Spain has enough problems: a debt crisis, a hangover from a housing bubble, unemployment of over 25%, youth unemployment of over 50%, massive demonstrations against “structural reforms” that the government is trying to implement in its desperate effort to keep its chin above water…. And now it has a new one: the possible breakup of the country. The military has already chosen sides.
It started last week in Barcelona, capital of the Autonomous Region of Catalonia, the richest region in Spain. Of the 7.5 million Catalans, between 600,000 and 1.5 million—an astounding 8% to 20% of the population!—protested in the streets, demanding independence.
Antagonism between Catalonia and Spain has simmered for a long time. But the financial fiasco that Spain is mired in deepened the fissures. Out-of-money Catalonia had to ask the central government for a bailout. Catalans are frustrated. They claim that under the current fiscal setup, Catalonia transfers €16 billion annually to the central government, and that these transfers bankrupted the region. Now, in exchange for the bailout, the central government has imposed austerity measures that cut into health care, education, and other services.
On Thursday, Catalan President Artur Mas met with Prime Minister Mariano Rajoy, originally to beg him for a new tax deal. But the massive demonstration in Barcelona had added independence to the agenda. Rajoy brushed him off, with references to the constitution that didn’t allow regions to secede.
“Constitutions may or may not be modified, but they do not subjugate the will of the people,” Mas lamented after the meeting. As leader of the Democratic Convergence of Catalonia and chairman of the governing Convergència i Unió (CiU) coalition, he represents the middle class and has supported Catalan independence only in an ambiguous manner. Until now. “Catalonia will follow its path,” he said. Parliament would meet next week to “consider the next steps.”
“Illegal and lethal,” howled Foreign Minister José García-Margallo and threatened Catalonia with exclusion from the EU if it chose independence. Decisions in Brussels as to which country will be allowed to accede to the EU have to be unanimous, and Spain’s veto would bar Catalonia “indefinitely,” he said.
Nevertheless, Friday morning, CiU spokesman Francesc Homs pushed that agenda further: after the elections—early elections could be held on November 25—Parliament may initiate the path to independence. This could be by referendum, but there would be alternatives, he said, “for example” a parliamentary vote to declare statehood.
The CiU hasn’t yet decided how to articulate its demand for statehood in its electoral program, but the strategy toward independence is an “irreversible process,” Homs said. He described Spain as a “lion” attacking the Catalan “gazelle” whose sole weapon is “agility.” And the threat of getting kicked out of the EU? “Catalans are European citizens,” he said, and he didn’t know how it would be possible to kick them out. But he wasn’t worried about the all-important business community. “We won’t lose investments if things are expressed democratically,” he said.
The response was immediate. Catalan independence would be a “tremendously huge problem“ for businesses, said Joan Rosell, president of the Spanish Confederation of Employers’ Organizations (CEOE), which represents state-owned and private sector enterprises. Employers, he said, supported a single market as a way out of the current turmoil.
Declaring statehood would have no legal value, Deputy Prime Minister Soraya Saenz de Santamaria declared at a press conference after the Council of Ministers. And the government didn’t welcome early elections, she said; “political instability” would aggravate the crisis. But she threw Mas a bone: the government would be willing to consider reforming the financing model of the Autonomous Regions.
A discussion of the nitty-gritty of independence has broken out. Hot topic: the distribution of central government debt. Would Catalonia have to carry 20% or 16%? Or none because Spain issued the bonds and not Catalonia? Would Catalonia be better off within Spain or as independent state? Would it even be financially viable? Rumors are swirling that members of the governing coalition have asked the European Commission if Spain can legally stop Catalans from seceding, and if it can expel an independent Catalonia from the EU via its veto power. As there is no law that would allow secession, there is also no law regulating it. So everything is up in the air. But the fact that this is getting serious attention, shows just how far the process has already gone.
And the military staked out its role. Colonel Francisco Alaman promised to crush the “vultures” if they chose independence. “Independence for Catalonia? Over my dead body,” he said. “Even if the lion is sleeping, don’t provoke the lion, because he will show the ferocity proven over centuries.” Words of the crazed fringe? Apparently not. “Deeply-rooted thinking in large parts of the armed forces,” explained retired Lt-Gen Pedro Pitarch. And it opened a whole new chapter in the Eurozone saga that, despite all assurances to the contrary, simply keeps getting more uncertain.
When the German Constitutional Court nodded with a stern smile on the ESM bailout fund and the Fiscal Union treaty, politicians breathed a sigh of relief. The German revolt was over. But steam is billowing once again from the misaligned pipes of the Eurozone, this time in France, where the Fiscal Union treaty had been silenced to death. Read…. A French Rebellion Against Unelected Bureaucrats: “European Coup D’Etat And Rape Of Democracy”
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Excellent reporting Wolf. Thank you.
It amazes me how many moving parts this has. It would also amaze me to see the ESM commit resources to Spain with the issue of Catalan (and Basque?) independence seemingly coming to a head.
Your words are ominous regarding prospects for military intervention. It certainly would open a whole new chapter in this tragedy. And I fear that it would spread to other countries rapidly.
One of the most interesting aspects of the Catalan-Spanish struggle may be what it portends for Germany's future role in the European context. Those who dream of the establishment of a peacefully functioning transfer union as the EMU's salvation are horribly mistaken. Those who would endeavor to establish such a union without a popular mandate, but through the clever machinations of unelected bureaucrats – are setting the stage for future revolution.
It is probably the start of Mitts's 53% being fed up with Barney's 47% but of course in a much wider context. And Europe is much worse than the US. The Western world is 'oversolidaritised'. Too many people receive something to keep the whole system affordable. Too many receivers staying put. With money still coming in what is the need for change?
This is imho especially relevant re the middleclasses (in Europe the by far most important source of tax revenue), they are likely to see around zero real income growth for the coming period (sometimes even at best), while states have at some (not to far away point) stop borrowing to fill the gap/deficit mainly caused by all the transfers and someone is still expected to pay for it all.
It looks like Catalunya is just one thing. Non-Western immigrants is another. Poor elderly without own resources. Structurally unemployed yet another one. Region permanently on the drip (Southern half of Spain and italy, Eastern Germany/Bremen/Berlin, Northen part of England to name a few). South going for permanent transfer union. East Europe mainly joining the EU for financial benefits (next to protection from Russia, but hardly to be nicely European).
With usually as main problem that the programms are sold at first to the payers as temporarily but a lot of the time ending as permanent.
As said with no or negative growth in real income (for the ultimate payers, the European middleclasses) this is the time that will very likely start to play. And if history showed one thing it is that you should not p… off the middleclasses, they are nearly always the ones that started successful revolutions. It usualy take some time before they are that far, but they usually also have to stamina to finish the job.
From another angle Europe has a solidarity deficit or social deficit. See eg Sloterdijk. Meaning that the taxpayers want all the social stuff but are not really willing to pay for it all. That is why governments need deficits to finance the gap. Basically sov debt wirks as a subsidy on a structurally lossmaking activity. With of course the huge differences that one time it will have to be repaid and somewhere down the road it will be impossible to boorw further.
Raising taxes is very unlikely to work longer term (several countries look at the peak of the Laffer). Confirmed with the experience of the last few decades. Europe got its economy started again by lowering top rates of income taxes and be tax-friendly (relatively at least) to business.
So their system need also from this angle a change. More important if these structural issues are not adressed like now or papered over with higher taxation things are unlikely to start again.
Thanks for a very interesting article.
+ Scotland looking for independence from the UK.
+ Germany's Bayern are also fed up with paying for the North ( and now the ESM/EU ).
Bayern has always considered independence. There was a joke some 30 yrs. ago that Strauss had already closed the borders.
One wonders whether the EU's plan is to destroy Nation States from the inside – via austerity – protests – arguments – escalation… and dare I say "civil war" ?
Do you read history Mr Richter? A bankrupt central government & political instability, Catalonian independence & military belligerance.
Don't know if it's peculiar to Spain but it's all very 1930's.
Breaking state sovereignty is exactly what Rothschild banking wants!
You guys better say no! To Centralized banking or and turn back austerity
I think the people of Spain are getting tired of these puppet rulers.
At least there not eating Rothchild GMO and getting poisoned like we are
in the states. jonkirby2012.wordpress.com
PS Cancer has a switch and radiation is its turn on .. see was Oswald killed for JFK or Mary's Monkey!?
I ordered the book in Jan .. unfortunately it never arrived .. made me wonder !
"Secrecy" is the biggest enemy IMO.
Considering that Govts. are supposed to be acting in "our name" (LOL), the least they could do is to let us know what they are doing "in our names".
The Internet is of course the PTB's biggest nightmare , which is why they are striving to control it.
"Freedom of Speech" … as long as it's their "speech" I guess.
The articles has, I believe, two sides. One is what is says about Spain. The other, what is says about Europe.
That there is a Catalan issue now in Spain, that is true. The demonstration in Barcelona last 11th September was very attended and, the most important thing, it is politically relevant. But before anyone jumps into conclusions, please inform yourselves better on what is really going on there and in the rest of Spain. Because the atmosphere is quiet and the tension is not as high as you might believe. On top of that the mention that the article and a number of other ones have made to the statement of a retired Army officer are totally off-mark. There is simply NOT a military element to this issue now, nor is it forseen to be one. Talking about that is plain nonsense.
But before we keep talking about it, let's remember the US went to war to protect the Union in 1861. So less preaching would be welcomed…
The real reason why independence is now an issue in Spain is because local elites in Barcelona have been trying to blame on Spain and its alledged starving of funds the savage cuts the Catalonian Government is now making in health, education and many things more (except political institutions, which they do not touch at all). And they are making the cuts because the previous regional Government has bankrupted the region with its never ending spending in whichever pet project or pork barrel you might imagine, without control from Madrid. Barcelona now has to go, cap in hand, to Madrid looking for funds, the one they have depleted (Catalonia is now the most indebted region in Spain, by far) and, however, it still insists in a brinkmanship game, which is difficult to understand or appreciate.
As for Europe, Catalonia and the Basque Country in Spain, join Flanders and Wallonia in Belgium, Scotland and Northern Ireland in the UK, Azores in Portugal, Färöer Islands in Denmark, Padania in Italy, Bavaria in Germany, Friesland in the Netherlands, Brittany and Corsica in France, and others (including Quebec in Canada). Just to name a few. However, Spain is, like France or England, the oldest state in Europe. So, there is plenty of experience accumulated to deal with the situation.
It is true, and it is also a possible (unintended or not) consequence of the EU project that the Nation state is in crisis in some regions. It is also worth recalling, the ideology or attitude behind many of those separatists is simple, plain, clear and deep xenophobia. Which, I believe, should never be deemed worth of respect. Do you know it is impossible to go to a school teaching in Spanish in Catalonia? Every child there is to receive his/her education in Catalan. And all decisions by courts granting the parents the right to choose the language had been ignored so far. Make no mistake. The regional authorities in Catalonia are committed to independence. But it is not that clear that the local population will go to the end with them. And, certainly, Spain is a nation. And as every nation, it doesn't appreciate secession from itself. The first Constitution in Spain is dated in 1812. The Spanish nation was already recognized there. And Catalonia has never been independent.
Francisco – thanks for your excellent comment. I do want to point out that I’m not preaching. I’m simply describing problems and potential problems in the Eurozone.
The US is deeper in debt than Spain. The difference is that the Fed can do whatever it wants to. Its course of action is to destroy the dollar in order to fund its cronies and the sins of Congress. Spain doesn’t have that possibility. Hence the stress on its debt.
The independence issue is important for the rest of the world (not just Spain) because it shows that the economic uncertainties in the Eurozone are still rising, despite what everyone is trying to make us believe.
Wolf thank you for your excellent article, I think describes quite well the situation in Catalonia
I am not agree with Francisco Aguilera at all. All his references about catalan language is nothing related with the economical crisis and the huge amount of money that Catalonia pays to Madrid for a really poor return in services.
Spanish nacionalist people like Antonio, always they use catalan culture as a weapon to wear out catalan goverment.
If spanish goverment is so democratic why they don't allow to ask catalan people with a referendum?. Let's see what they want!
The "real" reason (same way as you state) to me, is Madrid has created a strong economical lobby, with a strong spanish nacionalist press media that relies on the Catalonia transfers.
Please find more information below link,from an economist called Xavier Sala Martin.