The economic consequences are already being felt.

By Don Quijones, Spain & Mexico, editor at WOLF STREET.

September will be a make-or-break month for Spain’s richest region, Catalonia. In 12 days’ time the streets of its capital, Barcelona (from where I’m writing), will once again broil with uncountable crowds of local people solemnly marking the Diada, a national day for a nation that doesn’t officially exist.

Two weeks later, on September 27, the region will hold its most important elections since Spain’s late dictator Francisco Franco passed away 40 years ago. If the pro-independence parties win a majority of seats (68 out of 135) in Catalonia’s parliament, they will unilaterally declare independence from Spain.

That’s the plan at least, although the chances are that Madrid will have something to say in the matter. And that something is unlikely to be pleasant.

Rhyming History

Once again, history is seemingly rhyming south of the Pyrenees, as divisions rise and gulfs widen – not just between pro-independence Catalans and nationalist Spaniards, but between Catalans themselves.

As in Scotland, the separatists and unionists are closely matched in terms of numbers, with roughly two million people on either side. As one side clings to the dream of independence, the other frets about splitting from the rest of Spain, not to mention the potential for economic chaos, social division, and expulsion from the European Union.

Unlike Scotland, the independence process in Catalonia has been banned from taking place. There can be no official referendum or plebiscite, both of which are, in the oft-repeated words of Spain’s incumbent Prime Minister Mariano Rajoy, “anti-constitutional.”

One crucial result is that there is no escape valve for the pressures that are slowly building. Nor is there any hope of a negotiated settlement. Instead there is an escalating war of words and gestures, and a generalized climate of uncertainty, resentment and fear.

The economic consequences are already being felt. Thousands of Catalan companies have upped sticks and relocated to Madrid or other Spanish cities. What’s more, there are signs that the growing tensions between Madrid and Catalonia, combined with rising political uncertainty, are spoiling investor appetite. In June alone, overseas investors withdrew over €21bn from Spanish markets, compared to the €1.3bn they injected into the country during the same month of 2014.

This is just one of the visible consequences of worsening regional tensions in Spain. Yet although the slow-brewing conflict of words and gestures has the potential to unleash a maelstrom of unintended consequences, both within Spain and far beyond its borders, public figures on both sides of the divide continue to lock horns and ratchet up the pressure.

Choosing the Wrong Words

On Saturday Rajoy exhibited his usual tact and subtlety by likening the disunity caused by Catalonian nationalism – up to this point a wholly peaceful, democratic movement – to a virus. He also reiterated for the umpteenth time that whatever happens in the coming elections, Catalonia will always form part of Spain.

On the very same day, the Guardia Civil conducted searches of the headquarters and other offices belonging to Convergència Democrática de Catalunya (CDC), Spain’s largest pro-independence party, as part of an investigation into corruption charges against some of the party’s senior members. While there can be no doubting the seriousness of the allegations – the CDC is accused of running a decades-long extortion scheme – one can’t help wonder about the Guardia Civil‘s choice of timing, given that it coincided with the official launch of the pro-independence coalition’s electoral campaign.

A day later it was the turn of Spain’s former socialist Prime Minister Felipe Gonzalez to twist the knife. In an open letter published in El País, he implored the Catalan people not to follow the CDC leader Artur Mas down a “dead end” (camino muerte).

Although some of his arguments may have been on the money, in particular his assertion that Catalan politicians have purposefully played down the risk of a newly independent Catalonia being evicted from the EU, González could have chosen his wording more carefully. Worst of all was a short passage in which he drew comparisons between the threat posed by Catalan nationalism and the German and Italian “misadventures” of the 1930s — hardly a line of reasoning that’s likely to convince undecided Catalans to stay put in Spain.

No Jaw-Jaw

The response from Spain’s north-eastern province was immediate. The second-in-command of the pro-independence coalition, Carme Forcadell, accused González of upholding the same flawed theses as Spanish conservatives. “It seems to me that the arguments of the Spanish right are exactly the same as those of the Spanish left,” she said. “What’s more, González is in no position to talk about legality” – an oblique reference, one assumes, to the González’s government’s use of illegal death squads to fight the Basque Militant Separatist Group ETA in the 1980s.

Joan Tarda, a deputy of the Republican Left of Catalonia, offered a somewhat more vivid riposte:

González vomits up bile against the (independence) process. If he could, he would no doubt launch a dirty war, but he wouldn’t get away with it because everything we’re doing is both civic and democratic.

How long it stays that way, only time will tell. As the Financial Times warns, without negotiations between the two parties there can be no resolution to the current standoff. But given the proximity of the general elections, which are likely to take place some time in December, and the outright refusal of Rajoy’s People’s Party to negotiate with Catalan separatists, the chances of there being any jaw-jaw in the coming months are wafer slim. By Don Quijones, Raging Bull-Shit.

And there are ugly repercussions far beyond Spanish borders. Read… The Mother of All Storms Builds Over Catalonia’s Independence

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