Catalan Politician Does Unthinkable, Threatens Spain’s Creditors

By Don Quijones, a freelance writer and translator based in Barcelona, Spain. His blog, Raging Bull-Shit, is a modest attempt to challenge some of the wishful thinking and scrub away the lathers of soft soap peddled by our political and business leaders and their loyal mainstream media. Cross posted from Testosterone Pit

There are certain things politicians should never do – assuming, that is, they want to hold on to their jobs. Using the dirty “s” word (sovereignty) for example, is a definite no-no. Also high up on the list of “don’t dos” is threatening the interests of foreign creditors and bondholders.

Yet this is precisely what Oriol Junqueras, the firebrand leader of Esquerra Republicana Catalana (ERC), the second largest party in Catalonia’s government coalition, did last week. Not that many people living outside of Catalonia found about it, since it went virtually unreported in the international press.

The location was Brussels, the occasion a conference for the youth branch of the European Free Alliance movement in Brussels. As twenty and thirty-somethings from across Europe looked on, Junqueras delivered a barely veiled threat to Spain’s creditors about the dangers of failure to defuse the simmering conflict between Madrid and Catalonia (see video, in Spanish, here).

Perhaps those most interested in finding a solution are the creditors – not the politicians. Last year the Spanish state had a deficit of more than 10 percent of its GDP… Given that Catalonia represents a quarter of all Spain’s fiscal revenues and that we have the means to mobilise two million people onto the streets of Catalonia, does anyone seriously believe that we are not capable of halting the Catalan economy for one week? If we did this, can you imagine what kind of impact it would have on Spanish GDP? Or what foreign creditors would suddenly think of Spanish debt and what that would mean for the risk premium of Spanish bonds?

As such we also have our own instruments. European institutions need to decide what should prevail: democratic principles or the de-facto actions of the (Spanish) state? If it is the latter, clearly we will deploy all instruments available to us.

On his return to Barcelona, Junqueras faced a veritable shit storm of criticism from virtually all sides of the political spectrum, both in Catalonia and in Spain. Catalonia’s councillor for business and employment Felip Puig questioned whether a general strike in Catalonia would even be feasible. “The Catalan economy cannot stop for even two hours,” he said.

The criticism was even more stinging from Alicia Sánchez Camacho, the representative for Catalonia of Spain’s governing Popular Party, who described Junqueras’ actions as kamikaze and called for the Catalonian premier Artur Mas to denounce the actions of his largest partner in government – something Mas seems reluctant to do, and for good reason: Junqueras’ left-wing republican party is fast gaining support in the region. Indeed, recent polls have suggested that if there were elections tomorrow, ERC would emerge as the biggest party in parliament.

An increasing number of Catalonians are turning to more radical, separatist parties. They include the relative newcomer CUP, a strongly pro-independence and anti-EU party that in the last elections won 3.5 percent of the popular vote and three seats in the region’s parliament. One of those is occupied by David Fernández who has courted controversy at virtually every turn. Just last week, during a Q&A session on Bankia’s collapse, he threatened to throw a shoe at Rodrigo Rato, the bank’s former CEO of Bankia and one-time president of the IMF (For more background dirt on Rato, click here).

While Fernandez’s actions were roundly condemned by most quarters, all 21 sitting ERC MPs lent him their full support. It was yet another sign of the growing divisions in the fragile coalition led by Artur Mas. As Giles Tremlett warned in The Economist, by building up Catalonian nationalistic aspirations, Mas may have jumped “on a tiger he can’t fully control.”

In a thought-provoking article for El País Catalan writer Javier Cercas warned that Catalonia and Spain may well be facing a cataclysm (translation by yours truly):

The itinerary will be as follows: First, perhaps in 2014, the Catalonian parliament will make a unilateral declaration of independence. Then one of two things will occur, the most plausible of which is that the Spanish government suspends the region’s semi-autonomous status and declares a state of siege.

From that point on, anything is possible, including an escalation of violence… the most likely eventuality is that Spain will slip into a very severe crisis… It is a cataclysm into which we will be pushed by two main forces: the irresponsibility of a few luminaries who didn’t hesitate to jump on board a centaur born of economic crisis, idealism and the well-intentioned yet ill-informed aspirations of many decent people; and the incurable stubbornness of Spanish nationalism.

As long as the Rajoy administration continues to kill all hope of a negotiated settlement with its north-eastern province, one can expect political and economic relations between Madrid and Catalonia to continue to worsen. A symmetric trade boycott has already taken its toll on both economies and the Troika’s austerity medicine continues to wreak havoc — in particular in Catalonia, whose junk bond status prevents it from raising its own funds. It must therefore go cap in hand to Madrid for every penny it needs. When the money doesn’t arrive in the quantities needed, as is often the case, suspicions and resentment rise.

For the time being the EU continues to maintain a low profile on the issue. Every now and then it will issue Catalonia with a warning of the risks of trying to go it alone. The message is clear: any move to declare independence would result in the nascent nation’s expulsion from both the eurozone and the Union. However, as Junqueras warned, the status quo is no longer an option — at least not for a growing number of Catalans.

“We will use all democratic instruments available to us and we will not renounce any of them — because… without them we have no possibility of winning. And we are here to win!”

Rather than ignoring the problem, the EU would do well to listen to Junqueras, as well as pay heed to the lessons of history. This, after all, would not be the first time that Catalonia had tried to sever its ties with Spain. Twice in the early 1930s it unilaterally declared independence. What followed shortly thereafter was one of the bloodiest civil wars of modern European history, which also served as a prelude to the most costly global conflict in human history. By Don Quijones, of Raging Bull-Shit.

Despite a miraculous economic “recovery,” EU-wide youth unemployment hit 24%. New records were set in Spain (56.5%), Greece (57.3%), Italy (40%), and France (26%). The warnings from history are clear: governments that allow youth unemployment to escalate, do so at their own peril. Read…. No Country For Young Men

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  1. PaulW

    How bad does it have to get? Oh yes, if this continues something bad will happen in 2014 or 2015. If it is as bad as the alternative media makes it out to be – and not just in Spain – then why are people still taking it? Are they weak, helpless, frightened, stupid? So either the alternative media is exaggerating things or they are reporting accurately and people deserve what they get because they continue to just take it.

    In my gut I feel the 1% are a cancer in the process of destroying our standard of living every where. If things are that dire then when are people going to stand up and fight for their societies? After it’s too late? Forget the democratic process, forget the free market(which has been destroyed by crony capitalism), forget peaceful protests and forget ranting on the internet. All above actions make no impression on the 1%. I’m thinking Charlotte Corday. I’m thinking the cancer must be destroyed before society can get healthy again.

    1. craazyman

      None of this makes any sense. I’ll have to go over and check out my friend at the Spanish institute to see what’s up over there. She’s the source for my macro research on Spain. She has family there and she smokes hand rolled ciagrettes and speaks fluent Spanish. She can read Spanish too. They cut her budget by 50% last year but nothing there looks like it’s changed at all. God knows what they had to cut. I’ll have to ask.

      She said mostly they’re all out drinking and partying over in Spain, living at home, working off the books. She said she went back this summer and the cafes were full.

      This makes no sense at all. I bet it’s something like this: a few hundred ambitious people make the news and millions live their lives in total anonymity. The “economy” is someplace in between like an imperfect set, containing neither all of one or all the other — and certainly not both — and it’s filled with noise and randomness, the location of its borders signifys only its permeable boundaries.

      The real boundaries are invisible and unquantifiable. I have a theory but it’s too much work to type it out now. It has to do with energy and form. I need to find a way to make it more rigorous, more than something a crank would think up by accident in their spare time.

      1. Moneta

        My MIL was talking to a Portuguese friend last summer who told her the same thing… the economy is doing great because they are building even more high end restaurants, five star hotels, Chanel & Louis Vuitton boutiques….

        The globe is addicted to bling.

        The thing is that during the Weimar Republic, that’s exactly what happened. People lost faith, lived for today, spent and parted like there was no tomorrow and the class with too much money enabled it. I’m probably not supposed to mention Weimar and all those extreme cases because I sound like a lunatic. LOL!

        Anyway, IMO, the population just does not see clearly and never will.

        I tried to explain this to my MIL here in Canada and once again I was told to shut up because I don’t know anything. How could I, I’m not Portuguese and I’m always negative.

        1. PaulW

          You know how it is here in Canada Moneta. Happy days are still here as the debt bubble keeps building. It’s a shame they couldn’t be right and nothing bad will happen.

  2. Massinissa

    I feel like saying “INDEPENCE FOR CATALONIA!!” right now just because I can.

    Though in reality I don’t think it would make much of a difference for Catalonians, and I think they probably should stay in Spain.

  3. kenneth alonso

    The argument in Catalonia has always been about money.

    Franco invested heavily in Catalonia to quiet the population. Their prosperity came at the expense of the rest of Spain. That is not lost in the memory of the rest of Spain. Madrid also contributes more than does Catalonia and receives less in return. That is a reality check.

    Corporate interests (the major backers of political parties in Spain) have already noted they would withdraw from Catalonia and expect that a capital flight would occur rapidly (one of Spain’s largest banks, Banco Sabadell, is based in Catalonia…what Spaniard would bank with them if a rupture occurred?). The threat to creditors by stating there would be a return to the conditions of the early 20th Century that would disrupt the economy is not likely to sit well with the Bundesbank (or the ECB). I doubt that NATO would tolerate instability at the juncture between France, Spain, and the Mediterranean. And who would complain? That is also a reality check.
    Spain and all its autonomous regions is corrupt and has not had competent governance for decades. That is unlikely to change as well as the Constitution enshrined the corporate state. Investing in Spain requires tax breaks and/or a local elite as a partner.

  4. Ignacio

    I was born and live in Madrid, but i was was Catalonian, I would almost certainly support ERC’s take. The current spanish government has a weak position in Catalonia and has a well-known history of opposition to any initiative to fix catalonian claims on fiscal and other policies. It is also true that Catalonian conservatists (Artur Mas) are riding a tiger that they cannot control since separatism is fed, not only by true romantic nationalistic feelings but also by crisis mismanagement which the central government shares with governing catalonian conservatists. The main reason that I would embrace separatism would be pragmatic rather that romantic. These days, the larger the country the less democratic its functioning is.

    1. Carla

      “These days, the larger the country the less democratic its functioning is.”

      Very good point, Ignacio. Thank you for making it.

      Another point that seems to me to be a sub-text of this thread is that monetary sovereignty equals nationalism. Or at least, nationalism at some level will require monetary sovereignty, for good or ill.

      Finally, Viva Catalonia! (maybe that’s not the way you say it in Catalan. Unfortunately, I’m ignorant. But I sure do love Barcelona!)

    1. NotSoSure

      Impossible surely, since the spread on Spanish bonds have narrowed considerably. What can go right(not a typo) ?

  5. LordGamez

    I cannot understand the stupidity of the catalans. They haven’t learned nothing from their history at all. They will never gain independence from Spain and no one in Europe are willing to help them attain it as well. The catalans are fools, dreamers, or plain drunk with madness. Spain has a powerful military, they HAVE A FUCKIN CONSTITUTION (in which the catalans haven’t read) that forbids division of the supreme state. The innocent catalans are being led by old fools that will be butchered in the beginning of this holocaust. I believe this would be the 8th time since 1668 to now where the rebellious catalans will be butchered.

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