Catalan President: Spain will negotiate if “the open conflict” generates “concerns” at international level

Barcelona (ACN).- The President of the Catalan Government, Artur Mas, affirmed that Spain and Catalonia are already now in a situation of “open conflict”, after the criminal prosecution launched against him and two other members of his Cabinet. However, Mas asked the Spanish Government to end its “angry” attitude and start negotiating, proposing ways out for the current situation. The Catalan President added that the international community will ask the Spanish Government to sit and talk if the current open conflict finally generates “concerns” at international level. Mas was addressing an economic forum with the main representatives of Catalonia’s business community. 

The Spanish Minister for the Economy met with Mas

The Spanish Minister for the Economy, Luís de Guindos, was also present and they were in friendly conversation for a little while. De Guindos emphasized that the Spanish Government has issued “bailouts for Catalonia in difficult moments”. De Guindos was referring to the Liquidity Fund for the Autonomous Communities, which issues loans with high interest rates to regional governments. De Guindos stressed that Catalonia has already asked for a €24 billion from the FLA. In addition, he said that the relations between Catalonia and Spain go beyond the fiscal transfers and are “more complex”.

The FLA is the only mechanism by which the Autonomous Communities are now allowed to get additional funds to finance their deficit and face debt payments, since the Spanish Government does not allow them to access financial markets. In addition, the Spanish Executive tends to present such loans as a free-of-interest grant which is far from the case, since interests are higher than the market ones, and therefore the Spanish Government is making money out of it.

Catalonia suffers from a high and perpetual fiscal deficit

In addition, the Spanish Executive is refusing to review the current inter-territorial fiscal scheme, despite the current model having expired in January 1, 2014. The Spanish Finance Minister, Cristóbal Montoro, announced that the model will not be reviewed until 2016, at least. The Catalan Government already complained about the current model in 2012 and it asked for an urgent revision back then, as well as for a fairer treatment, reducing the high contribution that Catalan taxpayers are obliged to make with Spain’s poorer regions. Catalans have been giving away an average of 8.1% of Catalonia’s GDP for the last 25 years at least, equivalent to €16.5 billion each year, representing one of the highest inter-territorial transfers in the whole of Europe. After such a transfer, public investment per inhabitant is lower in Catalonia than in most of Spain, which makes Catalan public services being under-budgeted and basic infrastructure being delayed. In addition, the Catalan Government has to compensate for this and it has been posting a deficit for many years, resulting in a high accumulated debt. IF Catalonia’s fiscal deficit were halved, Catalans would still contribute to territorial solidarity and the Catalan Government would have a high budget surplus. Instead, the Catalan Government was the first to implement budge cuts in Spain and it now sees how it has to pay interest to Madrid for the liquidity it needs to fund its deficit and face debt payments.