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The Catalan Government decides to take the Spanish Executive to court for not paying €759 million

The outgoing Spanish Government has refused to pay Catalonia €759 million this year despite being legally obliged to do so and having stated publicly on several occasions it would pay the money. The Spokesperson for the Catalan Government announced Catalonia is risking to miss the deficit objective for 2011 without the funds. Facing this situation and the damage caused by it, the Catalan Government has decided to take the Spanish State to court and explain the issue to European institutions. Mariano Rajoy, Spain’s future Prime Minister, has said that he is not aware of the issue.

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14 December 2011 11:54 AM

by

ACN / Gaspar Pericay Coll

Barcelona (ACN).- The outgoing Spanish Government is refusing to pay Catalonia \u20AC759 million from 2008, an amount promised to be paid in 2011 on several occasions. The Catalan Government has therefore decided to take the Spanish State to court. The decision was announced on Tuesday by the Spokesperson for the Catalan Government, Francesc Homs, after the weekly Cabinet meeting. In addition, Homs said that the Catalan President, Artur Mas, has given instructions to communicate this \u201Csevere\u201D situation, \u201Cunprecedented in democracy\u201D to European Institutions. In fact, not receiving the money this year puts the Catalan Government\u2019s finances in a difficult situation, since the \u20AC759 million was included in this year\u2019s budget and it was confident it would receive the money before the end of the year, as the Spanish Government had previously stated. \u201CThe Spanish Government knows the damage this causes us\u201D, complained Homs; \u201Cit feels like a vendetta\u201D, he added. Not receiving the funds in December means that the Catalan Government will be short of cash at the end of the year, when many payments are due. In addition, the deficit objective for 2011 may not be reached, putting Catalonia under the spotlight of the international financial markets. For this reason, the Catalan Minister for Finance will send a formal request to the Spanish Ministry of Economy and if in one month the money has not been transferred, the issue will be taken to court. The main parties in Catalonia support the Catalan Government except the People\u2019s Party, who will run the Spanish Government from next week. The \u201Cnumber two\u201D of the Centre-Right Catalan Nationalist Coalition \u2018Convergència i Unió\u2019 (CiU), which runs the Catalan Government, met with Mariano Rajoy at the Spanish Parliament on Tuesday. Rajoy, who will become the next Spanish Prime Minister, said that he is not aware of the issue, according to CiU, and he wants to wait until after taking office, when he will have a clearer picture of Spain\u2019s financial situation.


The Spanish Government is legally obliged to pay

The \u20AC759 million that is to be paid by the Spanish Government corresponds to a point included within the Catalan Statute of Autonomy, which represents Catalonia\u2019s \u201CConstitution\u201D and it has been approved by the Spanish Parliament. It foresees economic compensation to be paid by the Spanish Government for an historical lack of investment to build transport infrastructure in Catalonia. It does not specify the amount and, in fact, there have been some arguments regards the exact formula to calculate the specific amount. In addition, the money had to be paid in 2008, but it was never transferred. Finally, the Spanish Government proposed the amount to be \u20AC759 million, and it was accepted by the Catalan Government. In February of this year, the Spanish Vice President for Economy, Elena Salgado, stated before the Spanish Parliament that the money would be paid in 2011. Those promises were repeated during the year, but the money was never transferred. The Catalan Government included the \u20AC759 million in its 2011 budget. Therefore, when the Spanish Government announced last week that it would not pay this quantity because it is leaving office, there was shock in Catalonia.

Not receiving \u20AC759 million to which Catalonia is legally entitled creates financial problems

Without this significant amount of money, the Catalan Government\u2019s budget has been put under severe stress for two main reasons. The first is that, at the end of the year, the Catalan Executive has to make many payments, such as the staff Christmas bonus or annual payments to service providers. Therefore, without the funds, the Government will be short of cash this month, and some payments may have to be postponed several weeks. Secondly, a sudden decrease of \u20AC759 million announced in December leaves very little room to correct discrepancies and thus avoid a deficit increase. The Spokesperson for the Catalan Government, Francesc Homs, said that the Spanish Government\u2019s failure puts the Catalan deficit objective at risk. Homs said that the Catalan Government\u2019s deficit might subsequently increase by 0.3% or 0.4%, and therefore not meet the objective of 2.66%. However, the Catalan Government insisted that the 1.3% deficit objective for 2012 will be met.

Opposition parties support the Catalan Government

The majority of the opposition parties are giving their support to the Catalan Government\u2019s claim. The Catalan Socialist Party, which is part of the outgoing Spanish Government, expressed its support to the Catalan Government and its decision to take the issue to court. However, the People\u2019s Party, who will be running the Spanish Government from next week, has been cautious and did not express its support. \u201CDoes somebody think this is the best way to begin a relationship with the new Spanish Government?\u201D asked the Spokesperson for the People\u2019s Party (PP) at the Catalan Parliament, Enric Millo.

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  • A caption from this week's Cabinet meeting at the Generalitat's Palace (by O. Campuzano)

  • A caption from this week's Cabinet meeting at the Generalitat's Palace (by O. Campuzano)