QUO VADIS CATALONIA? – Part Two Catalonia, Europe and the World by Albert Pont, President, Catalan Circle for Business (www.ccncat.cat)

In the first part of this article we referred to the historic, political, economic and cultural reasons that, for over three centuries, have underpinned the Catalan claim for self-rule. In this second part, we shall provide readers with a succinct overview of the Catalan “Road Map” to independence together with the economic and legal consequences of the establishment of a Catalan Republic, both for the Catalan population, for foreign residents in Catalonia, as well as for third country nationals having to deal with a newly independent Catalan State.
What can be Expected Next?
The will of the Catalans was expressed peacefully and democratically in the last elections to the Catalan Parliament held in September 2015. But there has been a constant hostility shown by Madrid towards Catalan institutions, as well as contempt for the basic democratic mandate from the Catalan people. There have been no political voices in Spain in favour of finding ways to reach an understanding with Catalonia. The only “reply” from the Spanish Popular Party (PP) government to the legitimate claims of Catalans that their political and economic rights be respected and about the need for a genuine political dialogue, has been the unprecedented, extravagant and abusive role and the repressive powers vested to the Spanish Constitutional Court (SCC), that are contrary to democratic division of powers and the rule of law, to “prosecute and punish” Catalan political leaders and public officers and the intensification of the “dirty war” being waged by the Spanish state against Catalonia.
 
The “Dirty War” against Catalonia
As it was revealed by the media, since 2010 there have been undercover moves by Spanish powers to create false evidence incriminating Catalan political figures with the help of Spanish “patriotic” news media. In this connection, it is worth pointing out to the existence of secret recordings, made by the Ministry of the Interior, that were made public due to the disputes between different “factions” in the Spanish security bodies and were then profusely covered by Catalan and Spanish media, concerning the existence of a vast conspiracy to discredit Catalan political leaders and to prepare the ground for an intervention by the central Spanish government to do away with the remnants of Catalan autonomy.
 
The so-called “Operation Catalonia” was organized by the Spanish Minister of the Interior (the leading candidate of the PP in Catalonia), employing vast resources among the police forces, the public prosecutors and the judiciary in order to create false accusations of corruption and wrongdoing against the Catalan pro-independence leaders, that were regularly “filtered” to the media during the critical periods prior to Catalan and Spanish elections. This must be seen in a political context in Spain characterized by a proliferation of instances of corruption, indictments and judicial proceedings against Spanish PP political leaders and officials (as in the so-called “Arena”,”Gürtel” and “Bankia” cases) involving some Presidents of Autonomous Communities, town mayors, former treasurers of the Popular Party (accused of having operated a parallel system of illegal party contributions and kickbacks for over 20 years) and even members of the Spanish royal family.  Moreover, after two general elections held over the course of one year, the PP has been incapable of securing a stable majority. Spain is thus “managed” by a caretaker PP government that refuses to be accountable to the elected representatives of the Spanish Parliament (Cortes) and whose only objective seems to be to continue using the Spanish Constitutional Court as a tool to repress the claims and aspirations of Catalans while it goes on exploiting them.
The Economic Perspective: the “Splitting” of Spanish Debt
The Kingdom of Spain is riddled with a huge unpayable debt. Presently, the public indebtness of the country is just over 100 per cent of the Gross Domestic Product. From an over USD 5 billion loan requested by the Spanish government from the European Central Bank to prevent the collapse of the banking system (and avoid an “intervention” by the EU), a mere USD 500 million have been recovered from the banks (most of them controlled by political cronies). The rest will have to be shouldered by many generations of Spanish tax payers.  Given the prevalence of corruption scandals, indebtness and repression, the worst case scenario for Catalans is, clearly, to remain part of Spain.  As we explained in the first part of this article, the nature of Catalan economy is fundamentally different from the oligarchic canvas prevalent in most areas of the Spanish State. Catalan economic activity is firmly rooted in the real economy, more industrially diversified and more sustainable than in the rest of Spain (and many areas of the EU). During the “crisis years”, despite the systematic financial suffocation caused by the measures taken in Madrid, Catalan exports have increased three-fold, and they have also augmented their value added and their technological content. Presently, only one third of Catalan sales go to the Spanish market[1] . Catalonia continues to attract international investments and, according to the well-known economist Jeremy Rifkin, “Catalonia is well placed and has all the required technological resources and assets to spearhead the “third industrial revolution” based on a collaborative and sustainable economic model, resilient to climate change”[2].
 
But, what will be the effect of the “splitting” of the huge Spanish debt burden on a newly independent Catalan State? A recently published analysis of the “Economics of a Catalan Secession from Spain” reaches the following enlightening conclusions, based on different political scenarios[3]:
 

  • The Velvet Divorce Scenario: Agreed Secession. The independence of Catalonia is recognized by Spain, it becomes a full EU Member State, enters the UN and all the international organizations, assumes its rights and duties under existing treaties, etc. Catalonia would then get full control of its own taxes, hence around USD 21 billion would not syphoned away by Spain every year, and both parts would take their fair share of Spain’s public assets and debt in application of the Vienna Convention of 1983.

 

  • The Sour Divorce Scenario: Unilateral Secession. If Catalonia secedes, despite Spanish opposition, the effect on the economy will be closely related to Spain’s success or failure in expelling Catalonia from the single European market and the euro.

 

  • This outcome would, in turn have two “sub-scenarios”: a) secession inside the single European market, or b) secession outside the single European market. In both cases, the main impact would be on debt: Spain would retain its USD 1.3 trillion debt, after losing Catalonia’s GDP, which is now 20 per cent of Spain’s current GDP. Its debt-to-GDP ratio would soar to 114 per cent from the current 100 per cent. This would make Spain completely unsustainable. In all these scenarios, Spain would have only two options. It can either recognize or not recognize an independent Catalan State. In spite of all the (empty) threats and gloomy rhetoric engaged in by Spanish political figures at home and abroad, if Spain chose not to recognize an independent Catalonia, it could not apply any retaliatory or discriminatory measures against Catalan either, since its people would continue enjoying their status as EU citizens.[4]

 
The Legal Perspective: the “Disconnect Laws” and the Voting of the Catalan Constitution
The democratically elected Catalan Parliament has resolved to begin the process of “disconnection” from Spain and the creation of an independent State.  The “road map” includes several options, such the possibility of calling a referendum and the voting on a draft Catalan Constitution. Unlike the non-binding consultation on independence of 9 November 2014, if Spain won’t agree to a referendum on independence, and it turns out to be the chosen path, the referendum will be called by invoking a new Catalan legal system rather than the current Spanish law. On this point the key lies with the prior approval of the law on “Legal Transistorizes” that is currently being drafted in the Catalan Parliament. The law could include a declaration of sovereignty, the rules for calling a referendum and a set of transitional regulations (some Spanish legislation will continue to apply just after independence) so as to avoid any legal uncertainty. It must be emphasized that the idea of deciding the future of Catalonia by way of a referendum is supported by over 80 per cent of the Catalan population.
 
In this regard, the CCN has urged the United Nations to assist them in the organization and implementation of a referendum on the future draft Constitution of the Catalan Republic, presently also being elaborated by the Catalan Parliament. The CCN recalls that the UN has in the past conducted referendums on the issue of self-determination, and is the best placed authority to ensure the authenticity of the vote while putting aside any controversy on the expression of the public will among the Catalan population. As Catalan Justice Counsellor (Minister) Carles Mundó has put it: “The Catalan Road Map to independence does not foresee any legal vacuum. This is a process that goes from the ballot boxes to the ballot boxes, from the law to the law”. It will encompass the full control of infrastructure, such as ports and airports, and the implementation of border control security commitments, in a manner that adheres to the agreements applicable to the territory of the new Catalan State.
 
The Effects of Catalan Independence for Foreign Residents and Third Country Nationals
Besides exercising effective control of the territory and ensuring the provision of goods and services to satisfy the needs of the population, the future independent Catalan State will have to guarantee the required legal certainty and security throughout the transition period and beyond.
 
Consequently, foreign residents in Catalonia and third country nationals having to deal with situations involving contractual or property rights or other legal entitlements concerning assets falling under Catalan jurisdiction will, without any shade of a doubt, be able to maintain them  and have them properly enforced after the independence of Catalonia. This will apply, for instance, to real estate properties or secondary homes in coastal areas or to the tax exemption for retirees from the United Nations system residing on Catalan territory. All these rights and privileges will be preserved and, most likely, enhanced. It is also worth mentioning that the highest judicial instance responsible for tax matters in Catalonia, namely, the Catalan High Court of Justice[5] has been already directly interpreting and applying the Convention of Privileges and Immunities of the United Nations for many decades now. Moreover, the acquisition of Catalan nationality by foreign residents will also be greatly facilitated by authorities in an independent Catalonia[6].
 
A Happy Ending…for All?
The massive demonstrations that this year, once again, took place in some of the main Catalan cities on the occasion of the Catalan National Day on 11 September and brought millions of people to the streets were yet another peaceful but resolute manifestation of the will of the Catalan population to become a state and to take a legitimate role in the international community.  To really understand the Catalan pro-independence movement one should keep in mind that, for the Catalans, independence is a project of hope and change. Hope for a fairer, more advanced and more prosperous country, where democracy works better and corruption is eradicated. Change for a country that, given the opportunity to manage its own resources, can become one of the most dynamic in Europe[7]. With an independent Catalonia, Catalans will not only be able to defend and promote their own language and culture, but the interests of all EU countries and the international community will also be better served (including through the secured repayment of a sizeable part of the present Spanish debt). In addition, Catalonia has the potential to become a powerful economic hub for the promotion of industry, services and innovation in Southern Europe and the Mediterranean region (including for our neighbours in the West of the Iberian Peninsula). Last, but most certainly not least, the independence of Catalonia could mark the beginning of a “virtuous domino effect” to finally dismantle and overcome the nefarious Franco legacy both in the Republic of Catalonia and in its future (good) neighbour, the Kingdom of Spain.
 
[1] See the journal “Elpuntavui”, 3 October 2016.
[2] “A New Economic Paradigm for a sustainable Catalonia”, a conference organized by Diplocat in Barcelona on 1 October 2016.
[3]“Here are the economics of a Catalan secession from Spain”, by Alfons López Tena and Elisenda Paluzie, Business Insider UK, Feb. 24 2016 (http://uk.businessinsider.com/economics-of-catalan-secession-from-spain-2016-2?r=US&IR=T
[4]More detailed information on the partition of assets and liabilities between the independent Catalan State and Spain can be found in “Delenda est Hispania” and “Adendum”, both by Albert Pont. References to these and other related publications can be obtained through the CCN website: www.ccncat.cat.
[5]The so-called “Tribunal Superior de Justícia de Catalunya”.
[6]Contrary to the restrictive measures applied by Spanish authorities, Catalonia has traditionally displayed a clearly open and welcoming attitude towards newcomers and refugees. See also in this regard the CCN Dossier about “The attribution of Catalan nationality”, available at www.ccncat.cat.
[7]Open Democracy, Catalonia: a new country in the making? by Jordi Solé i Ferrando, 19 August 2015 (https://www.opendemocracy.net/can-europe-make-it/jordi-soler-i-ferrando/catalonia-new-country-in-making).

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