Catalonia: a push for fiscal autonomy, not independence

Robert Sierra - 14 September 2017

With just over two weeks to go before Catalonia’s independence referendum, tensions are boiling over once again. Attempts by Madrid to force Barcelona’s hand and abandon its plebiscite appear to have gone nowhere. Such is the determination to proceed that Carles Puigdemont, the Catalan president, is willing to go to prison to uphold the vote. Ballot boxes have been hidden away in secret locations for fear of confiscation by the police and some two thirds of all local mayors in Catalonia have said they will allow the referendum to take place. Anger is also growing in Madrid.

Last week, Catalan lawmakers approved a bill that provides the legal basis for the 1st October referendum which in the event of a “yes” vote would result in Catalonia unilaterally declaring independence within 48 hours. Days after, Spain’s Constitutional Tribunal, at the request of the centre-right government of premier Rajoy banned the referendum saying that it is illegal under the 1978 constitution and threatened to prosecute all who collude in it.

Barcelona’s current grievances with Madrid run all the way back to Catalonia’s loss of independence in the War of the Spanish Succession in 1701-1714. But the roots of the independence movement are relatively new, fomented by the radical left during Spain’s deep economic crisis. With the return to democracy in 1977, Catalan political parties tended to concentrate on autonomy rather than independence. But calls for full independence began in 2006 after both Catalonia and Spain agreed on a Statute of Autonomy only for the decision to be overturned in the Spanish High Court of Justice. It was at this point that popular protest against that decision quickly turned into demands for independence.

It is important to note that not everyone is in favour of independence and that support for secession has been waning over time. In 2013, polls showed 49 per cent in favour against 35 per cent today (see chart below). Moreover, the best result for supporters of independence was 47.7 per cent in local elections two years ago — hardly the sort of majority needed to legitimise a rupture with Spain, not least to the many Castilian Spaniards who live in Catalonia.

In economic terms, Catalonia is a key part of Spain. It is the richest of the seventeen autonomous communities with a regional product of €224bn in 2016, accounting for about 20 per cent of Spain's GDP of €1.1tn. Despite representing only 16 per cent of the Spanish population, Catalonia accounts for roughly a quarter of all Spanish exports and a similar percentage of all Spanish industry.

As the richest of all Spanish regions, Catalans contribute disproportionately to public funds. The mismanaging (by both sides) of Catalan grievance and aspiration has pushed Madrid and Barcelona apart, leaving the obvious compromise — home rule with a large measure of fiscal autonomy — beached in the middle as both sides gravitate to the extremes. A few months ago, in a sign of conciliation, Rajoy said that the path forward for Catalans was the Basque way who unlike the Catalans collect their own taxes. Fiscal autonomy on Basque lines was, in fact, what the government in Barcelona sought from Madrid in 2012 but Mr Rajoy refused even to discuss it at the time.

In the extreme, Madrid might consider deploying its nuclear option, resorting to emergency powers to seize back administrative control of Catalonia including the suspension of Catalan self-governance and sending in the national police. Such measures risk igniting a constitutional crisis that would only inflame pro-independence sentiment.

The most likely outcome, while probably unpopular among hardliners in Madrid, would be to tolerate some kind of de facto vote, similar to the informal ballot in 2014, while ignoring its results because it has already been ruled illegal. It is also likely that greater fiscal autonomy will be back on the table and the push for independence weakened for good.

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