The Catalan crisis from an economists point of view Clara Ponsat - PowerPoint PPT Presentation

The Catalan crisis from an economist’s point of view Clara Ponsatí VIVES, KU Leuven December 15th, 2017

Preamble • For the last 5 years Catalan governments have been asking the Spanish government to reach an agreement to hold a referendum with all possible guarantees on the poli<cal status of Catalonia vis-à-vis the Spanish state. The adamant refusal of the Spanish governments of the Popular Party has been strongly supported • by the Socialist Party, and by the new neoliberal right, Ciudadanos. All in all they take up to the 70% of the vote in the Spanish state. If you don't include Catalonia, they take up to the 75% of the vote in Spain minus Catalonia. The pro-independence Catalan government was elected two years ago,. The par<es pro-union with • Spain won 39% of the Catalan vote (8% for PP, 18% for C's, 13% for PSOE). Pro-independence par<es won 48% of the vote. Two small par<es (one from the radical leR, the other from center- right) refused to take a stand on the issue, but supported the referendum and have been asking it to the Spanish government; they got 9% and 2,5% respec<vely. The pro-independence Catalan government, to which I belong, has been removed from power by • the Spanish government against the leUer and the spirit of the present Cons<tu<on. I will return to this important issue later on. As a result, the departments of the Catalan government are now run by the Spanish ministers, who • are members of and apply the policies of the Popular Party. Catalonia is now run, and momentous policy decisions are being taken, by a party which took 8% of the vote, under the applause of the socialists and the neoliberal right.

Main message • What is a stake in the Catalan case is a fundamental dilemma about the legi<macy of modern democra<c ins<tu<ons, a dilemma essen<ally framed by the tensions between the power of the majority and the rights of the minori<es - how to ensure them and how to protect them - in democra<c states. The fundamental lesson of the democra<c period established in 1978 and, • above all, the nego<a<on of the 2006 Statute, crowned by the ruling of the Cons<tu<onal Court, is that the Spanish cons<tu<onal structure does not guarantee any meaningful sovereign space for Catalans. Catalonia was and is a permanent na<onal minority, with its laws and • ins<tu<ons always suscep<ble of being corrected and laminated by the vote of the majority.

Outline of the talk 1. Basic economic data on Catalonia. 2. On the costs and benefits of statehood, and on the changing number of states, from the economics point of view. 3. Outline of the events. 4. The Spanish cons<tu<on, how was it approved and voted, and its main features and problems. 5. Checks and balances and rule of law in Spain at present. 6. Conclusion Major caveat: history is important, unfortunately I will not have 9me to review it today.

Catalonia: territory and popula:on 32.000 square kilometers 6.3 per cent of Spanish total ≈ Belgium 7.4 million people 16.1 per cent of Spanish total ≈ Bulgaria > Denmark, Finland, Slovakia, Ireland, Croatia, …

The Catalan economy • GDP at current prices 19 % of Spanish total ≈ Finland, Ireland • GDP per capita (at purchasing power parity) 18.8 % above Spanish mean 8.8 % above EU28 ≈ France, United Kingdom

Unemployment rate

Figure 9. GDP per capita and Social Progress Index in Spain

Catalan economic policy challenges 1 – Improving employment and wages 2 – Increasing produc<vity and compe<<veness 3 – Advancing in the levels of social progress This requires self-government ! Either a func<oning federal arrangement or an independent state

2 - What is the optimal size for a state? A balance of opposing forces: • – Economies of scale (defense, markets) vs. heterogeneity of preferences (law and order, welfare, culture). – Global governance vs. economies of scope (overlapping jurisdic<ons). Fast Globaliza<on (Markets, Migra<on) vs. Slow Globaliza<on (Culture and • ins<tu<ons). Costs and benefits change, so number of states change. •

Globaliza<on, number of countries, free trade agreements Source: Gancia, Ponceto and Ventura (2016)

3 - Timeline of events • 2005 Support for self-government very strong, but only 13% demanded independence – New Autonomy Statute draRed, overwhelming majority in Catalan Parliament – 2006 • Statute amended by Spanish Parliament, and approved by Catalans in a referendum – Challenged by Popular Party in Cons<tu<onal Court – 2010 • Cons<tu<onal Court rules new Statute uncons<tu<onal – Support for Independence surges – The Cons9tu9onal Court, overriding the double consent given by the Spanish and the Catalan legisla9ve powers, bestowed upon itself the role of final arbiter of the cons9tu9onality of the Spanish “State of Autonomies” with its July 2010 ruling on Catalonia’s 2006 Statute of Autonomy. Through this ins9tu9on, the majority made explicit its status as both party and judge in the poli9cal game of the Peninsula. The rela9onship of inequality became once evident, with all its crudeness, and Catalonia entered into a state of rebellion. (Boix 2017) 2011-14 • Recurrent demands for a referendum, polls consistently show 70-80% of Catalans support a referendum. – Spanish government and Spanish Parliament systema<cally deny referendum on the grounds that it would be uncons<tu<onal. – 2015 • September: Elec<on delivers a Parliamentary Majority suppor<ng independence. – 2016 • January, Puigdemont appointed President – July, Puigdemont announces a Referendum to take place with or without agreement with Spanish government. – 2017 • October 1s, Referendum takes place. People violently repressed by Spanish police. – October 2-26, Puigdemont pleads to interna<onal community to mediate for a nego<ated outcome. AUempts to call elec<on – fail. October 27, Catalan Parliament declares independence/ Spanish Senate triggers ar<cle 155. Parliament suspended, Government – sacked, Immunity removed. Nov 2, Spanish Jus<ce charges Catalan government members with accusa<on of “violent uprising”, 8 ministers in jail, President – and 4 ministers in Belgium contes<ng extradi<on. December 21, Elec<on. –

4 – On the Spanish cons:tu:on The condi<ons under which Spain became a formal democracy Western • style are not sufficiently known. • The poli<cal situa<on in Spain aRer Franco's death in 1975 was so complex, and the danger for the country to fall into chaos was so obvious, that it was considered an unqualified success that first, some form of democracy was provided by the cons<tu<on approved in 1978; and second, that it could be developed and implemented in the following years. • The authoritarian context in which that Cons<tu<on was drawn and voted must be recovered and highlighted to understand why Spain is now stuck in a cons<tu<onal crisis.

4 - Spanish cons:tu:on (cont.) Condi&ons while cons&tu&on was dra2ed and approved Assembly elected in June 1977 not explicitly cons<tuent. Some poli<cal par<es (i.e. Catalan Republicans) were s<ll illegal. • Violence in the streets. • Army and Police same as under Franco. • Judicial system unchanged. • No freedom of press. Radio and TV under rigid governmental control. • Franco regime one-party apparatus in control of administra<on. • Crucial ar<cles wriUen under duress: The commiUee who draRed the cons<tu<on was handed down (by the authority “above”, • i.e. the Army) a few ar<cles to be incorporated literally to the final text. This concerned the key elements: – 1) Spain is a Monarchy (the King was Franco’s appointed successor). – 2) Spain is a unitary indivisible na:on . Catalonia and the Basque Country are subordinated autonomous regions - not partners in a federa<on agreement among equals. – 3) The Army is ul:mately responsible to preserve the unity of Spain . Therefore, authoritarian condi<ons that in 1977 and 1978 shaped and curtailed the wri<ng • and approval of the cons<tu<on to a large extent invalidate the Cons<tu<on's legi<macy as a democra<c framework.

4 - Spanish cons:tu:on (cont.) In spite of undemocra<c flaws a majority of Catalans at the <me accepted the cons<tu<on as a • lesser evil, as it offered some degree of regional self government. • Alianza Popular (founded by 7 Ministers of Franco, later Rajoy’s Par<do Popular) voted against the cons<tu<on, precisely because they objected to Regional Autonomy. • Thus, Catalan regional self-government has been controversial from the start. • Disagreements on the specific distribu<on of powers between the central state and regions was resolved by a very ambiguous text. – Nominally, the Cons<tu<on allows broad and even exclusive powers over a considerable range of policy domains to regional governments. – Yet it gives the central government the right to interfere in any maUers theore<cally devolved to a regional government through the enactment of so-called “leyes de bases” that can define the architecture of any policy.