recentralisation

On Friday, the Spanish Government approved a proposal of law strengthening market unity, officially aiming to simplify the bureaucratic and legal framework in which companies operate. However, the Catalan Executive fears Madrid’s reform does not really aim to boost the economy and help companies, but to recentralise power. Barcelona thinks that the new proposal “radically modifies” the current distribution of competences on economic regulation and it aims to recentralise power. The Catalan Government hopes that the definitive law will be significantly changed in relation to the current proposal, as otherwise Barcelona will totally oppose the initiative. Catalonia is critical of the current proposal and accuses it of “homogenising the Autonomous Communities”.

The Catalan Ombudsman, Rafael Ribó, accused the Spanish Government of trying “to manipulate” data in its report last week, in order to push forward a recentralisation reform, which “goes against the self-government principle”. Ribó explained that the Spanish Ombudsman undertook 33,849 actions in 2012, which means each action cost an average of €428. In addition, it refused to accept 20,164 complaints. Meanwhile, the Catalan Ombudsman undertook 25,073 actions, with a cost of €279 each. The Catalan institution only rejected 267 complaints. Regarding resolutions and recommendations, the Spanish Ombudsman issued 548 while the Catalan body issued 3,635. This means that each resolution by the Spanish body cost €26,447 while the Catalan’s cost €1,925, which is 13.75 times less.

On Friday, the Spanish Government approved a €37.7 billion reform of Spain’s public sector which fosters the elimination of Autonomous Community bodies considered to be “redundant”. Instead of directly obliging the Autonomous Communities to eliminate them – which might be very tricky legally speaking, the Spanish Executive will link their suppression to the deficit targets allowed to the regional governments and the funds provided. However, in the case of Catalonia, most of the bodies included in the reform are recognised by Catalonia’s main law, approved in 2006 by the Spanish Parliament and through a binding referendum. The Catalan Government and most of the political parties are accusing the Spanish Executive of trying to recentralise Spain. In addition, the Catalan President said that unfortunately Madrid “teaches lessons” but “does not do its homework” and eliminates Ministries without competences.

According to an opinion poll from the Catalan Polling Centre (CEO), the Catalan political landscape would change, since the Left-Wing Catalan Independence Party (ERC) would would become the largest force in the Catalan Parliament after doubling the number of its MPs compared to the electoral results from last November. Meanwhile, the Centre-Right Catalan Nationalist Coalition (CiU), which has been running the Catalan Government since 2010, would continue to lose support. However, parties supporting Catalonia’s independence increase their total support while the number of those defending Spain’s unity drops. The CEO thinks the data show that over the last 9 months, the support for independence remains “stable” in a hypothetical referendum, ranging between 54% and 57%. However, those opposing independence grew from 20.7% to 23.4%, while the number of undecided citizens decreased to 15%.

The parties defending the current Catalan school model, which represent 80% of Catalonia’s Parliament, met on Tuesday to discuss how to face the Spanish Government’s Education Reform, known as LOMCE. They all agreed to act together in Madrid to try to change the law. The Catalan Government proposed modifying the reform in the Spanish Parliament in order to make it honour Catalonia’s main law – approved via a binding referendum – which clearly states that Catalan is the language of instruction. The Catalan school model is based on the linguistic immersion principle, guaranteeing equal opportunities and social cohesion. The Spanish Executive’s Education Reform aims to stop linguistic immersion and allow parents to choose Spanish as their children’s language of instruction.

The CIS – the Spanish Government’s public opinion survey institute – has indicated that 55.1% of Catalans would like a Catalan state, either independent from Spain (33.7%) or within a federal Spain (21.4%). 29.4% would like to keep the Autonomous Community model and 12.1% would back recentralisation and Catalonia being a Spanish “region”. The survey was taken between September and October but the results were only released recently in early May, more than half a year later. In addition, 65.1% of the interviewees said they wanted more power for the Catalan Government.

The deficit target for Spain’s entire public sector has also been raised from 4.5% to 6.3%. The Spanish Government has kept 81% of the deficit for itself while it is only responsible for 50% of Spain’s public spending. The Spanish Government has allowed itself a 5.1% deficit target, while the Autonomous Communities are only allowed a target of 1.2%. The regional governments fund the basic welfare state services and manage more than 35% of Spain’s total public spending. The Catalan Government welcomes the revision but considers it not to be enough. The Catalan Finance Minister, Andreu Mas-Colell, has been insisting that the Autonomous Communities should have at least a third of the total deficit. Therefore, with an overall target of 6.3%, the Catalan Executive should have a target at least 2.1%.

The Spanish Finance Minister, Crístobal Montoro, confirmed that if Brussels relaxes Spain’s total deficit target for 2013, he will share this flexibility with the Autonomous Communities’ governments. A working group has been created to analyse the most convenient formula for this, including that of setting different deficit targets for each Autonomous Community. The Catalan Government celebrated the decision, since it has been asking for it for many months. In addition, the Catalan Finance Minister, Andreu Mas-Colell, stated that he will look for “a smooth relationship” with the Spanish Executive to negotiate the details. On Wednesday, Mas-Colell proposed the idea that deficit targets could be set according to debt levels. In the last few days, the Catalan Government has sent several messages in order to show a willingness to talk to Rajoy’s cabinet about the most important subjects on the table.

Andreu Mas-Colell, the Catalan Government’s Finance Minister, emphasised that a 0.7% deficit objective means implementing an additional budget adjustment of €4.4 billion. This amount represents around 15% of the Catalan Executive’s budget for last year, which had already been reduced over the previous two years. Furthermore, expected revenue will decrease by 1% despite increases in tax, debt interest will grow by €300 million and the amount of spread payments will also increase by €150 million. In such circumstances a €4.4 billion one-year adjustment would blow up public services in Catalonia. Therefore, Mas-Colell urged the Spanish Government to find an agreement, as otherwise no one wants PM Rajoy to act “as the viceroy of Catalonia”.

The latest political poll issued by the Catalan Survey Centre (CEO), published every three months, shows that 54.7% of those interviewed would vote “yes” in an independence referendum, while 20.7% would vote “no” and 17.0% would abstain. Three months ago, the “yes” option was backed by 57% of the interviewees while in February 2012 it was only backed by 44%. Besides, 46.4% of citizens would support an independent Catalan state as their first choice, which represents an increase of 2.1 percentage points in three months and a 17.4 point increase in one year. 22.4% would prefer a federal Spain, 20.7% the current situation and 4.4% Catalonia being a region within a more centralised Spain.

The Catalan Government and most of the political parties have criticised the Spanish Government’s project to reduce local powers. Furthermore, the Catalan Vice-President, Joana Ortega, emphasised the “unfair vision” of local governments given by the Spanish Finance Minister. Ortega underlined that in Catalonia, most of the town halls ended 2012 with a budget deficit of 0%, which is “not in line with the mismanagement image given” by the Spanish Government. Furthermore, while the Spanish Government is aiming to reduce the number of councillors earning a salary to only 18%, Ortega reminded them that in Catalonia only 10% are now earning a salary. Political parties in Catalonia criticised the Spanish Government for taking away power from the government level closest to the citizens.

The Spanish Government is keeping most of the 4.5% public deficit allowed to the entire Spanish public sector in 2013 for itself, despite managing only 50% of the total public spending. It has allowed itself a 3.8% deficit while it has imposed a 0.7% target on the regional governments, which manage almost 40% of the public spending including basic services such as healthcare and education. The European Parliament report indirectly asks Madrid to relax the Autonomous Communities’ deficit targets according to the basic services they provide. In addition, it also states that regional governments should have greater fiscal capacities and depend less on central government transfers. Furthermore, the report asks “some member states” to eliminate the ministries whose powers have been devolved and to “reduce unnecessary defence expenditures”.

The Constitutional Court has accepted the Spanish Government’s appeal against three measures adopted by the Catalan Executive to reduce its deficit, some of them negotiated last spring with the People’s Party (PP). The Spanish Government, which is run by the PP, now believes that these measures invade its own powers, “break market unity” and go against the principle of “equality for all Spaniards”. While accepting the appeal, the Court has temporarily suspended the application of the fees and taxes for a five-month period, which could be extended. The Catalan Government will appeal the decision as it believes the measures to be in line with the Constitution and within its jurisdiction. The drug prescription fee brought in €46 million in its first 6 months and it reduced public spending on medicines.

The Spanish Prime Minister, Mariano Rajoy, has accepted the offer sent by the new Catalan President to talk about Catalonia’s claims, while keeping them “always within the Constitution”. Furthermore, he has rejected the possibility of modifying the 0.7% deficit target imposed on the Autonomous Communities for 2013. The Catalan Finance Minister, Andreu Mas-Colell, explained that, if the payment of financial interest is excluded, meeting next year’s 0.7% deficit target represents a budget surplus, which “makes no sense from an economic point of view in a context of recession”. Mas-Colell proposed that the Autonomous Communities meet a 1.5% deficit target in 2013, as they represent more than a third of Spain’s total public expenditure and Spain has been authorised a total deficit target of 4.5%.

The Spanish Education Minister, José Ignacio Wert, refuses to modify his Education Reform that will relegate the Catalan language in schools and re-centralise power. However, “technical improvements” could be included during the parliamentary debate. The Catalan Government “totally rejects” the current proposal as Wert “has not changed a single comma” despite the talks. Wert, famous for stating two months ago that he wanted “to Hispanicise Catalan pupils”, is pushing for a reform that will break Catalonia’s education model, which has been in place for more than 30 years. The Catalan school model guarantees knowledge of both Spanish and Catalan and it has been praised for fostering bilingualism and social cohesion by international organisations. The reform faces strong objections in Catalonia.