Eurozone, with Spain getting a grip on its debt financing and a plan
to bail out insolvent banks, a fresh threat to the common currency has
emerged with Catalonia's reignited drive to secede from the Spanish
kingdom.
GlobalFocusMore than a million residents of the country's most
prosperous region rallied for independence in a protest of historic
proportions on Sept. 11, Catalonia's National Day. Some estimates put
the crowd as high as 2 million, or more than a quarter of the 7.5
million who live in the northeast region including Barcelona. This
week, after Madrid rebuffed Catalonia leader Artur Mas' demand for
more control over his region's tax revenues, the regional parliament
set a Nov. 25 date for polling Catalans on "self-determination."
Spain's constitution doesn't empower the regions to call votes on
sovereignty and questions of national integrity. But Mas has said his
region will go ahead with a referendum without the central
authorities' approval to address what Catalans consider a grave
injustice: They pay as much as $20 billion more into national coffers
each year than they get back in public services.
The prospect of a national breakup, no matter how remote and fraught
with procedural complications, spurred Spanish King Juan Carlos into
rare action on a political matter.
"In these circumstances, the worst thing we can do is divide our
forces, encourage dissent, chase chimeras and deepen wounds," the king
warned in a letter posted on a new palace website, the daily El Pais
reported. It was an apparent allusion to the nationalist stirrings
that spurred the Spanish Civil War in the 1930s and a dictatorship
under Gen. Francisco Franco that endured until his death in 1975. It
was the first time the Spanish monarch weighed in on a political issue
in more than 30 years.
Other influential Spaniards have also stepped forward to propose
compromise, such as a looser federal structure that would give
rebellious regions like Catalonia more autonomy without fracturing a
country that has also dealt with a Basque separatist movement for
decades. Juan Luis Cebrián, media mogul and author, warned last week
that all the secession talk threatened to unleash the "wild beast" of
right-wing nationalism that shackled Spain's development for much of
the 20th century.
Catalonia secession is neither a sure thing nor an imminent one,
analysts note. Catalans for centuries have been bandying about the
idea of independence for their thriving bastion of manufacturing,
shipping, tourism and culture. The conservative government of Spanish
Prime Minister Mariano Rajoy has made clear that it opposes
Catalonia's bailing on the rest of the kingdom, and it holds what
essentially could be a veto if the region envisions moving into
statehood and taking its Eurozone membership with it. By charter, the
Eurozone's 17 members would have to unanimously approve induction of
any new euro currency user.
Mas may be stirring the secession quest to force Madrid to cede more
power to Catalonia over its own finances. But in an environment of
deep public spending cuts, the second bout of recession in four years
and unemployment afflicting 1 in every 4 Spaniards, the notion of
sheering off the northeastern corner flanked by Andorra, France and
the Mediterranean Sea is clearly appealing to many. Catalonia accounts
for 20% of the Spanish gross domestic product and a quarter of its
exports.
Catalonia secession has long been part of the political landscape in
Spain and has just entered a more active phase because of the tough
living conditions resulting from European Union austerity measures
demanded to keep euro users' national deficits in check, said Fabian
Zuleeg, chief economist at the Brussels-based European Policy Center.
"This is potentially more serious, as it reflects a real conflict
between the national and regional levels," Zuleeg said. "The way
Catalonia sees it, they've been paying in excessively into the
national coffers and, because they have their own deficit, they have
to go cap in hand to the Spanish government," only to be denied
latitude to keep the regional economy on track.
The 2013 budget unveiled Thursday requires all regions to cut back
further on already pared public spending and to generate more tax
revenue to service staggering national debts. The piled-on austerity
measures are fomenting unrest throughout the country, as seen this
week in angry protests demanding job creation and investment in
growth, which had to be dispersed with tear gas and mass arrests.
The Catalans' reignited campaign for independence "is an escalation
but by no means the last act," said Uri Dadush, director of the
international economics program at the Carnegie Endowment for
International Peace. "But it's another source of tension in Spain, a
complicating factor and another way that things could unravel."
Hit by bailouts, failing banks, unsustainable interest rates and
mounting public resentment of the severe belt-tightening across the
European periphery from Ireland to Greece, the common currency is at
risk, Dadush said, of "death by a thousand cuts."
http://latimesblogs.latimes.com/world_now/2012/09/spain-latest-economic-woe-catalonia-threatening-secession.html
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