Catalonia rejects the Spanish Government’s proposal to approve the Autonomies’ budget in advance

Barcelona (ACN).- The new Spanish Minister for Economy and Competitiveness, Luís de Guindos, has opened a Pandora box after an interview on Wednesday with the Financial Times. De Guindos said: “There will be additional instruments of control and budgetary adjustments for the finances of the autonomous regions … the liquidity difficulties are truly an opportunity to impose hard conditions and measures  in terms of reining in the deficits of the autonomous regions”. In addition, he proposed that the Spanish Government would have to approve the Autonomous Community budgets before they are approved. The fear in Catalonia and the Basque Country is that the proposal is part of a broader re-centralisation process, backed by Spanish Nationalists who want to take powers away from the Autonomous Communities and give them back to the Central Government. The deficit control would be considered an excuse for the political control of the Autonomies, which have their own Government, Parliament, and fully manage main Welfare State policies. On Thursday morning, the Spokesperson for the Catalan Government, Francesc Homs, sent a very clear message to Madrid. He said that Catalonia completely refuses this proposal as “it goes against the Spanish Constitution” and “against Catalonia’s self-governance”. The Catalan Government has said that De Guindos’ proposal “makes no sense at all”, and is “unacceptable and intolerable” as it “destroys financial autonomy” and “would represent a violation of the rules of the game set out in the Constitution”.

The Spanish Government does not go into specifics

On Thursday afternoon, after the weekly Cabinet meeting of the Spanish Government, Vice President Soraya Sáenz de Santamaría, did not detail De Guindos’ proposal. However, she stressed the need to honour the public deficit commitments, which are shared among all government levels in Spain (Central Government, Autonomies, and local councils) and the European Union Members. In addition, she said that the Spanish Government would negotiate with the Autonomous Communities in the coming weeks, within the next Fiscal and Financial Policy Council (CPFF). Furthermore, Sáenz de Santamaría explained that the Spanish Government would reduce the number of public companies and would ask the Autonomous Communities to do the same.

Some Autonomies have already done their homework

The Basque Country’s Government issued a press release on Thursday in which it refused De Guindos’ proposal. In addition, they said that some Autonomies are already meeting their deficit commitments and are making severe austerity efforts. Therefore, treating everybody the same way is unfair and is a privilege for those that have not fulfilled their obligations. The Basque Country Government also believe that De Guindos’ proposal goes against the Spanish Constitution.

De Guindos’ blamed the Autonomous Communities for the deficit surplus

In the FT interview, the Spanish Economics and Competitiveness Minister blamed the Autonomies when he proposed to “establish strict instruments of control over the budgets of the autonomous regions, which form an important part of the overshoot we had last year”.

The Spanish Government is mostly responsible for the deficit, not the Autonomies

Many voices in Catalonia said on Thursday that the Spanish Government is mostly responsible for Spain’s public debt and deficit. In addition, some Autonomies such as Catalonia have drastically reduced their spending by 10% in 2011, while the Spanish Government has not undergone such severe cutbacks. Looking at the numbers released by the Bank of Spain last June, the Spanish Government is responsible for 76% of Spain’s public debt, when it is only responsible for half of public spending and holds control of  revenue with a sovereign fiscal policy. However, the Autonomous Communities are only responsible for 17% of Spain’s public debt, when they are managing around 40% of public spending (Catalonia controls a higher percentage, as it has more devolved powers). In addition, the Autonomies are managing almost the entire Welfare State, which in times of an economic downturn are always those with most tension. Furthermore, the Autonomies have a limited fiscal autonomy, and many times depend on the Spanish Government’s will to receive the revenues they are legally entitled to.

A change in history?

The general perception in Catalonia is that using the economic crisis and more specifically the public deficit as an excuse for the Spanish Government to have more control of the Catalan Government is unfair and goes against the Constitution. Using the financial crisis to redraw Spain’s political map and drastically trim the Autonomies would be a success for Spanish Nationalism, which has advocated for that for a very long time. However, the Autonomies, and concretely the Catalan and the Basque Autonomies, are the result of a complex and painful historical process, sealed as an agreement in the Spanish Constitution. The danger lies in changing the Constitution that was approved after the Fascist and Spanish Nationalist military dictatorship and a dreadful civil war, which had ended Catalonia and the Basque Country’s autonomy and had persecuted their language and culture.