A relentless state, angry demonstrations, and profoundly worried businesses.
By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.
The ever-worsening political standoff between Spain and Catalonia is beginning to take a toll on credit markets, as banks refuse to renegotiate the terms of loans granted to companies with operations in the separatist region. One of the first victims is the British fund John Laing Infrastructure which, in its 2017 annual report, divulged some of the problems it faced trying to refinance a €700 million loan for work on section two of Barcelona Metro’s Line Nine.
The fund owns 53.5% of the concessionaire operating the fifteen stations on the line’s southern section. The other partners include Iridium, a subsidiary of the Spanish infrastructure giant ACS, and Queenspoint, a fund part owned by German insurance giant Allianz and the Danish pension fund ATP.
One of the main reasons why the banks involved don’t want to soften the credit conditions of the loan is that Barcelona’s metro depends on Catalonia’s regional government for funds. Building on Line 9 began in 2005 but was temporarily halted at the height of Spain’s financial crisis due to a funding shortage. Thirteen years later, the project is still far from complete and further progress is unlikely to be helped by the political chaos engulfing the region.
In the last fortnight alone Pablo Llarena, the Supreme Court’s judge in charge of the main investigation against Catalan secessionists, has indicted 25 Catalan leaders, put five who had previously been released on bail back in pretrial detention (for up to four years), and issued European Arrest Warrants against six pro-independence figures who have fled Spain. They include former regional President Carles Puigdemont who is presently occupying a jail cell in northern Germany awaiting a decision on his extradition.
News of his arrest sparked angry demonstrations that culminated in violent clashes with the police. Ominously, this could be just the beginning of a much broader crackdown by Spanish authorities on pro-independence supporters in Catalonia. In its latest budget proposal for 2018, which is unlikely to be passed by the nation’s parliament, Madrid’s fragile coalition government has earmarked 132% more funds for Civil Guard and National Police units in the breakaway region.
On Monday evening the Public Prosecutor’s Office at the National High Court in Madrid announced that it has launched an investigation into the activities of Catalan separatist protest groups known as Committees for the Defence of the Republic (CDR). Like Catalonia’s jailed politicians, the activists could face charges of rebellion, which carries up to a 30-year prison sentence.
Last Tuesday CDR groups blocked the most important highway linking Spain with France by erecting barriers at tolls causing disruption for Easter travellers. Over the Easter weekend the groups, which are estimated to number some 200, opened toll barriers and disabled security cameras on some Catalan motorways, so that drivers did not have to pay.
“The Catalan Spring has erupted,” the group said in a statement on Sunday. “We have crossed the point of no return… we will reappropriate the streets and stop the country,” the statement added in a call for a general strike like the ones held late last year when the region’s separatist crisis boiled over.
It’s a threat that many in the business community take seriously. Since the banned referendum on Oct.1, over 3,000 companies, both domestic and foreign, have shifted their headquarters to other parts of Spain, albeit in most cases only on paper. Tourist numbers also remain fairly subdued in Barcelona, according to the latest figures. Real estate investors, by contrast, remain relatively undeterred. After a small dip in the fourth quarter of 2017, residential property prices in Catalonia resumed their upward trajectory, surging by 14.9% per square meter in the first quarter year-over-year, and in Barcelona, by nearly 20%, according to the property website Idealista.
Other investors are less sanguine. Last week organizers of the fourth edition of the Barcelona World Race announced they were pulling out. The event was scheduled to take place in January 2019 and was forecast to generate up to €40 million for the city. Among the reasons cited for its abrupt cancellation were the difficulties the organizers had encountered trying to find sponsorship due to “the lack of political stability” affecting the region.
Similar complaints were aired at a heated meeting between German industrialists and the pro-independence speaker of Catalonia’s parliament Roger Torrent in early March. One participant accused the separatist leaders of trying to take Catalonia back to the middle ages and said they should all go to jail to general applause.
“We want a strong Catalonia, we invested here and we want security,” Albert Peters, chairman of the Barcelona-based Circle of German-Speaking Businessmen in Catalonia, told Onda Cero radio in an interview following the meeting. “Everyone must comply with the constitution, and if not, then that person should be taken to court.” Peters’ association represents more than 200 executives and its sponsors include firms such as BASF SE and chocolate maker Lindt & Spruengli AG, according to its website.
Large German investors in Catalonia include Volkswagen AG, whose SEAT unit in Martorell near Barcelona employs around 12,000 people. The company has already warned that in the event of another referendum on secession from Spain, it would not only change its headquarters, but would close the bulk of its facilities in Catalonia, including the Martorell plant.
Now, judges in Germany must decide whether or not to extradite Puigdemont. The most serious charge he faces, rebellion, is only reserved for “violent and public uprisings” — something neither Puigdemont nor any other of the defendants can justifiably be accused of without bending the meaning of the law beyond all recognition, though that hasn’t stopped the presiding judge Llarena from trying.
If Puigdemont is ultimately extradited on the full roster of charges for reasons of political expediency, the escalating crisis in Spain’s richest region is likely to get a whole lot worse, not better, with potentially grim consequences not only for Catalonia’s economy but also for many of the businesses with operations here. By Don Quijones.
“This plan, far from solving or alleviating the problem, is likely to make it a whole lot worse.” Read… Banks & Builders Want New Property Bubble In Spain, Government Obliges
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“Everyone must comply with the constitution”, shrills the self-interested businessman from Germany.
Well I will see your Constitution and raise you the United Nations Charter and the International Covenant on Civil and Political Rights, where the rights of all peoples to self determination are enshrined.
These rights have led to the decolonization of much of the new world from the old world. It is only just that they lead to the decolonization of Catalonia from the Spanish.
In state politics there are no rights, of ‘self-determination’ or otherwise: it’s a pleasant fantasy, but everything is decided by expediency and the distribution of power -the European powers divested themselves of formal empire because by the mid-20th century they could no longer hold on without excessive use of force.
Madrid will never relinquish one inch of national territory, and has the power to enforce that: judiciary, police, army. Nor are the Catalans at all united. Still less would Brussels accept it, as Juncker made plain.
The foolish and ill-prepared attempt at independence in Catalonia has had only one effect: the strengthening of the conservative Catholic, anti-democratic and corrupt Right in Spain, and – above all – confirming the rise of the blatantly neo-Francoist party, Ciudadanos, as a major political force. This has all been a wonderful gift to them.
For taking Spain backwards in this respect, Puigdemont and his incompetent friends and fanatical nationalists deserve total condemnation.
Idiots who claim to be leading the way to freedom so often just make more chains for their compatriots. They then have the satisfaction of being ‘martyrs’, but life becomes much worse for everyone else.
The strengthening of the cynical and reactionary Right has been a total disaster for Spain. It is unforgiveable.
How proposed to with radical right group?
How do you propose the Catalans dealing with restive government in Spain?
… where the rights of all peoples to self determination are enshrined.
Sure good and nice-sounding – except it all becomes tricksy and messy when we reach that very necessary part of defining “people”, and who are not “people” and how to decide who belongs to which set, so that we can properly assign some of those inalienable rights to them.
In practice we always take a shortcut and fight it out – Syria-, Rwanda-, Yugoslav-, Catholic vs Protestant- style! Whatever!!
Catalonia is not equipped for that and the majority of the Catalans are not up for it either – being not crazy enough, nor particularly deprived.
Some fanatics will surely take to terrorism and get slowly wiped out, that’s about it. Of course Madrid will LOVE terrorism, the terrorist is always the secret love of both the authoritarian and the police state always looking for excuses for poor statesmanship and government excesses of the police-brutality kind!
I think those German business people are plain stupid running their gob over this entire referendum business.
Regardless of the issues, Nobody likes to be told anything by outsiders.
The net effect is similar to when one of Britain’s most reviled persons, Tony Blair, comes out to support “Remain” – In this case a strengthening of the Catalan support for independence.
Why is “just let it go, it doesn’t concern you” so hard a thing to grasp by apparently successful people?
If there’s one thing all Europeans love, it’s being told what to do by powerful Germans.
Business czars do not care about, nor understand, the deep-seated desire of ordinary people for self-determination. This is why they will sometimes vote against their own economic self-interest in national elections.
In other words, it is not all about money and people are prepared to make financial sacrifices in order to secure some other kind of payoff, such as a say over their own affairs.
They need to make voting on elections obligatory in Spain and they need to find a voting system were the winner of the presidential election ends with a huge majority.
Maybe some kind of primaries? Then do the actual presidential voting?
Because a weak government who hardly anyone voted always end bad unless they can build up power somehow.
Anyone think SCL (precursor of Cambridge Analytica) might have put some roots in Catalonia as well? (After all, it turns out they were in Thailand starting with Thaksin Shinawatra protests, India w the evergreen Gandhi Family, Indonesia, etc etc ). Puigdemont might be a perfect fit, no? and why not the “Five-Star” party in Italy as well? it suits Brexit.
Catalonians need to show real guts. Constant screaming will lead to nothing.
It’s hard to respect people who want to have their cake and eat it too.
It’s game over for the Catalan independence movement. Every time they have fought against Spain they have lost everything. The last time was in the 1936-1939 civil war. It will take at least 40 years to regain the autonomy they have just lost.
Spain is putting the EU reputation , and much more at risk ,either Spain they goes back to last century behavior and leaves the EU , either they respect democracy and get their act together , as the Catalonian are the one overly contributing to the “national” budget .
“We invested here and we want security”.
Herr Peters, I was in the Val d’Aran (part of Catalonia, albeit closer in language and customs to Gascogne) exactly when the referendum was being held. My memory is affected by age and ill health, but I do not remember gangs of thugs burning and pillaging as they went.
An acquaintance of mine, the president of a Swiss company, has sizable investments in Catalonia. The only problem she has experienced so far is somebody tried to break into a property she owns, but they must have been pretty inept burglars because they maimed the lock to such a point they effectively made impossible entering without dismantling the door and did not notice an easily accessible window was open… According to the Mossos d’Esquadra (Catalan police) it was the work of “teenage delinquents”, and it could well have been given the bumbling incompetence they displayed.
Herr Peters, are inept “teenage deliquents” such a formidable threat you fear economic activity will be disrupted by them?
Or perhaps is your demand for “security” just a cover for the usual demand for a completely subservient government that remembers about citizens only when elections draw near?
Because that’s the kind of government your kind likes and everything else is just due to the evil machinations of Russian hackers, Cambridge Analitica and similar fearsome characters. If voters have a different opinion they must be under the influence of foreign manipulators.
When the Spanish Armada was routed by storms, poor organization and the English in 1588, Habsburg propaganda blamed “hechiceros de Laponia” (Lapland sorcerers) sent by the Protestant Kings of Denmark and Sweden to help the embattled Elizabeth Tudor.
History may not repeat itself, but it rhymes an awful lot of times.
Very well put.
They have done it before, and they can do it again. Franco’s ghost is abroad.
FWIW: “Divide and rule” was an axiom of government old in Roman times. Who benefits from a divided Spain.
I like the term, “…pre-trial detention” which could last forever…kind of reminds me of the US “detention” programs. Could also pertain to the “normal” course of US “justice” just waiting your turn at bat (trial).