Catalan Politician Does Unthinkable, Threatens Spain’s Creditors

There are certain things politicians should never do – assuming, that is, they want to hold onto their jobs. Criticising Israel, for example, is a definite no-no, as is using the dirty “s” word (sovereignty, that is, not shit). Also high up on the list of “don’t dos” is threatening the interests of foreign creditors and bondholders.

Yet that is precisely what Oriol Junqeuras, the firebrand leader of Esquerra Republicana Catalana (ERC), the second largest party in Catalonia’s government coalition, did last week. Not that many people living outside of Catalonia heard about it, since it went virtually unreported in the international press.

The location was Brussels, the occasion a conference for the youth branch of the European Free Alliance movement in Brussels. As twenty and thirty-somethings from across Europe looked on, Junqueras delivered a barely veiled threat to Spain’s creditors about the dangers of failure to defuse the simmering conflict between Madrid and Catalonia (see video, in Spanish, here).

Perhaps those most interested in finding a solution are the creditors – not the politicians. Last year the Spanish state had a deficit of more than 10 percent of its GDP… Given that Catalonia represents a quarter of all Spain’s fiscal revenues and that we have the means to mobilise two million people onto the streets of Catalonia, does anyone seriously believe that we are not capable of halting the Catalan economy for one week? If we did this, can you imagine what kind of impact it would have on Spanish GDP? Or what foreign creditors would suddenly think of Spanish debt and what that would mean for the risk premium of Spanish bonds?

“As such we also have our own instruments. European institutions need to decide what should prevail: democratic principles or the de-facto actions of the (Spanish) state? If it is the latter, clearly we will deploy all instruments available to us.

On his return to Barcelona, Junqueras faced a veritable shit storm of criticism from virtually all sides of the political spectrum, both in Catalonia and in Spain. Kamikaze politics was how Alicia Sánchez Camacho, the People’s Party’s representative for Catalonia, described his speech.

Catalonia’s councillor for business and employment Felip Puig questioned whether a general strike in Catalonia would even be feasible. “The Catalan economy cannot stop for even two hours,” he said. Many said that a general strike in Catalonia would do far more harm to Catalan interests than it would to Spanish ones.

Camacho called for the Catalonian premier Artur Mas to denounce the actions of his largest partner in government – something Mas seems reluctant to do, and for good reason: Jonqueras’ left-wing republican party is fast gaining support in the region. Indeed, recent polls have suggested that if elections were held tomorrow, ERC would emerge as the biggest party in parliament.

As José Antonio Zarzalejos writes in El Confidencial, Catalans are increasingly turning to more radical, separatist parties. They include the relative newcomer CUP, a strongly pro-independence and anti-EU party that in the last elections won 3.5 percent of the popular vote and three seats in the region’s parliament. One of those seats is occupied by David Fernández who has courted controversy at virtually every turn. Just last week, during a Q&A session on Bankia’s collapse, he threatened to throw a shoe at Rodrigo Rato, the bank’s former CEO of Bankia and one-time president of the IMF (For more background dirt on Rato, click here).

While Fernandez’s actions were roundly condemned in most quarters, all 21 sitting ERC MPs lent him their full support. It was yet another sign of the growing divisions in the fragile coalition led by Artur Mas. As Giles Tremlett prothetically warned last year in The Economist, by building up Catalonian nationalistic aspirations, Mas may have jumped “on a tiger he can’t fully control.”

As the tiger runs amok the result could well be a total cataclysm, as Catalan writer Javier Cercas recently warned in El País (translation by yours truly):

The itinerary will be as follows: First, perhaps as soon as 2014, the Catalonian parliament will make a unilateral declaration of independence. Then one of two things will occur, the most plausible of which is that the Spanish government suspends the region’s semi-autonomous status and declares a state of siege.

From that point on, anything is possible, including an escalation of violence… the most likely eventuality is that Spain will slip into a very severe crisis… a cataclysm into which we will be pushed by two forces: the irresponsibility of a few luminaries who didn’t hesitate to jump on board a centaur produced from the loins of economic crisis, idealism and the well-intentioned yet ill-informed aspirations of many decent people; and the incurable stubbornness of Spanish nationalism.

As long as the Rajoy administration continues to kill all hope of a negotiated settlement with its north-eastern province, one can expect political and economic relations between Madrid and Catalonia to continue to worsen. Bitter recriminations will deepen societal and political divisions, which in turn will engender further radicalisation.

A symmetric trade boycott has already taken its toll on both economies and the Troika’s austerity medicine continues to wreak economic havoc — in particular in Catalonia, whose junk bond status prevents it from raising its own funds. For every penny it needs it must go cap in hand to Madrid. When the money isn’t forthcoming in the quantities needed, which it rarely is, suspicions and resentment rise.

For the time being the EU continues to maintain a low profile on the issue. Every now and then it will issue Catalonia a warning of the risks of trying to go it alone. Any move to declare independence, it cautions, would result in the nascent nation’s expulsion from both the eurozone and the Union. However, as Junqueras warned, the status quo is no longer an option — at least not for a growing number of Catalans.

“We will use all democratic instruments available to us and we will not renounce any of them — because… without them we have no possibility of winning. And we are here to win!”

Rather than ignoring the problem, the EU would do well to listen to Junqueras, as well as pay heed to the lessons of history. This, after all, would not be the first time that Catalonia had tried to sever its ties with Spain — with disastrous consequences. Twice in the early 1930s it unilaterally declared independence. What followed shortly thereafter was one of the bloodiest civil wars of modern European history, which also served as a prelude to the most costly global conflict in human history.

6 thoughts on “Catalan Politician Does Unthinkable, Threatens Spain’s Creditors

  1. Hello Mr Quijones, love the article and the implications. My son lives in Catalunya and, as a result, I spend a fair amount of time in Barcelona. Your article is factually correct, except at its’ end. The Spanish Civil War was fought in the Rambla (the Communist Party headquarters now occupied by the Apple Store, the telephone exchange, the hotel Continental, the POUM hq at the Hotel Rivoli). While, financial libertarianism ended with the founding of the American Central Bank, civil libertarianism still flourishes to some degree in the USA. Spain emerged from world war one as a relatively rich country, however, the central bank and its’ crony interests controlled all financial assets, leading to the founding of the republic. Libertarianism in Spain, did not exist until Franco started his illegal civil war. Then, suddenly, the POUM and the CNT liberated all the army stockades and armed the citizenry. Instantly, a libertarian nation was reborn! How effective was this effort? France fell to the fascists in 4 days of battle. The Spanish, with their army turned against them fought tooth and nail for three PLUS years, without an army, air force or navy! This sent chills throughout Europe and an effort began to disarm Spain. Still, the picture that survives of the civil war is of Marina Ginesta the armed 17 year old militia. The effort to eliminate the militias began and ended in the Rambla in May 1937, when it was done, the Stalinists controlled the government and the people ‘made’ peace, slowly with the fascists and were disarmed. Why do I say all of this, because for the time during the civil war that the people were liberated, Madrid and Barcelona were united like never before or after. Everything you see now are nothing more than theatre. Just as an adjunct, Stalin virtually lost he war with Hitler, like the French, until he relented and armed the citizenry. Castro followed Stalin and used the militias until AFTER he took power and then disarmed the population of my native Cuba.

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  2. […] It is as Giles Tremlett warned in 2012 in The Economist: by building up Catalonian nationalist aspirations, Mas has jumped on a tiger he can not fully control. If he fails in his role or is rejected by voters, he will be quickly replaced by someone else – someone who is much more dogmatic and unpredictable like the firebrand left-wing separatist Oriol Junqueras, who late last year did the unthinkable by threatening European bond holders with the prospect of a one-week general strike in Catalonia. […]

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