History in the Making

Since 1978 and the end of the civil war, Spain has functioned under a decentralised regional democracy. The suppression of regional differences under the previous Franco dictatorship served to inflame regionalist sentiment in the aftermath of the dictator's death, and the authors of the 1978 constitution could not ignore this. The constitution therefore officially recognises Spain's 17 regions as autonomous entities with wide legislative and executive independence. Officially, they have their own parliaments and regional governments, and there is even deeper autonomy for the Basque country and Navarra regions. However, this compromise model falls short of a true federal arrangement for the country's governance. The major national parties - the ruling Spanish Socialist Workers Party (PSOE) and in particular the opposition, centre-right Popular Party (PP) - are strongly committed to preserving the integrity of the Spanish state, and over recent years have been reluctant to agree to further decentralisation, which would fundamentally alter the constitution.

The Pending Power Struggle

In November 2005, contentious proposals for a new autonomous statute for Catalonia were debated and given initial support in the Spanish national parliament, after having been overwhelmingly approved in the Catalan regional assembly. They centre around demands for greater Catalan control over the region's tax affairs and most aspects of its economy. These include the regulation and supervision of financial markets, energy, telecommunications and infrastructure. The regional government also wants greater internal control over judicial and law enforcement matters, as well as over ports and airports. In terms of precedent, and given Catalonia's economic significance, the new, revised statute has major political, economic and judicial implications for the whole country. The issue is set to dominate political debate in 2006, and is sure to be a source of great concern for Zapatero.

The new statute is especially contentious, as for the first time it explicitly demands that Catalonia be labelled a 'nation'. This has incited a major outcry from all corners of the political and social spectrum, with many fearing that it could lead to the eventual fragmentation of the Spanish state. Some critics have gone so far as to label it the 'Balkanisation' of Spain, in reference to the violent break-up of the former Yugoslavia.

The Rise of Catalonia's Influence

The current Statute of Catalonia establishes a democratic political entity with the necessary attributes of self-government to perform local administrative functions. The Catalan government is divided into 16 departments that implement policies according to their powers in education, healthcare, industry, public works, culture, agriculture, the environment, tourism, local administration and employment, amongst others. Its budget amounts to approximately 29 billion euro.

As an autonomous community of Spain, Catalonia has no official status or recognition at an international level. However, as the region has achieved a greater degree of autonomy in recent years, the Catalan government has opened some representative offices overseas.

PM May Have to Disappoint the Catalans

The new statute is seen by opponents, both politically and economically, as a challenge to the national government, and a threat to Spain's decentralised model. The problem is not so much that the new statute grants Catalonia increased autonomy to run its affairs; it stems more from the fact that it explicitly stipulates Catalonia's 'historic rights', which could be construed in some quarters as a challenge to the supremacy of the Spanish constitution over local law. The basis for autonomy would then be historical, and not rooted in the law of Spain.

It is likely that Prime Minister Zapatero is increasingly regretting his commitment to support any decision taken by the Catalan parliament on the statute. He first made this promise in 2003 in an attempt to help a PSOE candidate win a seat in the Catalan elections that year. In the March 2004 national election, the PSOE unexpectedly achieved a landslide victory in the tumultuous aftermath of the train bombings in the capital, Madrid. Unsurprisingly, the Catalans expected Zapatero to stick to his word when he assumed power. However, Zapatero could face a split in his own majority government over the issue. Some members of the government have already suggested that the PSOE may back away from this commitment; Minister of Public Administration Jordi Sevilla was quoted as saying: 'We are not going to approve something that is bad for Spain, even if it is constitutional,' referring to the authorisation needed in parliament for such a statute and the ensuing change in the constitution.

However, the PSOE's majority in parliament is to a large extent reliant on the support of a left-wing Catalan political party, the Republican Left of Catalonia (ERC), which favours full independence and made impressive gains in the regional elections held in November 2003. Should the Spanish parliament decide to reject the new statute, the ERC may withdraw its support for Zapatero. Although such a move would not see the PSOE lose its majority, it would leave the government, and indeed the prime minister, noticeably weaker.

Economic Implications of Further Autonomy

A key motivation behind the reformed statute besides nationalist sentiment is the feeling harboured by many Catalans that their economic strength is being exploited by the rest of Spain. The region - whose major city is Barcelona - contributes 18% of Spain's total GDP. It is, moreover, a net contributor to the Spanish budget and helps subsidise poorer regions. These other regions, and the businesses located there, are understandably anxious that Catalonia preserve the current arrangement. This translates into additional political pressure on the prime minister. The governor of the Bank of Spain, Jaime Caruana, warned the Spanish parliament in November 2005 that the proposed charter for Catalonia would 'threaten the efficiency of the Spanish economy.' If the region manages its economy in an increasingly autonomous fashion, there are fears that this will impede smooth commerce and fair competition with the other regions. This is a potential cause for concern for Catalans, as well as for the remainder of the country. Some Spanish business leaders and politicians are already calling for a boycott of Catalan goods in order to make their point. Although the Catalan Investment Authority has so far surpassed other regions in attracting foreign investment, some new investors may be reluctant to enter into separate regulatory and administrative obligations within the same country. The Catalan government will need to bear this in mind as it pushes for increased economic autonomy.

Basque Country Status

Should Catalonia's statute be reformed as desired by the regional government, Zapatero will face renewed calls to reconsider Basque demands; in early 2005 a draft proposal for greater Basque autonomy did not even make it past the first reading before it was thrown out of parliament on the grounds that it was unconstitutional. Moreover, the government's insistence that Basque terrorist organisation ETA must disarm before a political compromise can be reached on the region's status has so far been ignored by the group, which continues to detonate explosives on roads and in buildings throughout the Basque country on a regular basis. Zapatero must know that in 2006 he will need to try a different tactic if he is to succeed in stemming the violence and beginning peace talks with Basque leaders.

What Next?

Although the proposals for increased Catalan autonomy have been tentatively approved in the national parliament, they will have to be significantly amended in order to comply with Spain's constitution.

The prime minister is tabling amendments to the financial and judicial parts of the plan, modifying the reference to 'nation' to 'national entity'. However, it is difficult to imagine how the draft will be finally approved if such fundamental changes are thought necessary. The changes are unlikely to please the regional government in Catalonia, which overwhelmingly approved the draft and can boast popular support for the plans. Catalan politicians insist that the reformed statute is necessary to preserve the region's language, culture and economy. Memories of suppression during the Franco era still linger in the minds of many in Catalonia. In such a sensitive political environment, Zapatero is well aware that the government will have to tread very carefully.

The prime minister has told both Catalonia and the Basque country that he is prepared to open negotiations on new statutes, on the condition that they do not entail an imminent amendment to the 1978 constitution. Such a prerequisite is understandable as any major constitutional amendment would involve a complicated process:

• Approval of two-thirds of the deputies in parliament.
• Fresh legislative elections, plus ratification of the constitutional amendment in the new parliament.
• A national referendum.

All in all, 2006 will be a complex year for the Spanish prime minister as he tries to rein in the rebellious regions, while preventing a possible split within his own ranks. The submission of amendments to the Catalan autonomy statute is expected to take several months; however, the debate over the possible outcome is already well under way.

There is indeed also the real possibility that other regional ambitions, such as those of Galicia or Valencia, might be ignited by such talk of reformed autonomy statutes, an undesirable scenario for a country that is proud of its unified territory, and rightly so.

Contact: Raul Dary

24 Hartwell Ave.
Lexington, MA 02421, USA
Tel: 781.301.9314
Cel: 857.222.0556
Fax: 781.301.9416
raul.dary@globalinsight.com

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