As economic grievances towards the central government grow among Catalans, what would the secession of this wealthy region mean for Spain and the EU?

On 11 September, 2012 the world’s attention, rightly so, was fixated on the assault and subsequent death of U.S. Ambassador Christopher Stevens and 3 other personnel at the U.S. consulate in Benghazi.

On that same day in Spain, an event took place that could very well be the beginnings of the dissolution of Spain as we know it – and have known it – for centuries.

Catalan National Day

The 11th of September is celebrated every year as the “Diada Nacional de Catalunya” (National Day of Catalonia). Its purpose is to memorialize the defeat of the Catalan troops defending Barcelona during the War of Spanish Succession. Flowers are laid at the feet of monuments to the defenders, flags are hung from balconies and waved by hand, nationalists organize demonstrations for independence and in typical Spanish fashion a good time is had by most.

The aspect that makes this year’s celebration stand out is that the Diada was celebrated almost wholly with a separatist agenda. Tens of thousands of demonstrators with independence in mind descended on Barcelona in over a thousand chartered buses. The flag of independence, known as the estelada for its sole star, held a monopoly on the balconies and hands of the city.

It was also the largest celebration of the Diada ever held. Over 1.5 million people took to the streets. Today, 53% of the population supports independence. This number has doubled since 2008, the year the financial crisis took hold in Europe.

The National Identity and Autonomy of Catalonia

There has always been a separatist strain throughout Spain, notably amongst the Basques, the region the infamous terrorist organization ETA has its origins. Though there was a short-lived Catalan terrorist group active in the 1970s, Terra Lliure (Free Land), the expressions of Catalan independence have been cultural and are codified. The Catalan language is a requirement for jobs and is an official language of the European Union; it is, for instance, required by law that if a restaurant wants to garner a fourth star it must serve “pa amb tomaquet” (literally “bread with tomato”) – a simple recipe that requires toasted bread, garlic, sea salt, olive oil and tomato. There are no bull-fights in Catalonia, as the classic Spanish pastime was outlawed in 2010, and the flamenco guitars so often associated with Spain are often looked down upon as españoladas, which is a term used to identify an unwanted exaggeration of Spanish culture.

After thirty-six years of brutal oppression of regional cultures and languages under the fascist dictatorship of Francisco Franco (1939-1975) much power was given to the 17 regional governments of Spain, or comunidades autónomas. The regions can pass separate laws regarding their tax codes and penal laws among many other social, fiscal and penal issues, but Madrid has final say in most cases. This softened self-governance set up a relationship between the autónomas and the central government of Madrid akin to that of the federal and state governments of the United States. Were it not for this devolution of powers none of the above laws would have been passed in Catalonia and nationalist fervor for cultural expression and independence would have gained more and more credibility in a modern, post-dictator Spain.

The party responsible for the acceptance of the increased Catalan autonomy was the CiU (Convergència i Unió) headed by Jordi Pujol. Pujol and CiU led as a center-rightparty for 23 years. Catalonia has always been one of the wealthiest parts of Spain with its advanced industrialization and tourism. This has made it a popular destination for intrastate immigration and when Pujol took office, 37% of the Catalan population was from other parts of Spain. Pujol realized he had to foster the Catalan feeling of independence while retaining an open society with a large immigrant population. His inclusive model of identity identified a Catalan citizen as anyone who “lives and works in Catalonia and feels [Catalan]”. It worked. Catalonia has maintained its immigrant population (from within Spain and without) and its strong sense of national identity. This coupled with Spain’s joining of the European Union, which has led to a weakened Madrid and a stronger Brussels, has kept the separatist wave from overtaking the Costa Brava. Until now.

The Economic Grievances of Catalonia

The main point of contention among the Catalan populace comes from a perceived gap between the amount of tax money paid by Catalonia and the amount of government funds invested – something that has come to be called the “fiscal deficit”.

Is there any credence to this belief? Yes. Catalans pay more taxes on income, vehicle registrations and the upkeep of their healthcare system than the other communities in Spain. There has been heavy public investment in the high-speed railway system in Spain, often with huge losses, and Barcelona was late in receiving a high-speed connection to Madrid. It was, at the very least, an odd choice to idle on connecting the two financial hubs of the nation. Further on, of the railways constructed in the 1970s still in operation, 40% are in Catalonia and only 9% in Madrid. These railways are painfully slow in comparison to the new high-speed ones, which also offer more comfort and amenities. Also, there has been next to no investment in the Catalan highway system.

The Catalan healthcare system currently has an untenable deficit of €850 million, but research has shown that if the community were afforded as much support by the central government as País Vasco (Basque Country) it would have a €2 billion surplus. It should be noted that País Vasco is one of the richest communities in Spain and was allowed to keep its triple-A credit rating the first time Moody’s Investors Service downgraded the rest of Spain’s credit.

To compound the situation, the government of Barcelona was long ago shut out of the bonds market which led to the inevitable plea for a €5 billion bailout from Madrid. If granted, this money will be taken from the national budget and will cause Spain to miss its deficit reduction goal for the year; further increasing tensions between the capitals.

In light of these facts the Catalan people have long asked themselves why they should continue to pay taxes to a central government that is used to overlook their homeland when it comes time to invest. This view is merited, but Catalonia has not been the picture of perfect economic policy either. One example is that of a penitentiary that sits on a hill overlooking Figueres, the birthplace of Salvador Dalí. Its upkeep costs the government of Catalonia around $1.3 million a month, but it sits empty. This is because the cost would be augmented by $2.6 million a month if the prison were put to use.

Corruption, too, is a problem. Recently, two editors of the Girona-based Cafè amb Llet magazine released a series of videos accusing public officials of pocketing government funds intended for the Catalan healthcare system. Many of these claims have been investigated and verified though no one has been formally charged as a result. The editors were later charged with libel and fined €10,000. Several organisations who monitor freedom of press have taken an interest in this case.

Foolish budgeting and corruption are not solely a Catalan problem. Many of the autonomous regions are beginning to negotiate relinquishing the oversight of their healthcare, education and other social programs to the central government due to their overspending and unethical practices. Given the investment policies advocated by the central government and the move towards a more centralized Spain; is it any wonder that Catalonia has recently put forth legislation in the Spanish parliament to create their own tax agency and, more recently, to achieve independence? Both of these measures were flatly shut down by the conservative Partido Popular (People’s Party), which holds an absolute majority, and by the opposing socialist minority Partido Socialista Obrero Español (Spanish Socialist Worker’s Party).

How Would the Secession of Catalonia affect Spain and the European Union?

These deaf ears turned to the legitimate grievances of Catalonia can only bring a dissolved Spain closer to reality. But a Spain without Catalonia is much weaker economically. Catalonia accounts for 20% of the total economy of Spain, which is also the fourth largest in the European Union. It also makes up 25% of Spanish industry and 30% of Spanish exports. Its GDP is higher than those of Finland, Ireland, Portugal and Greece. According to a 2011 study by Cushman & Wakefield on European cities as professional centers, Barcelona is doing the most to promote itself, has the highest quality of life, the lowest levels of pollution and is the sixth best city to locate a business. Its people make up 16% of the population and its land area is 6.3% of Spanish sovereign territory.

The region has for years been a center for the arts – Salvador Dalí, and Joan Miró were both born there – and it is difficult to walk down the streets of Barcelona without passing an art gallery, theater or concert hall while hearing any number of languages being spoken. This is due to the fact that Catalonia is a center of Spanish tourism. The total number of visitors to Catalonia reaches 25 million a year, 15 million of which are foreign – with people often visiting the Catalan capital before the capital of Spain itself. The relationship between Barcelona and Madrid could be likened to that of New York City and Washington, D.C. With tourism being the largest sector of Spanish economy, Catalonia’s secession would prove disastrous.

Spain does not need a weaker economy, and global markets do not need more insecurity. While the European Union could conceivably create more jobs through a Catalan bureaucracy, an independence of Catalonia would embolden separatist groups inside of Spain, such as those of País Vasco and Galicia, and other parts of the European Union.

What would Europe look like if more regions with unique cultures and languages were to gain independence, thereby dismantling nations throughout? What if the term “United Kingdom” were to fall out of modern parlance in the same way as the “Soviet Union” and “Yugoslavia”? Recently, Galician historian Tiago Peres Gonçalves said in reference to Catalan independence that “it’s good that Spain joined the European Union. Now that they’re in, they have no recourse in sending the tanks. It’s a bit difficult in the EU.” Would there be wars that were associated with former dissolutions? Or would the European Union further demonstrate its ability to hold a historically embattled region together without bloodshed, something for which it was awarded a Nobel Peace Prize?

Difficult questions to ask and answer. If Spain’s central government does not take the time to respond to Catalan grievances we may once again be in the position of answering the question of a fragmented Europe. Bearing in mind the continent’s violent past, perhaps it would be best to listen to Catalonia.

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.