By Sanja Davidovic for Global Risk Insights
Catalonia, Spain’s wealthiest region located in the northeast corner of the Iberian Peninsula, voted in an unofficial referendum on whether it should break away from Spain and form an independent state. More than 2 million of Catalonia’s total 7.5 million inhabitants turned out at polling stations across the region, braving rain and long queues, to make their opinions count.
Early poll returns indicate an overwhelmingly pro-independence sentiment: 80.7% of the voters are said to support an independent Catalonia and an official referendum to set them on that path. The poll came in the wake of the Spanish constitutional court’s ruling decreeing any referendum on independence illegal. The Spanish Prime Minster, Mariano Rajoy has said that Sunday’s vote “will have no effect.”
On a day that marked 25 years since the fall of the Berlin Wall, the Catalan vote represents a culmination of years of grievances against Spain’s central government. Catalonia has long insisted that it contributes to Madrid’s coffers in excess to what it receives back, particularly in infrastructure and public service investment. As such, the argument goes, the industrious Catalans subsidize life for their unproductive neighbors to the south.
The enduring economic woes that have left Catalonia’s unemployment rates hovering at over 19% have also influenced popular sentiment that Madrid is the problem. A painful history of cultural and linguistic suppression during Francisco Franco’s 36-year fascist rule has only deepened the chasm.
Yet the independence movement, which Catalonia’s regional government’s president Artur Mas has led, also carries the baggage of high-profile fiscal and political problems facing the Generalitat. Catalonia is the most indebted region in Spain in absolute terms and was placed on rating watch negative (with its credit score currently at BBB-) by Fitch when Mr. Mas first called for the November 9th vote. The government is also reeling from accusations of tax evasion against its six-time former president Jordi Pujol and founder of the secessionist movement within the Convergence and Union Party that Mr. Mas now heads.
Among the myriad of unknown economic consequences facing an independent Catalonia would be uncertainty over its EU member status. The Catalan government recently issued a report outlining four possible outcomes independence would have on its European Union membership. Of the four paths outlined, between automatic acceptance and outright rejection, is some form of a transitional membership process.
The hardline taken by the government in Madrid has done much to push the Catalan electorate into the arms of the nationalist movement. Constitutional court rulings qualifying the use of the Catalan language in Catalonia’s schools, threats of legal action against organizers and voters, even the specter of violence, has hardened and led some voters to believe that at the core of the movement is a fight for existence.
Mr. Rajoy recognizes the Catalan question as perhaps the biggest crisis that he has faced during his tumultuous three-year tenure. He has vowed to confront it with the tenacity that will surely test Spain’s democratic fabric. For Mr. Mas, who has effectively locked himself and Catalonia into a high-stakes game of chicken, the consequences are equally dizzying.
The question for both leaders will be whether an equal measure of pragmatism and compromise will prevail and reveal a middle ground that can salvage the union.