Catalan President, Artur Mas, has travelled to Brussels this week to explain the state of the finances of the Generalitat to the president of the European Council, Hernan Van Rompuy. Mas has explained that Catalonia’s deficit will be 2.66%, above the 1.3% threshold set by Spain but that Catalonia has reduced its budget 10% and reducing it further would affect the Catalan’s people welfare since the Generalitat manages healthcare, education and culture, amongst other services. Mas also pointed out that the Generalitat’s deficit would meet with the Spanish target if Spain paid the 1.4 billion euros it owes Catalonia.
Later on, the spokesperson for the European Commission for Economic and Monetary affairs has explained that with these “budget cuts of unprecedented proportions” Catalonia has done its homework and has clarified that the other Spanish Autonomous Communities are the ones which need to follow Catalonia’s example and deal with their deficit.
Just after the elections last May the 22nd, the hidden deficit in many Spanish Autonomous Communities has surfaced and the international press (here and here), had pointed at the Autonomous Communities, and amongst them, Catalonia, as the main responsible for Spain’s deficit. However, as I explained here, Catalonia is only responsible for a very small portion of it..
The Spanish Government and media have an ongoing campaign to accuse Catalonia, and the international media has until now played along, as the culprit for the Spanish deficit and has threatened to intervene the Generalitat if it doesn’t meet the deficit target. This obbeys a carefully planned strategy to present Catalonia and the Catalan devolution process as a danger to Spain’s stability in order to reverse it and recentralise the Spanish State. A grotesque situation, threatening to intervene the Generalitat if it doesn’t meet the deficit target and at the same time provoking the overspending by not paying what it had committed to. It’ll be interesting to see how the Spanish justify a much higher deficit by some of the Spanish Autonomous Communities now that Catalonia has dealt with it and Europe is aware of the actual situation.
As a result of Mas’ meeting, rating agency Fitch has contradicted Moody’s and has admitted that the Catalan deficit is not endangering the Spanish solvency. This is a good start that may calm down the rating companies and make it easier for the Generalitat to find international investors for its financing needs this year.
But this is not enough, we need Mas to explain in Europe that Catalonia suffers an unparalleled fiscal plundering of 10% of its GDP by Spain every year, an unsustainable situation that makes Catalonia the highest taxed country in Europe and is a burden for its economic growth and welfare. Especially considering Spain’s frivolous spending habits. It is not acceptable denying Catalonia the 1.4 billion euros forcing Catalonia’s deficit above the target while at the same time not hesitating to approve 3.85 billion euros to finance the high speed train from Madrid to Extremadura, a region with 1 million inhabitants.
picture by tiseb