Young Catalan liberal rises in challenge to Rajoy's grip on Spanish power

By Julien Toyer and Angus Berwick

MADRID (Reuters) - Forget the traditional Socialist opposition and perhaps even the Catalan separatists: the main threat to Spain's conservative prime minister may now come from a Barcelona politician dedicated to national unity - Ines Arrimadas.

The 36-year-old leader of the liberal Ciudadanos party in Catalonia has jumped to the frontline of Spanish politics by coming out on top in elections to the region's assembly. Supporters even compare her performance with Emmanuel Macron's meteoric rise to the presidency across the border in France.

Laying down the gauntlet to Prime Minister Mariano Rajoy and the separatists alike, Arrimadas boosted her party's share of the vote to more than 25 percent in Thursday's snap election, up from just 7.6 percent two years ago.

That made Ciudadanos ("Citizens") the biggest group in the assembly, ahead of parties backing either more Catalan autonomy or outright independence which had won every regional election since the restoration of Spanish democracy in the 1970s.

Arrimadas will struggle to form a regional coalition as collectively separatist parties achieved a narrow majority.

Still, she celebrated victory with hundreds of supporters in the streets of Barcelona on Thursday night, flanked by her party's national leader, 38-year-old Albert Rivera.

On Friday she made an appeal for unity following October's independence referendum which led to the Catalan leader fleeing the country, other separatists leaders landing in jail and Madrid imposing direct rule.

"Yesterday was a great night, a historic night and for me the start of reconciliation in Catalonia, even if sometimes things take a little longer than what we would expect," she told Onda Cero radio.

Her performance echoed similarly strong showings from centrists in French presidential and legislative elections earlier this year, raising the hopes of Ciudadanos.

"This result is fully transferable to national politics," said Toni Roldan, a lawmaker for the party in the Spanish parliament who is also from Catalonia. "It takes Ciudadanos to the next level and we will be competing on equal footing with Rajoy in the next Spanish election."

Describing Arrimadas as a "political jewel", Roldan said the choice for all Europeans was now between liberalism and populism. In this struggle, Ciudadanos stood alongside Macron - who beat far right candidate Marine Le Pen to the presidency - and was now ready to blow apart the traditional left-right divide in Spain, Roldan added.

BIG HEADACHE

Ciudadanos, which has its roots in Catalonia, will need strong momentum if it is to threaten Rajoy's grip on power as the party came only fourth in last year's national election with 13.9 percent.

An opinion poll taken before the Catalan vote put it still in fourth. However, alone among the major parties, its support was up to 17.5 percent, suggesting voters are being won over by its tough stance on Spanish unity and against corruption, as well as its young professional leaders.

A veteran politician who has survived past crises, Rajoy leads a minority government and has yet to get a 2018 budget through parliament. However, he is under no immediate pressure as he can simply roll over the 2017 budget for months.

Also, the opposition is so fractured that it probably cannot bring Rajoy down and no serious leadership rival has emerged within his traditional centre-right Popular Party (PP).

If the secessionists pursue their aims by negotiation, they too are unlikely to pose a great threat to Rajoy, who could also re-impose direct rule in the region if they decided to act unilaterally.

Arrimadas was born in the Andalusian town of Jerez, far from Barcelona where she moved after completing a law degree.

Her husband was a lawmaker for separatist leader Carles Puigdemont's party, before resigning in 2016 to avoid complicating her political rise. Both have said their passion for Barcelona football team brought them together.

She was first elected as a Ciudadanos lawmaker in 2012 at 31, two years after a colleague at the consultancy where she worked in Barcelona had invited her to a party rally.

"The political and social situation was so serious that I felt the need to stop complaining from the sofa and go on to propose ideas and debate from parliament," she told an interviewer in 2015.

Since then, her party has made a successful move into national politics, backing Rajoy's minority government although not joining it.

"Ciudadanos is creating the next big headache for Rajoy. They can extract concessions from the PP without any political cost. And if Rajoy fails to pass the budget because of the Catalan issue, he won't be able to blame Ciudadanos for the stalemate and a potential snap election," said Teneo Intelligence analyst Antonio Barroso.

Barroso and other analysts said the moment of truth may come in the second half of 2018, should Rajoy have failed to normalise the situation in Catalonia.

Rivals express grudging admiration for the party.

"Ciudadanos has managed to bring together all unionism in a technically perfect campaign," a source close to Puigdemont said on condition of anonymity. "It is an artificial product that represents the feelings of many people."

(Reporting by Julien Toyer; editing by David Stamp)