Recommended article at the Huffington Post: "Spain and the Blame Game" by Carles Boix, Germà Bel, Elisenda Paluzie and Elizabeth Castro

(Link to the article "Spain and the Blame Game").

As Spain confronts the reality of its economic woes, it's becoming increasingly difficult to separate economic fact from political fiction. Last Thursday, Spain's minister of economy admitted that the 2011 budget deficit had missed the 6% of GDP target by about 2 percentage points and doubted that Spain could comply with the EU-imposed deficit target for 2012. With its debt risk still at high levels, the strategy of the new Spanish government is to shift the blame to the regional governments, like Catalonia, and at the same time use the crisis to grab back the power that was devolved to the regions in the 1980s. Unfortunately, the international media are starting to buy it.

Yet, while it may be true that some Spanish regions have overspent their means, in the case of Catalonia (capital: Barcelona) this is far from the truth.

In the past few years, Catalonia has been incredibly fiscally responsible, despite a no-win financial structure imposed by the country. One of the most productive regions in Spain (contributing 18.7% of Spain's GDP), it actually pays to the central government a staggering amount more in taxes than it receives from the central government in spending.

The imbalance has grown so large as to imperil Catalonia's own well-being. A 2005 report released by the Catalan government stated that Catalans had contributed 47 billion euros to the central government but had received only 30 billion euros in spending, resulting in a fiscal imbalance of almost 17 billion euros, or 9.8% GDP. A study released by the Spanish central government itself concurred, estimating the deficit to be 8.7% GDP. In other words, each year the equivalent of some US $21 billion goes directly from Catalan taxpayers to the central government. This makes it impossible for the Catalan government to make ends meet, despite the fact that it is responsible for delivering a wide range of services to its citizens -- responsibilities that have grown as the central government devolves (without cutting its own civil servant workforce!)

Not only is the funding too little, it is erratically paid; for example, so far Spain has refused to hand over 759 million euros -- ($1 billion USD) -- that had already been approved and included in the central budget. Catalonia's Minister of Economy accused the Spanish government of withholding the funds owed to Catalonia to both make Spain's debt look better and Catalonia's worse.

Since Catalonia has no relevant tax-collecting power of its own to make up for this lack of funding, its regional government has had to cut its budget by 10% -- incurring the wrath of many of its citizens. It tried to institute cuts its own way -- instead of immediately attaining the goal of 1.3% fiscal deficit demanded by Madrid, it chose a two year plan, with a 2.4% deficit for the first year, and 1.3% the next. Not wanting the regions to have such autonomy, the Spanish minister of economy recently announced that all new budgets from the regions would have to be approved by the Spanish executive branch -- something akin to requiring California's state budget to be approved by President Obama.

Despite the fact that it provides more funds to Spain than it takes in, Catalonia must sit by and watch the central government fund projects that do not help Catalan citizens. The Spanish government spent $60 billion building high-speed rail lines that link low density communities with marginal demand, like the connection between Toledo (population 80,000) to Cuenca (population: 56,000) which was finally canceled in June, 2011, because it cost around $22,000 per day to run, and over six months, had had only 2,796 passengers.

Meanwhile, there is no high-speed rail service at all from major port cities Barcelona (metro population: 5 million) to Valencia (2.3 million) or to the French border. Unfortunately, that is one example among many. Free highways, brand new schools, and empty airports abound all over Spain while Catalonia's commuters must pay exorbitant tolls, their schools are old and overcrowded, and the Barcelona airport is restricted from flying to certain international destinations in favor of Madrid's Barajas.

Add that to the palpable scorn expressed by too many Spanish politicians (and Spanish Twitter users!) for Catalonia, and you will realize why Catalan independence is now polling higher than ever before: around 44% would vote in favor of an independent Catalan state, in contrast with around 28% who would vote against. A week ago, the heretofore extremely cautious Catalan president alerted, in an interview with the Financial Times, about the growing emotional divorce between Catalonia and Spain and announced plans to achieve full fiscal sovereignty.

Indeed, with the 21 billion dollars that an independent Catalonia would save in a single year, it could wipe out its entire public debt in two years and still build a new airport in Barcelona, a much needed high-speed rail line to the French border, as well as several hospitals, schools and top-rate research centers.

The Spanish government must be concerned about losing its cash cow -- and is responding by doing its best to tamp down any independence Catalonia enjoys and convince the world that the Spanish deficit is Catalonia's fault. Don't believe a word of it.

This post is co-authored by:
Germà Bel, professor of Economics, Universitat de Barcelona
Carles Boix, Robert Garrett Professor of Politics and Public Affairs, Woodrow Wilson School, Princeton University
Elizabeth Castro, Publisher, Catalonia Press
Elisenda Paluzie, Dean of the School of Economics and Business, Universitat de Barcelona

Letter to the Editor (New York Times)

In relation to the New York Times editorial of February 4th ("Truth on Trial in Spain"), we would like to recommend professor Susan Digiacomo´s comments about Mr. Garzón´s conduct in other cases.
We also believe, however, that by clearly denouncing the fact that Franco´s regime has never been put on trial the NYT put the finger on a fundamental flaw that still taints the present political system in Spain.


To the Editor:

"Truth on Trial in Spain" (editorial, February 4) rightly notes that the trial of Judge Baltasar Garzón is a "disturbing echo" of the Franco dictatorship, but also oversimplifies a more complex story. What is less well understood outside Spain is that Garzón has also used his considerable powers to criminalize freedom of expression and demonize dissent. To offer only two examples: In 1992, just before the Olympic Games opened in Barcelona, he ordered a roundup of supporters of Catalan self-determination and looked the other way when they were tortured by the police. In 1998 he became the first judge since the Franco dictatorship to close down a newspaper, the Basque daily Egin, alleging that its editorial position in favor of self-determination made it an instrument of terrorism. With his contradictory record on civil and human rights, Garzón embodies the contradictions of Spain's incomplete transition to democracy.

Susan M. DiGiacomo

Cancel·lada la conferència a Vic

La conferència que feia aquest dijous a Vic s'ha cancel·lat per la previsió del temps a Osona.

És previst fer-la més endavant.

Lamentem els inconvenients.

Conferència a Vic el 2 de febrer: "Catalunya al món: com som i no com diuen que som"

El proper dijous 2 de febrer Salvador Garcia, promotor del Col·lectiu Emma, farà la conferència "Catalunya al món: com som i no com diuen que som".

Lloc: Llibreria La Tralla: C. de la Riera, 5 - Vic
Hora: 20.30h

Més informació clickant aquí.

Recommended article in the Financial Times: "Catalonia demands new deal from Spain"

We want to recommend Victor Mallet's article in the Financial Times "Catalonia demands new deal from Spain".

Some excerpts from the article, mostly based on an interview to President Mas:

“Catalonia cannot carry on supporting the fiscal drainage
that we have at the moment, which is roughly equal to 8 or 9 per cent of gross domestic product [some €17bn] every year,” Mr Mas said.

“So our project in the short term is fiscal sovereignty ... In the longer term, we’ll see.”

(...) says he sees no reason why Catalonia should not be a self-governing state like Finland or Denmark.

“We want to be the Holland of the south, and we can be the Holland of the south,” he said. “Holland is a very open society, with an industrial base, and it has made a big effort in innovation and science.”

Mr Rajoy’s government has threatened to rein in the Spanish regions, blaming them for swelling the country’s overall public sector deficit and making Spain miss the fiscal targets agreed with Brussels. But Catalan leaders insist their administration was among the first to impose strict austerity measures when they took power a year ago.

You can read the full article by clicking here.

Regional governments are responsible for less than 20% of Spain’s debt and for 33% of its 2011 deficit

(Recommended article published at the Catalan News Agency)

Barcelona (ACN).- In the last number of weeks, the Autonomous Community governments have been blamed even further for Spain’s deficit, even at an international level, and therefore agreeing with the Spanish Government and Spanish nationalists. However, simple and transparent data show that regional governments are not the only ones responsible for Spain’s deficit and debt, quite the contrary. 62% of the 2011 deficit depends on the Central Government as well as 75% of Spain’s public debt. The Central Government is behind 50% of Spain’s public spending. Regional governments control 40% of the total spending and are responsible for the main welfare policies (healthcare, education, social grants, public transportation, etc), whose costs increase in times of crisis, while revenue levels decrease. However, despite these facts, the regional governments have been blamed. Olli Rehn, European Commissioner for Economic and Financial Affairs is the latest person to blame the Autonomous Communities. At a press conference in Brussels on Wednesday he said: “It is lamentable that Spain exceeded its deficit, apparently in a quite a substantial manner, mainly because of the excessive spending of its regional governments”. Spanish nationalists have campaigned against the Autonomies and it is beginning to bear its fruits abroad. The Catalan Minister for the Economy and Knowledge, Andreu Mas-Colell, denounced these facts in an open letter to the New York Times published on Wednesday. Mas-Colell’s letter is an answer to a previous article from the American newspaper focusing on the overspending of the Autonomous Communities. Mas-Colell, who in the past was an economics professor at Harvard University, stressed in his letter that the article “placed excessive responsibility on the regions for the fiscal problems of Spain”. The Catalan Finance Minister also warned of the Spanish nationalists’ plans to alter Spain’s decentralisation, recovered after Franco’s death.

The Catalan Finance Minister addressed a letter to the New York Times’ editor, which was published in Wednesday’s edition. Mas-Colell said “the largest public budget and deficit and most of the regulatory power over fiscal and expenditure issues lie with the central Spanish administration”. Furthermore, he stressed the will and the need that both the Catalan and the Spanish governments work together and cooperate to reduce the deficit in all public administrations. “What the situation demands is a concerted effort by central and regional administrations for the success of fiscal consolidation”, he proposed, instead of using the financial crisis as a way to change Spain’s political organisation.

Spanish nationalists want to reverse Spain’s decentralisation process

The Catalan Minister for Economics and Knowledge, Andreu Mas-Colell, clearly condemned the objective of Spanish nationalists and warned of not reviewing history and thus Spain’s territorial and political organisation. Mas-Colell alerted, “The matter is a sensitive one, as not everyone in Spain is reconciled to the post-Franco transformation of the country.” He added “there is now the temptation, with the economic crisis as an excuse, to turn back the clock.”

The Spanish Government has decided not to take the blame for Spain’s deficit and debt. And Spanish nationalists have decided to use the current debt crisis to push for a recentralisation of the country, taking powers away from the Autonomous Communities.

Data clearly show that the Autonomies are not the main administration responsible for Spain’s financial problems

Data clearly show that the blame should be taken by the Central Government, and not the Autonomies. In 2011, the autonomous communities will have a public deficit of 2.7%, according to the latest data released by the Spanish Government. The Central Government will have a deficit of 5%, almost double that figure. Overall, Spain will have a 8% public deficit (the rest corresponds to local and municipal governments). The Central Government manages 50% of public spending in the country and the regional governments around 40%, although some such as Catalonia’s manage a larger quantity as they have more devolved powers. In addition, regional governments manage the most expensive and socially-rooted policies (healthcare, education, social grants, public transportation, etc.), which are very difficult to cut from one year to the next and whose costs increase in times of crisis. Furthermore, regional governments have limited control over revenue, as they have very limited fiscal autonomy and depend on Spanish Government transfers –which are not always made despite the legal obligation to do so-. On the contrary, the Spanish Government has much more room to control its revenue, and also its spending. Despite these facts, the Spanish Government is responsible for 75% of the country’s public debt, while the Autonomous Communities share represents less than 20%.

Catalogna in pillole

El bon amic i col·laborador del Col·lectiu Emma Marco Giralucci ha publicat a Spaghetti BCN, la pàgina web dels italians a Barcelona, una entrevista amb el professor venecià Patrizio Rigobon, que parla de literatura catalana. Aprofitem per recomanar molt especialment tota la sèrie de Catalogna in pillole, unes entrevistes en vídeo molt curtes que són una magnífica introducció a la realitat catalana per a la gent de fora.