The ruling parties of Catalonia have sought guidance from Brussels on
the legality of secession from Spain, requesting a "route map" for
membership of the European Union and the euro as an independent state.
Catalans want an independent treasury with control over its own tax
base, akin to the model already enjoyed by Basques.
It is the latest move in a fast-escalating clash between Catalan
nationalists and Spanish nationalists, the latter backed by King Juan
Carlos and the Spanish military. Jose-Manuel Garcia-Margallo, the
foreign minister, threw down the gauntlet, calling Catalan secession
"illegal and lethal". He warned that Spain would use its veto to stop
the region of Catalonia becoming an EU member "indefinitely". The
constitutional crisis has eclipsed the parallel drama of a Spanish
bail-out request from the European Stability Mechanism. It is no
longer clear whether premier Mariano Rajoy can deliver on any
austerity deal with Brussels.
Catalan leader Artur Mas held high-stakes talks with Mr Rajoy in
Madrid on Thursday, armed with a mandate from the Catalan parliament
and with charged emotions left from an unprecedented protest by 1.5m
people in Barcelona 10 days ago.
He demanded an independent treasury for the rich Catalan region, with
control over its own tax base akin to the model already enjoyed by
Basques. The 9m Catalans have an economy the size of Austria's.
"It did not go well," he said. The Rajoy government said Spain's
constitution allows no margin for compromise. Mr Mas refused to meet
the press in the prime minister's offices, retreating to the Catalan
delegation, where he spoke before the Catalan and EU flags.
"Constitutions may or may not be modified, but they do not subjugate
the will of the people," he said.
Catalonia's parliament will meet next week to "think deeply" about its
next fateful step. "Catalonia will follow its path. We have no enemies
but we will build our own project as a country," said Mr Mas. The
newspaper Confidencial reported that his Convergència i Unió (CiU)
party and coalition partners have asked the European Commission
whether Spain can prevent Catalans exercising democratic
self-determination, and whether a sovereign Catalonia could remain
part of the EU's single market and the euro.
The speed of events has caught almost everybody by surprise, including
Mr Mas himself. His CiU has, until now, pursued a policy of calculated
ambiguity over secession. Mr Mas has pivoted quickly, embracing what
he calls the "popular outcry" as his own. The antagonisms date back to
the Franco era and, above all, to 1714 when Philip V abolished all
Catalan institutions, and imposed Castilian laws and absolutism by
right of conquest.
Diplomats say Mr Rajoy's Partido Popular has provoked the latest
eruption of fury by exploiting the economic crisis to break the power
of the regions. This came to a head over the summer when Catalonia was
forced to request a €5bn rescue from Madrid, though it is a net
contributor to the Spanish state.
Spain's economic slump has frayed nerves across the country, much as
it did before the Civil War in the 1930s. Unemployment has risen to
25.1pc and may go higher as the delayed effects of austerity bite
deeper.
Citigroup expects the economy to contract by 3.2pc next year and 0.8pc
in 2014, pushing public debt to 100pc of GDP.
Chief economist Willem Buiter said the mix of austerity and reform
will not restore Spain to "fiscal sustainability", even if EU loans
keep Spain going for another couple of years. He expects "debt
restructuring" in the end. The warm glow of the European Central
Bank's bond plan helped Spain sell 10-year debt at 5.66pc on Thursday,
the lowest since February.
Mr Rajoy appears to determined to play for time, hoping that he can
muddle through without a rescue. Traders say such gamesmanship is
unlikely to succeed for long. Mr Rajoy also hopes to siphon off part
of the €100bn in EU rescue package for Spanish banks, but this is
certain to infuriate Germany's Bundestag.
Spanish politics are now intruding, in any case. An EU bail-out
memorandum would have to include fiscal restraint for the regions,
further inflaming Catalonia. The risks of a misjudgement are growing.
The king caused irritation in Catalonia this week by warning against
the seduction of "chimeras" – his first such crisis intervention since
1981.
A serving army officer, Colonel Francisco Alaman, has fuelled the
flames by comparing the crisis with 1936 – when Gen Francisco Franco
seized power – and by vowing to crush Catalan nationalists, described
as "vultures". "Independence for Catalunya? Over my dead body. Spain
is not Yugoslavia or Belgium. Even if the lion is sleeping, don't
provoke the lion, because he will show the ferocity proven over
centuries," he said.
Retired Lt-Gen Pedro Pitarch, a former army chief, said the words
reflect "deeply-rooted thinking in large parts of the armed forces".
He also accused Madrid of bungling the Catalan drama disastrously.
"Are we looking at a failed state?" he asked. Investors holding
Spanish debt are listening carefully.
http://www.telegraph.co.uk/finance/financialcrisis/9556803/Spain-risks-break-up-as-Mariano-Rajoy-stirs-Catalan-fury.html
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