region's new president Quim Torra named four jailed and exiled separatist leaders as part of his government unveiled last week.
The PNV, however, is deeply opposed to direct rule as it guards its own region's autonomy fiercely.
"We maintained this position until today because the situation has changed in recent days," the Basque nationalists said in their statement.
Catalonia has a "legitimate president, elected by an absolute majority in parliament" and the end of direct rule in Catalonia "is very near", they said.
- Pension increase -
The political situation in Catalonia remains blocked for now. Torra earlier on Wednesday called off the swearing-in of his administration because Madrid has refused to ratify the decree naming his ministers.
He announced he had asked his team to "study the legal measures that can be taken" to solve the impasse.
Madrid will only end its direct rule over Catalonia once a new regional government is in office.
While the PNV kept the suspense until the last minute, it is in its interest to see the budget approved. The PNV managed to persuade Rajoy to include a significant pension rise in the spending plan, indexing them to the inflation rate.
Tens of thousands of pensioners have taken to the streets of Spanish cities in recent months to demand higher pensions, with the protest especially large in the region governed by the PNV for most of the past four decades.
- 'New scenario' in Catalonia -
Now that Rajoy has secured passage of the budget, he can simply roll over the 2018 budget if he fails to get support for a new spending plan next year, observers say.
This guarantees that his government will last until the end of its term in two years' time.
Rajoy has kept a "low profile" on the Catalan question as to "not jeopardise the PNV's vote in favour of the budget," said Anton Losada, a professor of politics at the University of Santiago de Compostela.
"Once the budget is approved, this pressure will disappear, because he will be guaranteed to complete his term," Losada, who has written a book about Rajoy, told AFP.
"We will enter into a new scenario in Catalonia where clearly the government could be more inflexible than it is right now," he added.
© 2018 AFP