The issue of independence of Catalonia from Spain is increasingly becoming a dominant political and economic factor for Spain and rest of the European Union (EU). A declaration for Catalonia’s independence could throw Spain, the EU and Catalonia itself into political crisis and create disorder for the Spanish economy, which is just emerging from a long recession.
Catalonia has traditionally been Spain’s industrial and economic powerhouse. Economically strong Catalan’s tax revenue subsidises other parts of Spain. This has been one of the chief complaints of those Catalans who have been seeking independence from Spain. The Catalan government says it will be able to claw back 8 percent of its GDP if it didn’t have to make fiscal transfers to the Spanish government.
The Barcelona Centre for International Affairs, in conjunction with Brussels think tank CEPS, affirms that Catalan secession from Spain will be beneficial for Catalonia in all the cases examined, reflecting to a large extent the positive impact from terminating Catalonia’s net fiscal transfers to the rest of Spain. Moreover, Catalans cultures, traditions and language are different from that of most parts of Spain – this gives the Catalans a sense of Catalan-national-identity different from that of the Spanish.
However, many European analysts say that the Catalonia’s ruling elites are roaring for independence in order to gain, in reality, an upperhand in their long-standing negotiation for a greater economic autonomy from Spain. That is, the current leadership of Catalonia is using the national debate around independence to extract concessions from Spanish government. The secessionist passion is a response to fiscal austerity. Much of it would calm down if the Spanish government re-negotiates a greater economic autonomy with Catalans.
Catalonia had been a sovereign state up to 1162, when it was unified with Aragon. The crown of Aragon and Catalonia passed into Castilian control with the marriage of Ferdinand of Aragon and Isabella of Castile. Later, in 1714, The Catalan state was officially abolished.
Spain became a republic in 1931 and an autonomous Catalan government was created. In 1930s, General Francisco Franco came in power through a military coup and civil war. Over 35 years of rule, Franco regime had continuously suppressed Catalonia’s autonomy and Catalan identity, culture, traditions and language. Following Franco’s death, Spain held a constitutional referendum in 1978 as part of the transition to democracy, where Catalonia had a voter turnout of 67 percent, among whom 91 percent supported the new Spanish Constitution. Subsequently, Catalan became joint official language with Spanish, Basque and Galician. Catalonia was recognized as ‘nationality’ and was given the statute of autonomy.
In 2010, Spain’s constitutional court curtailed the powers of autonomy contained in the Statute and removed the word “nation” from the text, stirring anger among the Catalans in Catalonia. From then on, the call for independence has become ever loud, and Artur Mas, the conservative Catalan president, took up the leadership for the cause. A major demonstration for independence, in 2013, was showcased with 1.5 million people taking to the streets of Barcelona, the capital of the autonomous Catalonia.
In late 2014, the Catalan government pushed ahead with a non-binding consultation vote despite warnings from Spain’s central government and despite constitutional court’s declaration about the process to be unconstitutional. Among the 42 per cent voter, who turned out for the referendum, 81 per cent favoured an independent Catalan state.
Catalan President Mas announced early Catalonia’s elections for 27th September, 2015, declaring it a defacto referendum on independence from Spain. The main separatist alliance and a smaller nationalist party won 72 seats in the 135-seat regional parliament. However, the pro-independence parties won 1.9 million out of 4 million ballots cast. Despite falling just short of getting 50% of the vote, the separatists have been saying that the victory gives them a clear mandate to form an independent Catalan state.
Cost of independence
Inception of Catalonia as an independent state would mean that it would require setting up the state structures, including a new central bank, tax authority, judicial system, social security, a diplomatic service, a central bank and even an army. It would be impossible for Catalonia to function as an independent state without the state structures. However, it is never easy to set up these structures without the help from foreign friends, which Catalonia does not have one. Although Catalan President Mas did talk about setting up state structures, those words seem to be mere rhetoric – just as the call for independence itself may be a negotiating instrument, and not a real intension.
Even if Catalonia becomes a sovereign state, a greater political uncertainty would arise. There would be political chaos between the ones who opted for independence and the ones who didn’t. Moreover, Catalans would then have to assume a significant part of Spain’s debt. They would have to find a currency other than the Euro, as Spain would veto Catalan membership in the Euro Zone. Without a confirmed currency in the market and with political uncertainty, there would be a likely evacuation of multinational and Spanish companies from Catalonia to other parts in Spain. An independent Catalonia would face a hard time for acquiring a NATO membership.
The EU could refuse to re-admit Catalonia into the Union, either because it is unwilling to acknowledge Catalonia as a state or, atleast, because negotiations for membership of the Union have been blocked. This would mean Catalonia would have restricted access to the EU market. It would not enjoy any further the leverages of entering into the EU member states’ market as a free trade zone – a leverage its products enjoy now as Spanish goods. Duties on Catalan goods and services would be imposed not only by Spain, but also by the EU member states. Moreover, in times of economic disasters, Catalonia would be unable to call upon the help of the European Stability Mechanism (ESM) and the European Central Bank (ECB).
Independence might inspire other secessionist movements
Spain was assembled through the merger, mainly by marriages, of smaller kingdoms with long and distinct histories. Several of these regions have their own longstanding cultural practices, dialects, and even languages. Catalonia is one such region. Therefore, a separation of Catalonia is very likely to spark for secessionist movements in other parts of Spain and in other parts of Europe too. If Catalonia becomes independent, nationalists, who are seeking independence, in Scotland, Flanders, Padania, Madeira, Bavaria, Scania and elsewhere may become too desperate for their statehood call. Europe could end up split into micro states — the same sort of micro states that existed during the era of European city states.
A declaration of independence of Catalonia would instigate crisis in both Spain and the EU. There are a number of possible scenarios. One of these could be that Catalonia may continue as an autonomous state within Spain, possibly with greater powers – only if Spain agrees to Catalans’ longstanding demand. Another scenario could be that Catalonia, if breaks away from Spain, could become part of the European Free Trade Association of non-EU countries, similar to Switzerland or Norway. On the hand, the possibility of Catalonia becoming a new EU member in a negotiated settlement with Spain is very slim.