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Spain’s crisis, Europe’s opportunity

Oct 09,2017 - Last updated at Oct 09,2017

To revive the ailing European project, the ugly conflict between Catalonia’s regional government and the Spanish state may be just what the doctor ordered.

A constitutional crisis in a major European Union member state creates a golden opportunity to reconfigure the democratic governance of regional, national and European institutions, thereby delivering a defensible, and thus sustainable, EU.

The EU’s official reaction to the police violence witnessed during Catalonia’s independence referendum amounts to dereliction of duty.

To declare, as the president of the European Commission did, that this is an internal Spanish problem in which the EU has no say is hypocrisy on stilts.

Of course, hypocrisy has long been at the centre of the EU’s behaviour. Its officials had no compunction about meddling in a member state’s internal affairs — say, to demand the removal of elected politicians for refusing to implement cuts in the pensions of their poorest citizens or to sell off public assets at ridiculous prices (something I have personally experienced).

But when the Hungarian and Polish governments explicitly renounced fundamental EU principles, non-interference suddenly became sacrosanct.

The Catalan question has deep historical roots, as does nationalism more broadly. But would it have erupted the way it recently did had Europe not mishandled the eurozone crisis since 2010, imposing quasi-permanent stagnation on Spain and the rest of the European periphery while setting the stage for xenophobia and moral panic when refugees began crossing Europe’s external borders?

An example illustrates the connection.

Barcelona, Catalonia’s exquisite capital, is a rich city running a budget surplus. Yet, many of its citizens recently faced eviction by Spanish banks that had been bailed out by their taxes. The result was the formation of a civic movement that in June 2015 succeeded in electing Ada Colau as Barcelona’s mayor.

Among Colau’s commitments to the people of Barcelona was a local tax cut for small businesses and households, assistance to the poor and the construction of housing for 15,000 refugees — a large share of the total number that Spain was meant to absorb from frontline states like Greece and Italy.

All of this could be achieved while keeping the city’s books in the black, simply by reducing the municipal budget surplus.

Alas, Colau soon realised that she faced insurmountable obstacles.

Spain’s central government, citing the state’s obligations to the EU’s austerity directives, had enacted legislation effectively banning any municipality from reducing its surplus. At the same time, the central government barred entry to the 15,000 refugees for whom Colau had built excellent housing facilities.

To this day, the budget surplus prevails, the services and local tax cuts promised have not been delivered, and the social housing for refugees remains empty.

The path from this sorry state of affairs to the reinvigoration of Catalan separatism could not be clearer.

In any systemic crisis, the combination of austerity for the many, socialism for bankers and strangulation of local democracy creates the hopelessness and discontent that are nationalism’s oxygen.

Progressive, anti-nationalist Catalans, like Colau, find themselves squeezed from both sides: the state’s authoritarian establishment, which uses the EU’s directives as a cover for its behaviour, and a renaissance of radical parochialism, isolationism and atavistic nativism. 

Both reflect the failure to fulfil the promise of shared, pan-European prosperity.

Catalonia provides an excellent case study of Europe’s broader conundrum.

Choosing between an authoritarian Spanish state and a “make Catalonia great again” nationalism is equivalent to choosing between Jeroen Dijsselbloem, the president of the Eurogroup of eurozone finance ministers, and Marine Le Pen, the leader of France’s far-right National Front: austerity or disintegration.

The duty of progressive Europeans is to reject both: the deep establishment at the EU level and the competing nationalisms ravaging solidarity and common sense in member states like Spain.

The alternative is to Europeanise the solution to a problem caused largely by Europe’s systemic crisis.

Instead of impeding local and regional democratic governance, the EU should be fostering it. 

The EU treaties could be amended to enshrine the right of regional governments and city councils, like Catalonia’s and Barcelona’s, to fiscal autonomy and even to their own fiscal money. They could also be allowed to implement their own policies on refugees and migration.

If there was still demand for statehood and separation from the internationally recognised state to which they belong, the EU could invoke a code of conduct for secession. 

For example, the EU could stipulate that it will sanction an independence referendum if the regional government requesting it has already won an election on such a platform with an absolute majority of the voters.

Moreover, the referendum should be held at least one year after the election, to allow for a proper, sober debate. 

As for the new state, it should be obligated to maintain at least the same level of fiscal transfers as before. Rich Veneto could secede from Italy, for example, as long as it maintained its fiscal transfers to the South.

Moreover, the new state should be prohibited from erecting new borders and be compelled to guarantee its residents the right to triple citizenship (new state, old state and European).

The Catalonia crisis is a strong hint from history that Europe needs to develop a new type of sovereignty, one that strengthens cities and regions, dissolves national particularism and upholds democratic norms.

The immediate beneficiaries would be Catalans, the people of Northern Ireland, and maybe the Scots (who would in this manner snatch an opportunity out of the jaws of Brexit). But the longer-term beneficiary of this new type of sovereignty would be Europe as a whole.

Imagining a pan-European democracy is the prerequisite for imagining a Europe worth saving.



The writer, a former finance minister of Greece, is professor of economics at the University of Athens. ©Project Syndicate, 2017.

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