Iberian Divorce: The Catalonian Independence Referendum
Charles W. King
Independence is in the news once again as both Catalonia and the Kurdish region of Iraq have held referendums on the subject. The prospect of an independent Kurdistan is unacceptable to the governments of Iraq, Iran, and Turkey, and already there are rumblings of a new outbreak of violence in the region if the Kurds follow through with the independence that many of them voted for. The referendum in Catalonia has already broken out in violence, as the Spanish government deployed militarized police to attempt to prevent Catalans from voting in a referendum that the Spanish Government and Supreme Court deemed illegal.
The Catalonian push for independence from Spain raises the question of why in the 21st century a relatively autonomous region of a reasonably well off and advanced economy would seek independence. Both Catalonia and Scotland, despite possessing autonomous rule, have legitimate grievances with their respective central governments in Madrid and Westminster. They contribute significantly more to the national budget than they receive in national disbursements. Despite being profitable engines of growth for their respective economies they receive little in the way of reinvestment to ensure that they remain healthy and growing. Along with the fact that they feel like their cultural differences are ignored or suppressed by central governments, it is understandable the politicians and citizens of Catalonia, like the Scotts before them, feel like they are being exploited.
Like the legal Scottish independence referendum of 2014, the prospect of Catalonian independence would grant increased political autonomy, but an uncertain future. There exists no precedent for a member of the European Union to split, and it is unclear which, if any, European institutions an independent Catalonia would be a member of, or eligible to join. If not a member of the Euro Zone, would a Catalonian state be able to issue a currency? On what terms would it trade with the European Union? The sovereign debt crises in the wake of 2008 have empowered the European Central Bank and made European finance ministers wary. It is now common knowledge that Greece cooked their books to join the Euro, and Spain may have as well. It is unlikely that a new Catalonia would be immediately allowed join all of the European institutions that Spain is party to. The effect on the Catalonian economy while the European Union investigates the new country’s books could be devastating, even more so if the result is rejection from one or more institutions.
Prosperity in the 21st century is inextricably linked to the ability to conduct international trade. Catalonian independence from Spain could scuttle the economies of both countries. The tactics deployed by the Spanish government to repress the Catalonian referendum, in the wake of years of ignoring Catalan concerns, are heavy handed but they demonstrate the concern that the Spanish government has for the consequences of losing one of its most prosperous regions.