Politics

The Minister for the Economy, Andreu Mas-Colell, warned the Spanish government that the Generalitat "will never accept political conditions" in exchange for capital from the Regional Liquidity Fund (FLA). He repeated the phrase three times after revealing that the Catalan government has accepted financing from the FLA and has so far employed “all available instruments of liquidity” but “only” those that are linked to exclusively economic conditions. The minister admitted that the Catalan government will welcome the FLA due to “the liquidity pressures” that the Generalitat is facing. The specific amount of funding has not been revealed but Mas-Colell assured that “it will be what is necessary.”

Catalan Parliament approved on Wednesday the proposal for a new fiscal pact for Catalonia by an overall majority. The proposal defends the creation of an independent tax agency with powers to raise and manage all taxes in Catalonia. According to the Catalan President, Artur Mas, it involves starting a “difficult” negotiation with the government of Spain but it was either “now or never”. If achieved, this new fiscal arrangement would be similar to the one enjoyed by the Basque Country, that collects its own taxes and has been able to keep its debt under control. Therefore, it could help Catalonia getting out of the crisis. Currently, out of the all the territories, Catalonia is ranked third for the amount it pays in taxes, but is ranked tenth for the amount it receives in return. The new arrangement would see Catalonia leaving the common system established by the Organic Law on the Financing of the Autonomous Communities (LOFCA) and establishing bilateral fiscal relationships with Spain.

Catalonia has not asked for a rescue from Spain, said the spokesman of the Catalan government, Francesc Homs. At a press conference, Homs denied reports that Catalonia is seeking a full bail-out, but admitted the government is considering participating in the Regional Liquidity Fund. “This is a treasury mechanism”, said Homs, who added that by using the fund Catalonia would not have to meet “any new set of conditions”. When presenting the €18bn fund last week, the Spanish government said the aid will be only offered under “strict conditionality”.

The Spanish Economy minister said on Monday that the state will “absolutely not” require a full rescue package such as the one taken by Greece, Ireland or Portugal. Speaking at a parliamentary hearing, De Guindos said that the Spanish economy is competitive and has “capacity to grow” unlike other struggling European countries. However, markets seem unconvinced by Luis de Guindo’s remarks, pushing the ten-year Spanish bond yields to more than 7.5%. Doubts about the autonomous communities financing capacity are also affecting the situation, especially after Valencia announced that it will ask for about 3,500 million euros from the Spanish Liquidity Fund. Catalonia, the most indebted community in Spain, is still considering whether to use the money from the fund, and will only decide after studying “the set of conditions” attached to it.

The Spanish Congress has ratified a new austerity package this Thursday with 180 votes from People’s Party (PP), 131 votes against made up by the other parties and one abstention from the Unión del Pueblo Navarro (UPN). The new measures include the suspension of the Christmas bonus for public sector officials, an increase in VAT, and a reduction in unemployment benefit after the sixth month. The Spanish finance minister, Cristóbal Montoro, defended the measures on the grounds that they are "necessary sacrifices" to enable economic recovery and that "giving up is not recommended or possible". Various groups have protested against the measures, with over 80 demonstrations across the country.

The Catalan President in a parliamentary session criticised what he considers to be “acts of disloyalty” by the Spanish government. He said it is unfair that regions have to assume most of the burden of Mariano Rajoy’s adjustment program and emphasised the fact that Madrid has yet to pay much of its debts to Catalonia. Mas accused Rajoy of “lacking respect” for the autonomous regions and said this could lead to a “break down of relations” between administrations.

The Spanish vice president, Soraya Sáenz de Santamaría, said the fund is an “extraordinary mechanism” that will force regions that use it to comply with “extraordinary conditions”. The money will come from a €6,000 million loan from the state lottery and the Spanish treasury. The autonomous communities that decide to use the money from the fund will have the responsibility of paying it back and will be subject to a potential intervention by the central government if they do not comply.

The Catalan minister for the Economy, Andreu Mas-Colell, said in an interview that he will ask to speak directly to Brussels if Madrid decides to intervene in Catalonia’s finances. The minister is very disappointed with the results of a meeting between the 17 autonomous communities and the Spanish Minister Cristóbal Montoro. At the summit, Montoro announced a new cut in the regional deficit targets, from 1,1% to 0,5% for 2013 and from 1% to only 0,1% the year after. This could imply a new adjustment of about €650 million on top of the 1,500 million already announced by Catalan President Artur Mas only two months ago. The Catalan government spokesman, Francesc Homs, did not deny the possibility of new cuts in Catalonia in the near future. If they are confirmed, those would be the fourth round of spending cuts implemented in the country since Mas entered office in November 2010. Meanwhile, other autonomous communities still have to start to reduce spending.

President Artur Mas says Catalonia needs to come out of the crisis stronger and citizens should “come together” in the wake of new austerity measures announced this Wednesday by Spanish president Mariano Rajoy. The Catalan government spokesman, Francesc Homs, celebrated Rajoy’s decision to cut Spanish public workers salaries, several months after the same decision was implemented in Catalonia. However, he criticised the VAT rise. The Catalan minister for the Economy, Andreu Mas-Colell, said Madrid’s plan is “in line” with EU instructions but urged Rajoy to offer “some kind of compensation” to the autonomous communities because their expenditure won’t benefit from the VAT rise.

The Catalan President has made the case for Catalan full fiscal autonomy in a trip to Portugal. Artur Mas has started an international tour to try to explain to foreign leaders why Catalonia wants to have a new fiscal arrangement with Spain. According to the president, the Catalan fiscal deficit caused by the current system is damaging Catalonia, one of the driving forces of the Spanish economy, and therefore is also detrimental to Spain.

The Spanish government will launch a new mechanism to issue regional debt bonds on Thursday. This will allow autonomous communities to finance themselves through debt guaranteed by the Spanish Central Treasury. The Spanish secretary of Public Administration, Antonio Beteta, said the regions will have to comply with a strict set of additional conditions to benefit from hispanobonds.

The ruling Centre-Right Catalan Nationalist Coalition, Convergència i Unió (CiU) and the People’s Party (PP) have agreed to evaluate the drug prescription fee in 2013. The implementation in 2013 of the 1 euro fee will be on the condition of meeting the deficit targets and the effects of other financial measures regarding medicines. The PP has abstained in the Catalan Parliament’s vote and the plan finally has the green light to be implemented.

Unemployment in Catalonia dropped by 15,356 in June, leaving the total number of people registered as being unemployed at 615,576 individuals. It is the fourth consecutive month that the number of people registered as unemployed dropped in Catalonia. In the whole of Spain, unemployment also decreased last June. By the end of June there were 98,853 fewer people registered as unemployed throughout Spain.

Depending on UN-Habitat, the Global Water Operators' Partnerships Alliance (GWOPA) has established the Catalan capital as the permanent base for its headquarters. GWOPA will set up its offices in one of the historical Art-Nouveau pavilions of the old Sant Pau Hospital, in Barcelona. These pavilions will host other international organisations, such as one institute of the United Nations University. “It is not the first and neither will it be the last organisation to choose” Sant Pau’s historical site to base its headquarters, stated the Catalan Minister for Sustainability, Lluís Recoder.

A new poll by the Centre of Opinion Studies shows that, for the first time in history, Catalans prefer independence to any other political arrangement with Spain.