Today's article aims to inform Eurocrats.
Sirs,
The European Union recently admonished Spain for delays in reforming and for not fulfilling its commitments. But Europe is currently acting like a simple, dismal accountant, only requiring of its members staple numerical results: i.e. exercising sovereignty only in demanding these and defending gargantuan financial interests, though unable to exercise sovereignty on member states regarding the policies they have to follow to overcome their structural weaknesses, never delving deep into the gut of the problem in each state.
This means governments that are inept or wedded to vested economic or bureaucratic castes, formally seeking to obtain the results Europe asks of them, but in fact protecting their special interests, to the detriment of the majority that may, at any time, detonate a social chain-reaction. This would not be the first time this has happened in Europe.
The lack of direct European intervention has now turned some very threatening cases into real bombs lying under the foundations of the EU. The prime example is the case of Spain. London Times pundit Matthew Parris recently noted that Catalonia was a timebomb for Europe if it ever seceded from Spain, and he therefore recommended negotiation. But Parris is only right in the destructive potential for Europe an uncontrolled event in Catalonia can have, much greater than the effect of Cyprus or Portugal. In the remainder, he was wrong in the diagnosis and the timing of the explosion. This will occur before any referendum can take place. It will be social and economic, and will drag Spain into hell. And along with it, Europe; and I am no prophet of doom.
Let us dissect where we are, where the clock is standing in the countdown. Spanish PM Mariano Rajoy's government is arm-wrestling with Catalonia (besides Valencia and the Balearics) to force the Catalan government to approve a budget with a deficit of 0.7% in relative terms, which would mean a greater impact than the cuts in Portugal and Cyprus. Except that these are two sovereign states that can assume their responsibilities in full, while Catalonia is a sub-state entity with no capacities for tax collection (what little it tries to exercise is quashed by Spain), and to which the Spanish government owes €10bn in arrears, with a further deficit of €17bn insofar as Spain collects annually approximately 9% of its GDP, which never returns. Catalonia is on the verge of collapse, and this will not be prevented either by rolling over last year's 0.7% budget, nor by approving a budget without formally guaranteeing easing the deficit (which, by the way, would not ensure compliance by Madrid), which someone as moderate as a member of the Governing Council of the Bank of Spain, Mr. Lopez-Casasnovas reckoned required at least 2.3% of GDP.
Madrid is not easing up, nor does it take decisions. And in Catalonia politicians who make up the majority seem to have finally realized that, if you're going to kick the bucket anyway, it may as well be clear Catalonia's is a case of homicide and not suicide. That's why Spanish politicians, who are enthusiastic gamblers (they've made gambling tax-deductible!), bootleggers and rogues, are bluffing their way through this game of Russian roulette. But they don't realize that there is only one turn and one bullet left.
The Catalan middle class is impoverished or fast becoming so, their youth are leaving in a diaspora or joining the grey economy, workers are anxious about keeping their jobs or have directly joined the doe queues, with unemployment at 27% (30% in the Spanish region of Extremadura, where 30% of the population are civil servants, while Catalonia has almost 30% unemployment, but with less than 10% in the civil service). There has been no social uprising yet in Catalonia because the majority hopes for a change in the political framework, creating their own state. For now it is a safety valve. But if the valve is jammed, Catalonia will blow up; a region that means 20% of Spain's GDP, 24% of its income, one third of exports, 40% of high R&D value-added exports, with the Mediterranean's top ports and a major tourist destination.
Would any analyst even dream that a country with this potential, with all these resources, should find itself on the verge of bankruptcy if it were able to govern itself? There will always be those super-critics who will argue that there are elements of misgovernment and corruption in Catalonia too. But let's compare proportions in productive and speculative economies, let's compare percentages of legitimate versus grey economies with any Spanish or Italian region, or with the South of France. Catalonia would win hands down in terms of a healthy, fertile economy in comparison with of those territories. One need but look at the map of the European Research Council of scientific excellence: the only concentrations of talent worth mentioning south of Geneva are in Catalonia and Israel.
Despite all this potential, Catalan society is about to take the streets, while public finances of the regional government are just a step from bankruptcy, all because an oligocratic caste (as brilliantly described in recent books by Germà Bel and Oscar Pazos) defends its special interests, and practices that foolish traditional Hispanic motto: “Better honour without ships, than ships without honour".
Well, Mr. Eurocrat, I conclude my report by introducing myself: I was a government official, a Minister of the Catalan Generalitat for Industry, Trade, Tourism and Universities, for seven years, and I now supply well-disposed support to small businesses. Please be so good as to urgently intervene politically in Spain because the countdown for the Catalan explosion is nearing its end.
Minister of Innovation, Universities and Enterprise (2006-2010)
Minister of Trade, Tourism and Consumer Affairs (2004-2006)
President of the Josep Irla Foundation
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