Catalonia Declares Independence but Hits Hold Button; Spain Sets Emergency Meeting; Good Outcomes Unlikely: Update – Rajoy Forces Secessionsits’ Hands

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Tuesday evening, Catalonia’s President Carles Puigdemont tried to come up with a Solomonic compromise between his separatist movement and the Spanish government. With other senior officials in the region, he signed a declaration of independence, but said he was suspending it for several weeks to pursue negotiations with Spain.

Spain’s leaders reacted quickly, scheduling an emergency Cabinet meeting for Wednesday morning. Prime Minister Rajoy was mum, but central government officials kept up their drumbeat of disapproval. For instance, the BBC reported:

Spain’s Deputy Prime Minister Soraya Saenz de Santamaria responded to Tuesday’s developments by saying: “Neither Mr Puigdemont nor anybody else can claim… to impose mediation.

“Any dialogue between democrats has to take place within the law.”

Puigdemont’s gambit was consistent with his initial move after the contested independence referendum: he said Catalonia would secede shortly but called for negotiations. As we pointed out then:

Yet after having threatened to declare independence within 48 hours of a favorable referendum vote (and press reports indicated that the total number of voted lodged favoring departure was higher than the threshold Catalonian separatists had set), officials in Catalonia are now retreating from their threat of a speedy exodus. Instead they want to negotiate and have the EU moderate. But you can’t have talks unless the other side wants to talk too.

In the intervening days, Spain has made it even clearer than it did in the referendum crackdown that it has no intention of indulging Catalonia’s secessionists. The only open question is how harsh its next moves will be.

Let us consider the moves Spain has already taken against the separatists:

Spain issued a decree allowing companies to move headquarters more readily. One well-regarded company,  Oryzon Genomics, announced plans to move even before the Spanish government intervened to facilitate a corporate exodus. Some US companies with units based in Catalonia claimed they could withdraw overnight. CNBC provided a roundup yesterday of the companies who said they were making plans to relocate or giving it serious study.

The king denounced the separatists. From his speech:

For some time, certain authorities in Catalonia, repeatedly, consciously and deliberately, have been failing to comply with the constitution and the statute on autonomy…

With these decisions they have systematically infringed the approved legal framework, showing an unacceptable disloyalty to the powers of the state. A state that those authorities represent in Catalonia.

They have broken the democratic principles of the rule of law and have undermined the harmony and coexistence of Catalan society, to the point — unhappily — of dividing it…and with their irresponsible conduct are even putting at risk the economic and social stability of Catalonia and all of Spain.

Experts pointed out that the last time the king made a similar statement was during a short-lived coup attempt in 1981.

The Constitutional court suspended a scheduled Catalonia parliamentary session. As we described, the Constitutional court blocked the meeting of Catalonia’s parliament at which the referendum results were set to be presented and where the legislators were expected to approve a declaration of independence. Moreover, as the Guardian pointed out:

The court warned that any session carried out in defiance of its ban would be “null”, and added that the parliament’s leaders could face criminal action if they ignored the court order.

There is no reason to think that the government in Madrid has had a change of heart and will now make nice to Catalonia. The only retreat it has made from its hardline stance is to apologize for the headbreaking during its referendum crackdown. That in turn resulted from the media widely publishing video clips showing excessive use of force, resulting in international condemnation.

In other words, the central government is not going to negotiate, since it sees no reason to. It will stick to its playbook. . From the Financial Times last week:

As Spanish prime minister Mariano Rajoy met other party leaders on Monday, his government gave little sign it was open to talks as long as the separatist Catalan government pushes for full independence from Spain, in contravention of the law and the constitution…..

Rafael Catala, the justice minister, said the government would use all the tools at its disposal — including if necessary the suspension of Catalonia’s autonomy — to enforce the rule of law. “We have always said that we would use all the force of the law,” he said told Spanish television.

There were also hawkish calls by Albert Rivera, the head of the liberal Ciudadanos party which supports the PP government, to suspend Catalonia’s autonomy immediately. The government on Monday rejected taking these steps right away, although has left the option open for the future.

One of the reasons Madrid won’t compromise, aside from the fact that that appears to be out of character for Rajoy, is that the central government isn’t willing (it would argue isn’t able) to give Catalonia the compromise that could put the secession push to rest, namely, giving Catalonia a level of autonomy similar to that of the Basque country. The critical change would be to let the region control its own tax collection and remit some funds from that to the central government. Catalonia’s intent, as with the Basques, would be to keep more of the proceeds for itself. The Basque region is small enough that the revenue loss wasn’t terribly consequential. By contrast, given that Spain does not have its own currency, and separately is a devout believer in neoliberal economics, Spain can’t deficit spend on a sustained basis to make up for a shortfall, and raising taxes or cutting spending in a still-weak economy would be unpopular and would hurt growth.

Shorter: there’s no solution space even if Rajoy’s government were willing to talk.

So the open question is how harsh will Rajoy’s new measures be? ABC Australia set forth some possibilities:

Prime Minister Mariano Rajoy could take the unprecedented step of dissolving the Catalan Parliament and triggering new regional elections, the so-called “nuclear option”….

Last week Carlos Uxo, a Spanish studies expert at Monash University, said there were a couple of outcomes:

• The President of Catalonia would probably be arrested
• The Spanish Government would seize control of the region

At a minimum, it seems likely that Spain will order the arrest of everyone who signed the declaration of independence. It might offer the token concession of being willing to withdraw the order if they cancel the declaration.

If Catalonia does not back down and the separatist leaders are able to evade arrest, Madrid could invoke Article 155 and take control of Catalonia.

But as we’ve said, if the secessionists don’t retreat, this becomes a lose-lose situation. While the central government has more than enough tools to bring Catalonia to heel short term, it can’t keep down a popular movement with as much support as the secessionists have garnered. And the less careful and surgical Madrid is in how it combats the secessionists, the more it does to increase their resolve.

The Basques eventually got their way via a sustained campaign of violence. That is what Spain will put in motion in Catalonia unless it proceeds with great finesse, a quality its leaders seem to lack.

Update 6:45 AM. I need to turn in, so forgive me for being brief. From the Financial Times:

Spain’s prime minister has opened the way for Madrid to suspend the autonomy of Catalonia by demanding that the regional government makes clear whether it considers itself independent….

Madrid is considering whether to apply a “nuclear option” in the Spanish constitution — Article 155 — to intervene, suspend all Catalan autonomy and call new elections.

I would assume Catalan president Carles Puigdemont’s response will be “We aren’t independent now.” Tactically, less is more, particularly given the risks.

However, Rajoy signaling that he is ready to strip Catalonia of its independence is likely to fuel more pro-independence protests if the separatists keep their cool and make minimal formal responses. But since I haven’t been impressed with how either side is playing its hand, I defer to readers in Spain who no doubt have a much better reading on what other considerations could affect what move Puigdemont and his allies take next.

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  1. Ruben

    “The Basques eventually got their way via a sustained campaign of violence. That is what Spain will put in motion in Catalonia unless it proceeds with great finesse, a quality its leaders seem to lack.”

    This is a very astute observation that no one, not even in the Basque Country, would let it out of his/her mouth, but it is all too clear to the informed outsider: the Basques owe their autonomy to a certain (necessary?) degree to ETA’s killing spree and this is sad, it is uncivilized, it is un-European, readers are advised not to repeat it when visiting Spain.

      1. vlade

        only for the last, well, a few, years, and only if it does happen in a former Western European country. Or, to put it otherwise, only when it suits.

      2. ambrit

        Hmmm. This is a situation where there is no suitable level of irony available.
        Another thought is that, since killing is a species wide endeavour, ‘Civilized Europe’ can revel in its’ cutting edge application of the process.
        “The Horror. The Horror.”

      3. Sid Finster

        Exactly what I was thinking, Colonel.

        Not long ago, Europeans were the folks who brought us imperialism and colonialism, to name a few. Hell, even the Belgians went all in colonialism.

        Europeans only magically morphed into the placid vegetarian metrosexuals we know today, once they met the Red Army and decided that the Cult of Chest-Thumping Aggression wasn’t so much fun when its your [FAMILY BLOG] that’s getting beat.

      4. Oregoncharles

        A TV historian – “The History of Civilization,” IIRC – observed that Europeans were able to pretty much conquer the world because they had practiced so much on each other.

        The background to this is that while China was mostly unified through history, Europe was mostly broken into Warring States; indeed, Catalonia is one of them. The present story is an aftershock from the War of the Spanish Succession, in the early 1700s.

    1. Ignacio

      I can’t believe I am reading this here. The Basques owe their autonomy to ETA? Explain how, when and what ageement was reached upon ETA terrorist menace.

      If there is any independentist going to sustain any violent campaign, that will signal the political end of independentism

      1. Ruben

        Your indignation is duly noted.

        Apparently it was Yves whom wrote “The Basques eventually got their way via a sustained campaign of violence” (or it was her quote of a piece in ABC Australia) in reply to which I asserted that it was an astute observation because I agree, I believe that ETA is part of the reason the Basques enjoy such an astounding degree of autonomy (not through formal agreements of course), although this is of course something that every politically correct person should be very sad about and should not be said aloud lest one wants to be showered by righteous indignation.

        1. Ignacio

          Well on the contrary, ETA has been a hindrance for the desires of Basque nationalists. Their autonomic achievements are more or less the same as catalonian and galician (the three “historic” autonomies achieved fast-track competencies earlier that the rest). Regarding the fiscal pact with basque country (there are at least three “particular” fiscal pacts with Canarias, Navarra and Pais Basque), has historic precedents and it is the natural development of the spanish constitution in 1978. Has nothing to do with ETA. So, please, tell us which pact or achievement has been thougth, produced or developed by the formal or informal influence of ETA.

          Any “advantage” basques may have obtained in negotiations has usually been the effect of political negotiation. Tipically, a national government needing parlamentary support from nationalistic parties during a legislature would concede advantages. If anybody has any proof or authoritative claim, apart from gut feeling, that ETA conditioned such negotiations in favor of more autonomy, i really would appreciate to see it. I am just reading assertions for which I cannot find any support.

          1. Ignacio

            There was only one precise moment in the first democratic government, very early in spanish democracy, in which the weakness of UCD (for several reasons, economic, terrorism, pressures from far-rigth) prompted fast autonomic negotiations. Nevertheless, the effect that terrorism had was, mid and long term, negative for basque independentists.

            Catalonians know it. Now, the contitions of early democratic process in Spain, do not apply and violence would rapidly invalidate any independence project.

          2. Ruben

            “Their [Basques] autonomic achievements are more or less the same as catalonian and galician …”.

            This assertion of yours is so wrong, at the very least please read the Reuters linked here on 10/10/2017, “The Basque: Spain’s effective but expensive antidote to secession”.

            Any positive or negative effect of the sustained campaign of violence by ETA on the unique degree of autonomy that the Basques enjoy cannot be rejected or corroborated by your, mine or any other commentator assertions here, it is a matter for specialists digging deeply. You stated your gut feelings, I believe otherwise.

            1. Ignacio

              I was meaning on general competences and I mentioned the exception of fiscal competence.

              Those were the fast-track autonomies. The main difference between Catalonia and Pais Basque is the “concierto vasco” (economic fiscal agreement) that dates from 1878 and was only suspended by Franco to be revived during the negotiations resulting in 1978 constitution. This is the reason, not ETA, that explains this difference in Basque autonomy. The rest of autonomic competences where simultaneously delivered to the three autonomías. As I told before, the Basque Country is not the only one thas has special fiscal treatment. Navarra also has a “foral “agreement for historic reasons. ETA opposed to the agreement in Navarra which was the first to be signed. The agreements lmit the contribution of these autonomías to the common national fiscal box.

              In the case of Catalonia, they have never enjoyed the fiscal “privilege” and they felt envious on basques. Catalonia, contributes to the common national fiscal authority. As being one of the richest Autonomías is a net contributor, but not the only. Madrid is the largest contributor and other Autonomías contributing are Valencia and Baleares. The reason they are not allowed to pursue fiscal independency is to protect low income autonomías that depend vert much on their fiscal surplus. The system is similar to that working in the EU in which the richest countries are net contributors. Most large companies in Spain have fiscal domiciles in Madrid and Barcelona although they make business in all the country. Thus the system compensates these autonomias that collect less in part for this reason. Apparently, some “catalans” believe that they can enjoy access to all spanish market and common facilities without contributing or with minimal contribution in fiscal terms. Quite mean by the part of Convergencia, the neoliberal conservatives governing the autonomy in coaltition.

              Catalonians are trying to break the system, but this in turn has consequences because companies having fiscal address in Cataluña feel the pressure to change fiscal address to the place where most of their business reside. That changes the game and it seems to me that the process has ignited a flux of companies to change their fiscal location. There is where resides the real “war” between the central government and the autonomic.

              The article you mention correctly points to the origin of el “concierto vasco” much older than ETA, and not a consequence of ETA terrorism as it has been suggested..

              Finally we get to the point that bring us to the reality of the driver of the “proces” which is just neoliberal gaming of the fiscal system. It is a game of the elites

              1. Ruben

                Thanks for this detailed response. We agree that this is a struggle between two elites, I said that much in a post of mine here on 10/10/2017 (1st comment on “Catalonia’s drive …”). Your views though still are wrong because fiscal autonomy is very important, you just can’t defend this: “Their [Basques] autonomic achievements are more or less the same as catalonian and galician …”.

                I am not convinced either by your view that this extraordinary degree of autonomy enjoyed by the Basques in the 21st Century (and the Basques say that Navarra is part of Euskadi BTW) was achieved based on events in 1878. Come on. Be reasonable. Why would the modern Spanish state, which many Spaniards as well as other peoples of the Iberian Peninsula, see as just “sun and beaches” with barely any other productive activity, let go a large part of tax collection from a very productive region like the Basque Country? Just because of 1878? Or did the background noise of car bombs all over Spain, kidnappings and executions, revolutionary taxes, high profile assassinations (Carrera Blanco), etc, played a role in the mind of those conceding in Madrid? It seems to me, as an outsider that the Basques showed their teeth and this was part of the reasons they got to control of all of their taxes (except the sales tax AFAIK).

    2. Amanda

      Catalanist movement has been nothing but peaceful, and it will continue to be. Even after being violently hit and repressed at the polls, we responded with peaceful chants, arms raised. Millions of people demonstrate every Diada (our national day) and not one single violent action has occurred. We never answered violently to any provocation from the far right and fascist counter-protesters or the Spanish government. And that is how we intend to continue, peacefully protesting and resisting, until we are free

      1. Ruben

        These are your laudable intentions but any serious unresolved conflict involving millions of people will have a significant group at the tail of the distribution that will go for the nuclear option. It is a natural phenomenon.

      2. St Jacques

        Oh so those huge pro-Spain crowds in Barcelona are “fascists” Yeah, heard it already, a dodgy, unconstitutional legal “process” topped off by a dodgy referendum in which only some 38 % voted and counted in absolutely record time with an amazing 90 % yes vote is sufficient justification for secession? Please spare us of your peacefulness towards all those “untrue Catalans” and their “fascist” friends. I think Charlie Hebdo has captured the spirit of this nationalist movement better than most of the poorly informed MSM. This is no Hollywood battle of the white hats versus the black hats, it is one of the elites, though complicated and fuelled by a difficult economic situation and promises of an economic and social escape for their rank and file supporters.

        1. Ruben

          Spaniards: “We made your referendum dodgy by hacking computer networks, confiscating your funding, ballots and urns, and by unleashing our dogs on peaceful voters, therefore we cannot accept the results of your dodgy referendum”. Brilliant.

          BTW, despite all the Spanish counter-measures, 42% of Catalan voters did vote, not 38% as you say, according to figures tacitly accepted by El Pais, clearly a Spanish organ. Where did you get the 38% figure?

        2. RabidGandhi

          That’s a lot of strawmen in such a short paragraph.

          Amanda said that there were fascist counter-protesters, not that all of the counter-protesters were fascists. At no point did she accuse anyone of being an “untrue Catalán”– which you even put in quotes. Nowhere did she say this is good guys versus bad guys as you claim. And lastly, she made no claims as to the legitimacy of the vote or secession, which you try to refute anyway.

    1. Basil Pesto

      I’m not sure whether it’s likely or not, but it could have significant legal consequences for Spain.

      I thought I saw an international legal authority (a case or a statute) that prohibited parent states from using force to quell an illegal unilateral secession while I was reading on this subject. I’ve just been looking for it but I can’t find it, I might have been thinking of this article, but it’s only theoretical (emphasis mine):

      3. Secession and Just War Theory
      A more serious lacuna in the philosophical literature on secession than the failure to integrate it into a comprehensive theory of territorial justice is the absence of a connection with just war theory. In real-world conflicts in which a group asserts the right to secede and the state denies the validity of the claim, either one or both of the parties often resorts to force. But merely establishing that a group has the right to secede does not settle whether it is justified in using force to achieve its goal of independent statehood. (In general, merely having a right to X does not entail being justified in using force to secure X). Similarly, if the group does not have the right to secede, it may still not be justifiable for the state to use force to prevent it from seceding. Remarkably, philosophical theories of secession have not distinguished between having the right to secede and being justified in using force to exercise the right. Nor have they discussed the conditions under which states have the right to use force to resist secessions when the secessionists have no moral right to secede. This is especially surprising, given the resurgence of philosophical theorizing about just war.

      Things are getting a bit ‘just watch me’ though, disconcertingly

    2. Yves Smith Post author

      My guess is that at this stage, the central government will arrest the separatist leaders if they don’t blink and will call that a day. That would force elections for their seats. I have no idea what if any other implications that would have for the Catalonia government.

      I am sure there would be large scale protests in Barcelona, perhaps with some violence, but the central government would be smart to stand aside and let that play out. I doubt you’d see more than a couple of very large rallies if Madrid manages to intervene surgically.

      However, my guess would also be that that will not be the end of it. But I have no idea whether the separatists are prepared to draw on the ETA’s playbook.

      If on the other hand, Spain strips Catalonia of its current autonomy, all bets are off.

      1. Oregoncharles

        ” That would force elections for their seats.”
        The Spanish government should be careful what they wish for.

        I assume an actual declaration of independence would be made from a position of relative safety – or they’re implausibly naive.

        Catalonia isn’t looking to me for strategic advice, so I won’t go into it, but there exist detailed scenarios for effective non-violent resistance of an occupation. For instance, enough people in the streets would prevent the authorities from moving without causing a blood bath. The Catalan movement hasn’t been quite that coherent, but if Amanda is right, they’re working on it. An election would not be viable under those circumstances, and the costs would become extreme..

        In any case, if the independence movement didn’t boycott it, a vote would produce a MUCH more secessionist government. Spain could prevent secessionists from running, but then it wouldn’t be legitimate. Nobody can win here.

  2. The Rev Kev

    “Experts pointed out that the last time the king made a similar statement was during a short-lived coup attempt in 1981.”
    Not the same king. The present one – Felipe VI of Spain – has only been on the throne since 2014. The one that faced off with the 1981 coup attempt was Juan Carlos I of Spain who abdicated due to ill health and to make way for the present one.

    1. Yves Smith Post author

      “The King is dead, long live the King.” Monarchs are much more bound by tradition and history than political leaders.

      The King of Spain speaks so infrequently (outside scheduled pro-forma events) that the statement by his predecessor is a precedent for him.

      1. The Rev Kev

        So true that. I guess that after Spain lost Portugal a coupla centuries ago that they swore never to let another chunk of the Iberian peninsular go ever again. Those monarchies have awful long memories for stuff like that.

        1. Colonel Smithers

          Thank you, Kev.

          At the time of the rebellion, which led to Portugal’s independence under the Duke of Braganza, Catalonia also tried to break away, but the Castilian monarchy prioritised its eastern front, so fought to hold Catalonia.

          Years later, when the Bourbon Philippe V and his family arrived from France, still the ruling family, Catalonia rebelled in favour of the Habsburg rival claimant, later Emperor Charles VI. As you say, those monarchies have long memories.

          I was in Spain around May Day 2016 and noticed the large number of republican flags at demos. The legitimacy of the royal family, including how the Felipe VI’s father rebuilt the family fortune, is disputed.

  3. Eustache De Saint Pierre

    I suppose that if things get really heavy that a crackdown unlike the ” Proportionate ” roughing up session of throwing women down flights of stairs etc, might result in martyrs. I recall a time when a hard pressed population with a certain history of nationalism, their own alternative language & culture who were hard pressed economically organising & taking part in civil rights marches, based on those devised by MLK.

    The major power decided to teach them a lesson, initially through the use of the local paramilitary police, but when that failed they sent in a certain battalion of paratroopers who over a period of around five months killed twenty four civilians, which led to a very successful recruitment campaign for a certain recently born organisation.

    I wish that I could wholeheartedly believe that the same mistake will not be made again.

    1. makedoanmend

      Racking my brain, EDSP, by reading in between the lines to figure out to just what event you are referring. :-|

      One minor quibble, the “recently born organisation” though a different variation than its older predecessors has a rather longer lineage dating back to a definitive precursor in the 19th century, and it can be argued that that organisation was devised upon kernels of resistance knowledge garnered back into the 18th century as the means of colonial “administration” became more efficient and comprehensive.

      On another note, what I can’t help noticing is how the influence of neoliberal socio-economic policy, which (imo) is creating economic divides in many regions of Europe (i.e. the North South divide in the UK), is being ignored by huge swathes of the MSM. When everyone is looking after #1, there are going to be perceived losers and its discontents no matter the map; or winners who don’t want to be associated with the perceived losers (the Northern Italy brouhaha comes to mind).

      1. Eustache De Saint Pierre

        Northern Ireland which i should probably have made clear, which is where I am working at the moment. I did the Derry taxi tour recently given by the son of one of those shot Standing by while he pointed out the actual position on what is now a car park of where his wounded father was stood over & finished off, is a moment I will never forget, as will be the taxi driver’s apparent ability to not blame me personally for the acts of my country of origin.

        I believe that the same economic factors in terms of Britain are also being willfully ignored by many in the Remain camp. One of the brilliant things about this place is the apparent empathy towards the long time losers & the reaction that has led to Trump, coupled with derision towards the previously comfortable who have hysterically reacted to a perceived threat to their best porcelain rice bowls.

        Of course the long suffering have been had, but that has been a pretty normal state of affairs for the last thirty to forty years, which is something that the hysterical & now slightly in comparison uncomfortable fail to understand.

        1. makedoanmend

          EDSP, was just joking re: the reference. Your insights and subsequent comments are insightful, to say the least.

          My Derry story (short version) arrived by bus by mistake on boxing day many moons ago and well before any thoughts of a peace proccess. Luckily got digs but no food bar a few pints of the black stuff. Next morning (27th, town still essentially closed) found a pub in the bogside open and ordered 4 bags of peanuts and a pint. Quickly sussed that the natives were very wondering what this head case was doing in the pub on this day, and maybe I wasn’t so kosher (so to speak).

          Luckily the bar keep asked me why I was ordering so many bags of peanuts and I was able to audibly explain my plight. Up went the newspapers along with sniggers (at head case’s expense) and normal service resumed. Thankfully a cafe opened by noon’ish and I ended up staying a few more days, as the craic was good.

          [Mind you, I won’t give the buggers the satisfaction of calling Derry a city. ‘Tis just a big town. ;-)]

          1. Eustache De Saint Pierre

            Yes it is basically a large town but the side of the river you refer to has been substantially dolled up, probably some of it due to a few years ago being the chosen European city of Culture.

            The other eight mentioned in that number were people shot in Ballymurphy, West Belfast, an episode I was unaware of until my cousin took me on a Belfast tour. He has a much greater knowledge of the historical aspect than myself & was telling me recently the tale of the fourteen ” Hooded Men ” who it seems were used as guinea pigs for the sort of techniques that were applied at Abu Garib. Many of the group were not IRA but simply picked up off the streets & they all it seems underwent the being thrown out of a helicopter a few feet off the ground while hooded – George Clooney’s wife is currently involved in a case for the survivors at the European court of justice.

            In comparison to England there is a strong community spirit built around their culture, mainly I think through the GAA & it is amazing to see the sports centres that they have largely built themselves through fundraising over the years & going back to my cousin, he believes that is what to a large extent is holding the country together, which was hit badly due to the banking crisis. They also get I think about 8 billion a year from Westminster which might not be easily replaceable by ROI in the light of a United Ireland.

            I sincerely hope that things do not get out of hand due to Brexit – as people go & it is largely impossible to know in everyday life what side of the divide they come from, they appear to be by & large a friendly accommodating people who certainly do not deserve yet another version of the same old nightmare.

    2. Basil Pesto

      “I recall a time when a hard pressed population with a certain history of nationalism, their own alternative language & culture who were hard pressed economically organising & taking part in civil rights marches”

      The Sudetenland?

  4. Disturbed Voter

    If it is true, that the new Globalism, is at heart the new Feudalism … then of course modern nations will be broken up into duchies and archbishoprics. All the better to be ruled by the real Deep State … the Vatican.

  5. Basil Pesto

    I mentioned in the Catalonia story yesterday that I’d written a long essay to no one in particular. I whacked it up on Medium as I had nowhere else to put it (if you read the essay, you will notice various echoes of comments that I have made on NC on the subject) I think it’ll be informative and of interest to many here.

    Catalonia and the political misuse of concepts of democracy and human rights

    There is one particularly important point from the essay that is worth highlighting. The other day I saw a pro-separatist in the comments on NC saying that “international observers” had in effect given the referendum the thumbs up. This didn’t make sense to me so I did some digging. There were some reports of observers, mainly in the Catalan press but some in English language press too (The London Telegraph, Irish Independent). The provenance of these observers is deeply suspect. There are two observer groups reported. One is connected to Puigdemont, the other is being supported by a private think tank that won’t disclose its clients. The essay goes into further detail with links. They are not internationally recognised observational groups. There’s some misinformation going on here that people should be aware of.

    1. Ignacio

      There’s lots of misinformation everywhere. In official, unofficial, para-official well-stablished media etc. I haven’t yet found an analysis worth reading.

          1. Basil Pesto

            Thank you! Feel free to share it around if you think it would be useful or informative to others :~)

          1. Oregoncharles

            That would be an improvement.

            Micronations are much less of a menace, especially if they can be networked. And they’re much more manageable.

            My priors: years ago, I concocted a mental list of countries known for being well run. Given my cultural bias, they were mostly European (Singapore would be a current exception – I’d like to see a list of non-European nations); more to the point, they were and are small. I think the EU is a huge mistake, in both senses of huge. I think they had it right with the Common Market; networked small, manageable countries.

            It’s already clear that the EU is not manageable. If they try to carry unification further, first, I doubt that it will pass; and second, it will cause yet worse problems. It’s the formula for a really dangerous type of empire, IF it succeeds in “unifying.”

            We think of Spain as this easily-visualized block of land; but it’s actually a patchwork, and a lot of the patches are conquered principalities. Long term, not a stable situation.

            1. Basil Pesto

              Ah, when I said micronations I meant the kind of “jokey” micronations such as Molossia which aren’t very well thought out. That’s as opposed to things like Ministates like Andorra/Monaco/Vatican City or city states like Singapore. I’m not sure I agree with you but your point of view is interesting!

        1. Tobin Paz

          It’s a very complicated issue, and I found your article very helpful in navigating what is going on.

  6. RabidGandhi

    Correct me if I’m out over my skis here, but with regard to the corporate exodus from Catalonia, I think it’s easy to exaggerate the effects. It is true that major Catalonian players– notably CaixaBank and Sabadell– immediately moved their headquarters out of Catalonia. Yet the effects of this are not as dire as portrayed by the rightwing Spanish press– at least from a tax perspective. In the event of independence, there would be some tax changes, but so long as Catalonia remains in Spain, the effects are more psychological than anything.

    First it should be noted that under Spanish law there is no change whatsoever in tax liability just by merely transferring a company’s address; rather there needs to be an effective change in control of the company itself. This means transfer of management and control of all activities.

    Second, if companies are able achieve an effective change in control (“effective transfer of management and control of all activities”), they would still have to pay taxes on any revenues in the autonomous communities where they are incurred– this holds true for all national and international companies operating anywhere in Spain. These activities would be subject to corporate tax (IS, collected by Madrid and not included in the autonomic financing model), personal income tax (IRPF withholdings, collected by Madrid and 50% returned to Barcelona) and VAT (collected 100% by Barcelona).

    Third, in the case that Catalonia does leave, what good will a Spanish Ministerial Order have in an independent Barcelona? The independent Catalonian government would no doubt demand taxes on activities conducted within its territory, regardless of what Madrid has decreed.

    In short, there has been a lot of hand wringing in the press about ZOMG Corporate Exodus! but as I see it the main purpose of Madrid’s legislative ploy and the subsequent media caterwauling is to raise ire against the separatists (with whom, for the record, I have no truck). Nevertheless, the only way there will actually be a major tax/fiscal impact would be in the case that Spain’s autonomic structure is reconfigured– whether by Catalonia getting a Basque type deal or by independence– and it will be this reconfiguration that causes the impact, not the moving of corporate headquarters.

    1. Ignacio

      Your observations are well pointed in general. The reason for fiscal/social movement has more to do with uncertainties in the outcome. Wins or losses migth come mainly from movement of employees under current circumstances. In case of independence Catalonia would loose corporate taxes that would be due where the company has its fiscal address. (VAT, local taxes, taxes on labor would remain the same). I don’t know how much its at stake but it is significant and in fact is almost certainly at the core of the conflict. If I remember correctly corporate taxes amount to about 3% GDP. This seems to be well worth the political battle.

      1. RabidGandhi

        Thanks Ignacio, but this does not sound correct to me. Let’s follow your hypothetical where Catalonia quits Spain and it survives the ensuing economic chaos (RG: don’t hold your breath). On one hand, if Barcelona keeps the same tax framework currently in force in Spain, then any companies with fiscal address outside Catalonia would be liable for any revenues from their production centres in Catalonia. Not only would they have to pay VAT directly to Barcelona just as they do now, but they would also be on the hook for non-resident revenue tax (IRNR). These taxes would accrue on the foreign companies’ activities in Catalonia, just as they do now. On the other hand, a hypothetically independent Catalonia could ostensibly ditch the Spanish model and create its own tax framework (being independent of Spain and expelled from the EU) and thus charge companies whatever it thinks it can get away with.

        Yes there could potentially be actual disruption from movement of personnel, and this could have significant fiscal multipliers, but the only change propitiated by the Ministerial Order was a change on paper. Companies like CaixaBank have only changed an entry in their mercantile registry page; otherwise there is no effective change.

  7. makedoanmend

    The planet would be full of crackpot micronations.

    As opposed to a planet full of crackpot macronations and world wars, threats of nuclear annihilation, and regional conflicts fanned by macronations, and “erasure” of native cultures and cultural diversity, and continent/regional wide biological degradations, and imperialism…

  8. Roland

    How can anyone claim that Spain is not “sustainable”? The current territorial composition of Spain has endured for a considerable time.

    Where is the pressing justification, the need for hurry, that compels Catalonia to pursue a UDI ? As far as I can tell, the Catalans do not face death or ruin in today’s Spain.

    “But Rajoy is an a-hole.” Yes, but so what?

    A separate Catalonia might end up in thrall to an even larger and less accountable ruler: Brussels. Why would anyone in the EU want to be in a smaller and weaker national unit? Don’t the Catalans see how the EU treats small nations who ever find themselves down on their luck?

    1. JBird

      >>A separate Catalonia might end up in thrall to an even larger and less accountable ruler: Brussels. Why would anyone in the EU want to be in a smaller and weaker national unit? Don’t the Catalans see how the EU treats small nations who ever find themselves down on their luck?<<

      Saying there ain't anyone else, no alternatives, and the beatings will continue until morale improves are not good reasons long term.

      See Trump, and the American Revolution. Yes, doing stupid sh** like voting in an orange haired creep, or fighting the most powerful empire of the time, or trying to separate from Spain is stupid, but if you keep doing stupid sh** on people, they will do something, anything, to deal with the continued beating, even if it is stupid.

  9. JBird

    Being an American makes me biased, but I am surprised that no one has mentioned the American Revolution. Let me give a not so short rundown of the revolution, and you can see some similarities.

    Independence was originally a position of fringe fanatics, but thanks to the British incompetence, that changed. For example, Benjamin Franklin was a loyalist who actively worked, for years, if not decades, in maintaining, even strengthening, the Colonies connections to Britain, and the leadership of Parliament, and Monarchy. Until he was not. The years from the end of the Seven Years War in 1763 to the first fighting, and the Declaration in 1775-1776 is a fabulous example of creating a war that almost nobody wanted. The years of 1775 to 1783 is a good example of how not to fight a rebellion.

    Everyone made serious mistakes, but it was the central government ignoring all attempts at reconciliation, and of just modifying the legal, and governmental, relationship, like just giving the colonies direct membership in parliament was ignored, brushed, or just insulted. Most of the political leadership of almost the entire political spectrum of the colonies, along with serious numbers of British politicians, and military leaders, informed the British government of the situation, gave useful advice to peacefully solve the crisis, and warned what would happen if they did not take the advice. This included the possibility of armed revolt, and the great, if not impossible, task of subduing millions of people living along much of the North American Atlantic coast, one to three months away by sailing ship.

    So with all that, the government used ever harsher punishments on increasing numbers of subjects, then used the army, and navy, as customs and tax collectors, then demanded that the colonies acknowledge the complete authority of the crown, and parliament, without offering any concessions, meeting any of the leadership, and often ignoring and being politically abusive not only to such like the Continental Congress, but also the loyalists. This included the very, very poor use of the colonial loyalists trying to help, even fight, when the war came. Note too, that the entire Bill of Rights, especially I think the first eight, was a response to the British actions before the Declaration of Independence which gives a idea of the tactics used before the war.

    So reading about the Spanish and Catalan governments do their dance with the anti-governmental, but not necessarily pro-Independence, faction in Catalonia growing is much like reading about the American Revolution. If it continues, we are going to see a shooting war.

    BTW, back of envelope numbers show the colonists were 1/5 of the Great Britain’s population and a WAG here, 10% of the economy compared to Catalan’s 16% of the population and 19% of GDP.

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