dimarts, 15 de juliol de 2014

Mariano: Lose Catalonia or Lose Everything, Your Choice

At this stage, it is clear to any informed observer that Catalonia is going. There is no longer any hiding it, Swiss bank UBS recently revealed it had set up a working team to consider the implications of Catalan independence. This is not the end of the story though, since while there is nothing Spanish leader Mariano Rajoy can do to prevent it (the White House has already said loud and clear that there is no ammo for Mariano) he can still try to save most of Spain. Let us have a good look at some of the potential implications for Spain of a failure to promptly recognize Catalan independence and negotiate in good faith an orderly agreement covering, among others, a civilized split of assets and liabilities:

* The Basque Country and Navarre. The Basques currently hold a very comfortable status whereby they enjoy tax sovereignty while not having to send any troops to Mali. How long would their acquiescence to remain within Spain last if Mariano asked them to contribute more to the Spanish Treasury's coffers? Can anyone doubt he would be forced to do that to plug the gap, should he have to deal with Spain's national debt as it stands? Surely he does not expect Catalonia to take up a portion without being recognized by Madrid, does he?

* Valencia. The region's ruling elites have traditionally been rather pro-Spanish, to put it mildly, but even they have a breaking point. Could they survive an even more savage discrimination than they currently suffer? Would they accept to remain within an autarchic, isolated, Spain, or rather gravitate toward a much more prosperous and EU-connected Catalonia? Would they not be tempted to seek bilateral agreements to facilitate exports, bypassing Madrid?

* Balearic Islands. Here the Catalan language and culture is much stronger, and widespread protests have already taken place against Madrid's attempts to roll back Catalan in school. Furthermore, economic discrimination is rampant, with Madrid failing to authorize essential infrastructures, while treating the Islands as a mere milking cow. It is not very difficult to imagine some interesting developments …

* Morocco. The irony here is that while most of the population in Ceuta and Melilla, two Spanish cities in North Africa, wishes to remain Spanish, Mariano's non-existent democratic beliefs prevents him from holding a referendum and relying on self-determination to preserve them. With that door closed, Madrid has to rely on deterrence to prevent them from following in the wake of Western Sahara. The question is then, faced with a 125 % debt-to-GDP ratio, would mainland Spanish public opinion push for further cuts in the military, thus facilitating a Moroccan takeover at some stage?

Mariano is thus facing a scenario with no optimal outcome. He is no longer able to preserve Spain within her current borders. Catalonia is leaving, and any attempt to use force will only accelerate that development. However, not all is lost. He can still keep most of his country's territory if he adopts a pragmatic attitude and recognizes Catalan independence in exchange for an orderly split of assets and liabilities. If that is then followed by extensive economic reforms, a big if but something only possible once Catalonia is gone, since Catalan tribute allows “rational underdevelopment” to persist, Spain may survive. If, on the contrary, pride overcomes wisdom, and Mariano prefers to go down with his ship, there is little doubt that Catalan independence will sooner or later be followed by the breakdown of Spain.

Alex Calvo is an expert in Asian Security and Defense

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