By Karan Kochhar
“Freedom is on the way” stated a banner on top of Palau de la Generalitat, Catalonia’s government headquarter. Under the new president, Carles Puigdemont, the Catalan government had announced a referendum for October 2017, to decide whether Catalonia should continue to be a part of Spain. The proposal was immediately dismissed by the Spanish government.
Persisting for independence
This is the second referendum for the same issue in three years. Arthur Mass, the then Catalan President, along with some 40,000 supporters pushed for voting, opening schools and police stations for polling booths. The referendum resulted in an 80% majority for ‘pro-independence’ and a two-year ban for Arthur Mas to hold office for defying the Spanish Constitutional Court.
The declaration of the referendum comes at a time when the Catalan government is being accused of drafting a framework for an independent nation. In January 2017, the Catalan government allegedly created tax collection databases to enable future tax collection—a duty that is in the purview of the Spanish government. A judge was also suspended when found drafting the Catalan constitution.
Authority through the ages
Calls for independence from Spain are not something unheard of in Catalonia’s history. In the 19th century, during the Spanish civil war, General Franco staged a military coup in 1936, against the democratically elected Republican government. When General Franco declared victory, Catalonia was cast into a 40-year dictator regime. It was only after his death in 1977 that Catalonia was granted autonomous rights under the newly elected Spanish government.
Since 2004, a proliferation of neo-autonomism and unfair treatment by Madrid has been witnessed. The recession of 2008 has forced Spain to enact severe austerity measures. Catalonia feels that as an independent nation, it would utilise its wealth to much better use than subsidising taxes from other regions of Spain.
To leave or not to leave
Considering the recent world events where secessionist movements have called for referendums, the decision for separation (or not) has always been close. Consider the case for Scottish referendum in 2014 where anti-secessionists won by just over 10%. Even in Britain, where ‘Brexit’ had just over 4% votes as ‘Pro-EU’. However, the sentiment to leave Spain in Catalonia was quite evident in the 2014 referendum when 80% voted to leave.
With stubbornness from both sides, the case for a peaceful secession remains bleak. Spain’s refusal to recognise the legitimacy of the 2014 referendum and of an upcoming one, has further exacerbated tensions. If things continue to go in this direction, a forced secession seems plausible. In that scenario, Spain wouldn’t recognise Catalonia as a separate nation state.
Trading on debt
Catalonia’s exports to the rest of Spain account for more than 40% its total exports. With Spain shutting its doors to the fledgeling nation, loss of trade would be inevitable. Also, as an independent nation, Catalonia’s membership request to the European Union would be approved only if all the 28-member states, including Spain, approve its incorporation.
However, the main impact would be on debt, which would affect both nations. The current debt-to-GDP ratio of Spain stands at 100%. Taking out Catalonia, Spain would lose out on 20% of its GDP and retain some of Catalonia’s debt because the burden of debt is shared by both regions. Spain is also a guarantor of Catalonia’s regional debt. Without this support, the debt might spin out of proportion.
An impossibly possible solution
Speaking about his dealings with Madrid, Catalonia President, Carles Puigdemont, indicated a standstill with the Spanish government. The tensions on both sides are escalating, threatening to destabilise a region that is already going through an economic crisis.
In the current scenario, the possible solution is for Spain to acknowledge the legitimacy of the forthcoming referendum and negotiate a deal under which Catalonia decides to pay all of the debt that it owes to Spain. In return, Catalonia could be guaranteed passage of Catalan goods into Spain and an EU membership.
Featured Image Source: Visual Hunt
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