The crisis in Europe is claiming many victims. The other day we learned about how mental-health patients are taking a bad beating from austerity policies. First, governments in Europe’s welfare states monopolized health care and promised people to provide everything they could ever demand in terms of health care services; when the welfare state’s spending promises exceeded what taxpayers could afford, politicians took to austerity to try and fit the welfare state in a smaller box. That never works, but until the statist lawmakers in Europe realize that they will keep on trying to cut back spending, raise taxes, claim more of the private sector’s resources and give less back.
People suffer as a result. They can’t get what they were promised by government, and they can’t build private alternatives because government is sucking the life blood out of the private sector. As austerity continues, frustration piles up among voters/taxpayers. Since the EU is built to shield Eurocrats from the people, it is practically impossible for austerity-suffering families to make their voices heard. So far they have been able to exercise their rights under parliamentary democracy at the national level, but as more and more national governments resort to desperate, EU-imposed austerity policies, voters’ frustration previously reserved for the EU is now spreading downward to the national level as well.
As The Financial Times reports, this could have serious consequences:
Canadian regional elections seldom set the international pulse racing but this week’s victory in Quebec of the separatist Parti Québécois was closely watched in Spain, now facing a revival of Basque and Catalan independence demands. These, in turn, are being carefully monitored by the Scottish National party, committed to a referendum in 2014 on Scotland’s future relationship with the UK. By then, the die may be cast in Spain, where separatism has stormed on to the agenda amid the worst crisis of the post-Franco, democratic era. Alongside the eurozone crisis and Spain’s worsening public finances and chronic lack of economic growth and jobs, Madrid looks to be sleepwalking into a constitutional crisis that could lead to the break-up of Spain.
This is about as sensational as if Alaska decided to declare independence.
Next Tuesday, Catalans celebrate their national day, or Diada, in a year when the clamour for independence for the first time commands the support of more than half the population – including figures such as Jordi Pujol, the mainstream nationalist who ran the restored Catalan autonomous government from 1980 to 2003, and Pep Guardiola, the former manager of Barcelona’s football team. Next month, Basques go to the polls with the separatist Bildu coalition going head-to-head with the mainstream Basque Nationalist party (PNV). After a decade-long ban for links to Eta, the separatist group that recently ended its 50-year campaign of violence, political separatists won more seats than the PNV in municipal and general elections last year. Separatism has gone mainstream, in a Spanish state being shaken to its foundations.
Spain is, technically, not a federation, but thanks to secessionist movements in the Catalan and Basque regions, there has been a weakening of the central government over the past three decades. However, the fact that Spain is still a traditional, centralized nation state makes the revival of regional autonomy movements even more problematic: a nation state is by design not suitable for regional autonomy. A federation is built around the principle of enumerated, not unlimited, central government powers.
Therefore, even a moderate surge in support for regional autonomy can lead to constitutional tensions. To make matters worse, the immediate cause for this surge is to be found in the current welfare-state crisis. Spain’s central government is in large part responsible for funding regional governments, and when those governments cannot keep their books in good order the central government threatens to simply take over. As a result, separatism is on the rise.
At the same time, the Financial Times reports, relatively wealthy regions such as Catalan feel that they are already getting short-changed by the central government:
The genteel nationalists who run the Catalan government are in a quandary. The Rajoy [central] government is ideologically opposed to any extension of fiscal federalism. But any government in Madrid will need the Catalan subsidy to meet the health and pension liabilities of an ageing population. The conditions attached to Madrid’s rescue money, moreover, imply a loss of self-government, just as EU bailouts dilute national sovereignty. … The Diada demonstrations next week look set to be massive and massively separatist.
Similar sentiments of separatism are reflected in a story by Russia Times about a city in the Catalan region:
Catalonia’s Sant Pere de Torello has declared its independence from the Spanish central government. Local deputies unanimously approved a resolution plan on “free Catalonian territory” after Catalonia asked Madrid for a 5-billion-euro bailout. The resolution suggests setting up Sant Pere de Torello’s own finance ministry, a national bank, a taxation office and justice ministry. Once approved, the crowd of about 1,000 people gathered outside the council exploded in thunderous applause, local media report. … Local separatists have appealed to the local Catalan parliament to hold a referendum on the national sovereignty of their territory within the next two months. … The deepening crisis and tough financial situation have added fuel to the conflict between Catalonia and the rest of Spain, because Catalans “feel they are not treated fairly by the Spanish tax system and also that economic policies of the central government are not helping Catalonia to sort out the crisis,” Murado told RT.
In plain English, this means that Catalan voters are tired of paying higher taxes for less and less government services. Since they cannot get out of the choking grip of austerity by influencing their national government, they look for a way to seize control over their own destiny.
The only problem with this is that they are in all likelihood not going to do away with the welfare state. This will eventually bring about the same problems as Spain is facing nationally. The question that the Catalonians need to ask themselves is: what do they do then?
As the Russia Times reports, the Catalonian regional government is not exactly in good fiscal shape:
The move comes a week after Spain’s debt-struck Catalonia region on August 28 asked Madrid for a 5-billion-euro (US$6.3-billion) bailout from “the liquidity fund,” the 18-billion-euro body set up to finance troubled regions. If Catalonia receives financial aid from Madrid, it will become the second of Spain’s 17 autonomous regions formally to request aid. However, it will not accept the money if “political conditions” are put on the table, because “the money is Catalan money.”
In other words: give us the cash and let us spend it without any austerity strings attached.
While there is no intrinsic reason to keep a country like Spain together, separatism in itself won’t solve anything. The macroeconomic mechanisms that have brought Spain to the edge of the austerity dungeon will work just as forcefully at the regional level.
If on the other hand Catalonia declared itself independent, structurally reformed away its welfare state and built a new economy based on libertarian principles, the outcome could indeed be formidable.