The president separatist catalan Carles Puigdemont , has finally signed on Tuesday evening a declaration of independence, which he immediately suspended to a very hypothetical dialogue with Madrid, sowing confusion on the sequence of events. "Independence is our future and depends on us, young people".
Despite this, the signing of an independence declaration will be viewed by Madrid as an act of provocation and Mr Rajoy will struggle to find a way to respond that satisfies everyone.
Despite the opposition, some politicians and activists say they won't accept anything less than a full declaration of independence at Tuesday's session.
Madrid has indeed rejected dialogue with Catalonia until the regional leadership returns to the path of the law and starts respecting the "rules of the game", Spanish Deputy Prime Minister Soraya Saenz de Santamaria said.
However, he added, the region would suspend the process of declaring independence in a bid to establish a constructive dialogue with Madrid. The Catalan government would like these talks to lead to an offer of a legal referendum, but few in the Spanish capital back such a prospect.
Deputy Prime Minister Soraya Saenz de Santamaria also rejected the Catalan leader's proposal for talks to be conducted by an global mediator. "With a Spanish state that continues to harass and persecute us?" she said. There were helicopters overhead, huge screens in the street for people to watch.
At this most crucial moment in Spain in its decades of democracy, Rajoy must show more willingness to enter into dialogue, and prove that his government is capable of a policy that is worthy of Spain's elevated position in the European Union.
Spanish banks stocked up on European Central Bank money at a weekly auction on Tuesday, fearing jitters on the funding market if Catalonia breaks away from Spain. How did we get here, and what happens now?
Catalan nationalists have always argued that the region is a separate nation with its own history, culture and language, and that it should have increased fiscal independence. That's something that Spain's government has always opposed.
"On the contrary, they have been only threatening [the Catalan leader]".
Puigdemont had been under intense pressure from all sides.
The government of Spain threatened to seize control of his government if he made the declaration. Initially, people chanted "independence", cheered and kissed each other, but as it became clear there would be no formal declaration of independence, some people whistled and shook their heads.
Catalonia "has the right to become independent", Puigdemont declared to cheers from lawmakers.
Catalonia's regional government has said it will do everything possible to prevent damage to the economy.
A representative of another European movement for independence, Jonathon Shafi from the Radical Independence Campaign championing Scottish independence, has also criticized Madrid's actions during and after the Catalonian referendum.
Nuria Trapero, a 24-year-old waitress in Barcelona, told ABC News that Catalans had spoken when they voted for independence and that the Spanish authorities should respect their wishes.
"If do they do what the Catalans say they want, which is hold negotiations, they absolutely don't want to do that in government here because if they do it accepts the core of the Catalan argument, which is this is a political issue", he said.