bailout

On Friday, the Spanish Government approved the €1,350 million compensation to Escal UGS, the company behind the controversial Castor Project, a submarine facility built to store 1.3 billion tonnes worth of gas reserves off the Ebro Delta coast. This project failed after it was found to have caused almost 1,000 small earthquakes. This amount will be financed through increased tariffs to gas consumers over the next 30 years, resulting in public compensation for a private investment. The Spanish Government is obliged to pay the developer Escal UGS, because of a clause in the 2008 Royal Decree whereby the State would agree to compensate the company should the project be unable to be completed. An appeal of this law was rejected by the Spanish Supreme Court last October. The Spanish Government has argued that this solution is cheaper than operating the project. The Catalan Government however, which had opposed the project from the start, has appealed this decision to the Constitutional Court.

On Wednesday evening the main Catalan small- and medium-sized enterprises association, Pimec, organised a protest conference in which they accused the Spanish and Catalan Governments of politically and financially "discriminating" against them. With the slogan #diguemprou (#wesayenough) 1,400 owners of SMEs and self-employed workers protested against both Governments for not taking SMEs into account and only working for the interests of large corporations. The protest was explicitly backed by 220 guilds and associations, as well as by 9 professional associations and that of self-employed workers. The event issued a manifesto compiling a list of grievances, split into 7 different areas: entrepreneurship; loans and funding; taxation; labour market; energy; training and employment; and internationalisation.

The Catalan Minister for the Presidency and Spokesperson for the Executive, Francesc Homs, warned that “if a political solution cannot be reached” to keep Catalonia within the EU if it becomes independent from Spain, it would be “the end of Europe as a model for democratic and peaceful integration of the different peoples that form it”. On Monday, in a debate on ‘Catalonia’s political process’ held at the University of Lisbon’s Faculty of Law, Homs highlighted the fact that if EU Treaties had been interpreted “literally”, the financial bailouts for Spain, Portugal, Ireland and Greece would not have been possible. However, in this case, the EU reacted “with common sense” and for “the general interest”. Therefore, “since the EU is a project of peace and democracy, a political solution [for Catalonia] will be found, as the EU has ever done in all situations”, he stated.

The former leader of the European Union diplomacy and now an International Relations professor at the Barcelona-based ESADE business school, Javier Solana, stated that it is “difficult” to believe that such a measure could be implemented in Spain or Italy. Solana, who chairs the EsadeGeo Centre for Global Economy and Geopolitics, highlighted the fact that “it is an unprecedented decision to make all depositors pay” such a tax. According to Solana, this could create “insecurity” and it is “an unfair decision for honest money savers”, despite the measure targeting those who have manipulated Cyprus’ financial system.

Independent auditors state that in the worst possible scenario the Spanish banking system would need up to €62 billion. The Eurozone agreed to put at Spain’s disposal up to €100 billion if needed. In the most likely scenario, the Spanish banking system would require between €16 billion and €25.6 billion. Within the most stressed case, Spain’s three main banks would have enough resources of their own to face difficulties and would not need any additional funding. They are the Barcelona-based CaixaBank and the two international giants BBVA and Banco Santander.