agreement

The Autonomous Community governments, such as the Catalan Executive, cannot meet the deficit objectives imposed by the Spanish Government because of the current inter-territorial fiscal scheme, according to a report from the Spanish banking giant BBVA. The bank has published two studies on two consecutive days that shed some light on this scheme and its consequences. In the first report, the BBVA states that spending per capita on basic Welfare State services, such as healthcare and education, varies by 60% among the Autonomous Communities. A second report highlights that the Spanish Executive reduced the funds for the Autonomous Community governments in 2014, despite the economic situation and the intake of public revenue improving. On top of this, it refuses to review a fiscal scheme that legally expired 16 months ago and that was designed before the financial crisis.

The Catalan Government President and leader of the centre-right pro-Catalan State coalition CiU, Artur Mas, complained on Wednesday that his ally, the left-wing pro-independence party ERC, is not fully honouring their agreement to call elections on 27 September, which should become a 'de facto' vote on independence. According to Mas, the ERC is not offering its full parliamentary support to the Government. "There is an agreement signed in January, and it is also an agreement that talks about stability until elections are called" and "some [parliamentary] votes are being lost, which harm such a stability agreement", he said. Furthermore, he stated that elections will be "expectedly" held on 27 September and did not rule out the option of running in a cross-party list yet. The leader of the left-wing party, Oriol Junqueras, replied that the ERC is honouring the agreement and that Catalans will vote on 27 September.

According to a study by the Professional Association of Economists of Catalonia (Col·legi d’Economistes), an independent Catalonia would obtain a much better grade from rating agencies than it currently gets, taking into account its diversified economy and higher GDP per capita than the European average. Specifically, it would obtain an A+ rating, 7 levels higher than the current BB ‘junk bond’, using Standard&Poor’s classification. The study highlights that without the current fiscal deficit with the rest of Spain, the rating would be “at least” that of the Basque Country and would enable the Catalan Government to access the international financial markets. Catalan taxpayers pay much more to the Spanish Government than the amount they get back in terms of services and infrastructure; a fiscal deficit equivalent to between €13bn and €17.5bn per year.

The Catalan Government is expecting to post a 2.2% deficit for the whole of 2014, corresponding to some €4.41 billion. However, the definitive figure will not be known until March. This is more than  double the 1% deficit target that the Spanish Government unilaterally imposed on the Catalan Executive. Over the last few years, the two governments have quarrelled about deficit targets, since the Spanish Executive is imposing much stricter objectives on the Autonomous Communities than those it allows itself, despite regional governments exclusively managing and funding the basic Welfare State services such as healthcare and education. For instance, for 2014, the Spanish Government only allowed the Autonomous Communities to only have 15% of the whole deficit allowed by the European Union to Spain’s entire public sector, despite managing some 35% of the country’s public funds and basic services.

The President of the Catalan Government, Artur Mas, assessed on Tuesday the Executive’s work during 2014, which he found to be “positive” overall, although he admitted there are still many people in great need and many social and economic challenges ahead. Referring to the current debate on whether to call early elections transformed into a ‘de facto’ referendum on independence from Spain, Mas promised immediate decisions to be announced on Thursday. Before taking the definitive decision and after weeks of admitted “confusion”, the Catalan President wants to hold a last round of talks with the main civil society organisations supporting independence and the left-wing pro-independence party ERC – with whom the governing centre-right pro-Catalan State coalition CiU has shared a parliamentary stability agreement for the last 2 years. “I will not slack” in the self-determination process, Mas stated.

Miquel Iceta, First Secretary of the Catalan Socialist Party (PSC), proposed his road map for the coming two years: no early elections and broad Constitutional Reform to better fit Catalonia into a federal Spain. On Wednesday Iceta held his own conference after those of the Catalan President and leader of the centre-right pro-Catalan State coalition (CiU), Artur Mas, and the left-wing independence party (ERC), Oriol Junqueras. While the two others support independence, Iceta opposes it. He totally rejected the road maps proposed by Mas and Junqueras and insisted on the need to work "on the real problems of Catalans", such as poverty, unemployment, budget cuts in public healthcare, etc. However, the PSC leader admitted that "there will be no solution without a vote", but "a real vote". Iceta said that before breaking up with Spain, Catalans should be allowed to vote on "a new agreement" to remain in Spain. In order to facilitate such a new agreement, he proposed that the Spanish Government cancel part of the Autonomous Communities' debt.

The President of the Catalan Government, Artur Mas, confirmed that Spain and Catalonia are already now in a situation of “open conflict”, after the criminal prosecution launched against him and two other members of his Cabinet. However, Mas asked the Spanish Government to end its “angry” attitude and start negotiating, proposing ways out of the current situation. The Catalan President added that the international community will ask the Spanish Government to sit and talk if the current open conflict finally generates “concerns” at an international level. Mas was addressing an economic forum with the main representatives of Catalonia’s business community. The Spanish Minister for the Economy, Luís de Guindos, was also present and they were in friendly conversation for a little while. De Guindos emphasized that the Spanish Government has issued “bailouts for Catalonia in difficult moments”.

The President of the Catalan Government, Artur Mas, proposed the next steps in Catalonia’s self-determination process: early elections to the Catalan Parliament and, if a single pro-independence list get an absolute majority, negotiations to reach full independence in 18 months. Such a list should be formed by independent personalities and recognised professionals, who should commit to only run once, with traditional parties adopting a secondary role. After negotiating independence and building the new state’s basic structures, a referendum to ratify the new state’s genesis and constituent elections would be called, in which traditional parties would again be running separately. Mas said he was ready to be the front-runner or to end such a list, the latter case ruling out the possibility of his being re-elected. However, he will only call early elections if parties and civil society organisations transform them into such a ‘de facto’ referendum on independence. After years of peaceful citizen mobilisations, now “it is time for the definitive vote” and the “only” way of doing it is through early elections, he said.

On Wednesday, the Spanish Finance Minister, Cirstobal Montoro, refused to start negotiating and launching a new funding scheme for the Autonomous Communities before 2016, even though the current model had to be reviewed before January 2014. The Catalan Government has been insisting on its review since 2012, since the system does not properly fund basic public services such as healthcare and education in times of economic crisis, areas which are entirely managed by the Autonomous Communities. In addition, Catalonia suffers a permanently high fiscal deficit: each year Catalan taxpayers have to give away some 8.5% of Catalonia’s annual GDP to fund services and infrastructure in poorer regions in Spain. The problem is that after such transfers, public services in the poorer parts of Spain have more money per inhabitant than the Catalan ones and basic infrastructure in Catalonia is not built. The Spanish Government has been postponing the new model, despite the territorial tensions and the self-determination demands.

On Sunday the Spanish Socialist Party (PSOE) approved another solemn declaration proposing a Constitutional Reform, after it already did so in July 2013. Once again the PSOE has not detailed their proposal, but insists on building a true federal model, going beyond the current Autonomous Community system. The People's Party (PP) – which runs the Spanish Government – opposes such a reform although they "agree to talk" about it. The PSOE wants the PP to "immediately" approve the creation of a Constitutional Reform committee at the Spanish Parliament and set expert hearings to debate ideas. However, they do not want "to rush" to solve Catalonia's "urgent problem", as explained by the President of Andalusia and PSOE's Chairperson, Susana Díaz. Meanwhile, the alternative left party Podemos, which could win the next Spanish elections, has elected Pablo Iglesias as its Secretary General, who has promised a broad Constitutional Reform. Iglesias recognises Catalonia's right to self-determination but considers that the Catalan Government cannot approve a unilateral declaration of independence.

The day after 2.3 million citizens gave their opinion on Catalonia's independence, the reactions of Spanish and Catalan parties did not bring great surprises. The PP, which runs the Spanish Government, considered the vote "illegal" and announced potential legal actions. In addition, they stated that "a silent majority" did not vote. The Spanish and Catalan Socialist parties (PSOE and PSC) insisted on a Constitutional Reform and rejected an independence referendum. Populist party Ciutadans (C's) asked for early elections, while Spanish nationalist UPyD wanted Catalonia's autonomy to be suspended. Parties supporting self-determination praised Sunday's vote. The governing centre-right pro-Catalan State coalition CiU wants to explore negotiations, although Liberal CDC is sceptical about the results. The left-wing independence party ERC and the alternative left and radical independence CUP rejected negotiations with Madrid. The green socialist and post-communist coalition ICV-EUiA asked for a binding referendum.

On Sunday, Catalans are being called to give their opinion about independence in a participatory process, organised by the Catalan Government in cooperation with more than 40,000 volunteers and many town halls, which replaces the original consultation vote also scheduled for the 9^th of November. The Spanish Government appealed against the first vote, the Constitutional Court suspended it, the Catalan Government launched an alternative process and the Spanish Government filed a new appeal, accepted by the Constitutional Court. However, this time the non-binding participatory has been maintained with a wide consensus among Catalan institutions a wide representation from the civil society. These are the three last steps of an intense self-determination process, which started with the approval and trimming of the Catalan Statute of Autonomy and was shaped by four massive demonstrations and a series of "no" and threats by the Spanish authorities. Here is a summary of the main milestones of this process before the massive pro-independence demonstration of 2012.

The Catalan National Assembly, a grass-roots organisation, and Òmnium Cultural, a non-profit association promoting Catalan culture, are behind the massive independence demonstrations of 2012, 2013 and 2014, and in July they presented their new campaign 'Now it's time, united for a new country'. They aimed to mobilize the Catalan people for the self-determination vote scheduled on November the 9^th. There will be events throughout Catalonia and abroad during the 2 months before Catalonia’s National Day (September the 11^th). On that day, a massive demonstration in the shape of a giant V, for 'Votar' (To Vote) and 'Victòria' (Victory), will take place in Barcelona, which is expected to become the largest rally in the Catalonia's history. In addition, more than 30 ANC groups abroad are organising a worldwide campaign #votecatalonia. The political marketing firm Blue State Digital, which managed Obama's digital campaigns, is involved in the initiative.

On Tuesday, the Spanish Finance Minister, Cristóbal Montoro, rejected to review the funding scheme of the Autonomous Communities to grant them more resources, despite the fact that the Catalan Government is under-budgeted. On Wednesday, the Spanish Finance Ministry downplayed Catalonia's fiscal deficit by issuing the so-called fiscal balances, which calculate the inter-territorial fiscal transfers, posting a significantly low Catalan contribution. According to the Spanish Government's new calculations, Catalonia gave away €8.46 billion in 2011, representing 4.35% of its GDP. The figure is significantly lower than the Catalan Government's calculations: €15.01 billion and €11.09 billion, using two complementary methodologies used by the Spanish Executive in 2008 and agreed among independent university experts.

The Spanish Prime Minister, Mariano Rajoy, stated on Wednesday that he "will not join absurd debates" and will not "participate in the game" to negotiate Catalonia's self-determination vote since "the referendum is illegal and will not take place". Ironically, Rajoy accepted the request of the President of the Catalan Government, Artur Mas, to meet, but he has specifically rejected to talk about the purpose of the interview: the self-determination vote. In addition, the Spanish PM has downplayed the agreement backed by a two-third majority of the Catalan Parliament, which was answering a mandate resulting from the 2012 Catalan elections. On the same day the Spanish Finance Minister, Cristóbal Montoro, rejected "reinventing Spain" to better fit Catalans and therefore ruled out a deep Constitutional Reform. In addition, he also rejected setting up a new fiscal scheme for Catalonia, similar to the one that the Basque Country already has.