How do you think the Catalan economy will evolve in 2014?
Currently we can already see some positive trends in the Catalan
economy. For instance, the increase in exports, which is above the
Spanish average for exports. In addition, since the self-determination
process started in September 2012, Catalonia has established itself as
the European region that receives the most foreign investments regarding
the real economy, outside of Barcelona’s stock exchange. So we can see
there are certain trends indicating that Catalonia has entered into the
mindset of international investors. Finally, another indicator is
tourism: overnight stays as well as the number of days in stays have
increased, when in other major cities in Spain, this hasn’t been the
case.
This does not mean that in the background, we don’t have a very
serious economic situation caused by an increase in public debt and
deficit. And this is what we must try to sort out. We believe that a
Catalonia, freed from paying off €16 billion or €18 billion in fiscal
deficit each year, would be a Catalonia that could reinvest all of this
capital in infrastructure, capital, knowledge, etc. And this would be
the way to overcome the crisis.
How do you think our economic model should evolve, since the
crisis has revealed the limits of our old production model? What should
our new production model look like?
It must be said that there isn’t one single economic system that has
not suffered from crises, that is immune to crises. But this crisis has a
particular characteristic and it is that we have provoked it. It has
been a speculative crisis, a real estate crisis, which fundamentally
developed out of very specialised markets and economy sectors tied to
State oligopolies or to large companies providing works, services and
infrastructures for the State; companies that live off State debt. It is
a system of communicating vessels that exists between certain items in
the Spanish budget and the accounts of certain companies. Therefore,
from the CCN, we believe that this public debt has been generated not
for the benefit of society but for the benefit of no more than a few
companies. This is an odious debt and, in principle, we shouldn’t be
deemed responsible for it. Even more so than in the 90s and the first
years after 2000, the Catalan institutions have criticised the Spanish
Government and its policies regarding investments and infrastructure.
They have denounced these colossal macro-works and this cult of
immoderation as being unviable and unsustainable. So when you have not
taken part in the decision, when the decision has gone against your
position, when you have warned time and again against the risks without
being taken into account, and this debt has eventually served to benefit
a few only, this is an illegitimate debt.
So what we have to do is change this model, return to productive
economy, which is what we know all about: an economy of small and
medium-sized companies, and especially - the most important thing
nowadays - the only way out of the economic crisis for a Catalan
company, strictly speaking, is for it to be internationalized. It’s as
simple as hiring a commercial director bilingual in French, German or
English, that will allow all of us to focus on considerably larger
markets. We have the francophone community next door with 75 million
inhabitants with an average income that exceeds almost €50,000 per year.
And on the other hand, we have Spain, with 40 million inhabitants but
with an average income that amounts to less than €25,000 per year. Thus,
we see that the product or type of product demanded by one market or
the other is very different, the product demanded by Europe is a product
of much greater added value and this is where we should go.
When you talk about an ‘odious debt’ and not taking
responsibility for it, in a process of independence what would happen to
such a debt?
We are precisely analysing how to distribute the assets and debts of
the Spanish State [in the event of Catalonia’s independence], and we are
probably the ones who have studied this the most thoroughly. And
indeed, distribution is necessary. But you should bear in mind that if
Spain does not recognise the independence of Catalonia, Spain should
assume its debt completely and the Catalan Government its own debt, as
long as there hasn’t been an agreement on the issue. And such an
agreement could take months or even a year to be reached. In order to
know what we are talking about, I’ll give you an example: when
Yugoslavia was dismantled, the resulting states had to distribute some
€16 billion of debt. When the Soviet Union collapsed – an economic,
demographic, military giant – they had to distribute a debt of
€53billion. At the current time, the debt of Spain amounts to €980
billion and there still need to be added items that are not included in
the concept of debt. In the end, it all adds up to €1,250 billion. This
is unsustainable.
What we must show to the international community is that Catalonia
has to assume part of this debt, that there is the willingness to assume
part of this debt; obviously, a proportionate one. However there are
shares of the debt that we are not responsible for. For instance, if the
Spanish State gets into debt to build a high-speed rail line between
Algeciras, Madrid and Jaca, planning to build a 118-kilometre-long set
of tunnels, at 1,500 meters altitude, since this infrastructure will not
pass through Catalonia, the debt it will have generated cannot be
transferred to Catalonia. We have to be careful with this. When people
say that Catalonia will have to assume between 16% and 20% of the €980
billion of debt of the Spanish State, no, it doesn’t work like this. We
have to analyse things item by item and see which debt can be
transferred, because not all debt can be transferred, and of the debt
that can be transferred, what share we should assume. Some of the debt
cannot be transferred, for instance the debt of the Spanish State to
individual people. For example Treasury Bonds, State Bonds, Treasury
Bills, etc. All of these are papers stating ‘Kingdom of Spain’ and those
who signed the bonds bought them from the Kingdom of Spain, not the
Republic of Catalonia. It is complex but we can define precisely which
areas are our responsibility and which ones are Spain’s.
By not acknowledging some items of the debt or the bonds issued
by the Kingdom of Spain when Catalonia was part of it, don’t you think
this may affect the recognition of an independent Catalan State by the
international community, since they might see Catalonia as a state that
doesn’t pay for its debts?
It is just that they are not its debts [Catalonia’s]! You’re right
but you also have to keep in mind that the doctrine of the odious debt
has applied, I would say, to almost all countries in the world including
the United Kingdom or the United States in Iraq in 2004... It isn’t
that you arbitrarily decide that this debt shouldn’t be yours to pay.
The question is how you justify it. That is to say, if you prove that
you haven’t made the decision, that you have warned time and again
that this was not the way to do things, that they didn’t take this into
account, and furthermore that this debt has gone to works, services and
infrastructure that are not in your territory, automatically nobody will
say “excuse me, this debt is yours”. No, it is not mine to pay. Not
that I am running away from it, it is just that I am not responsible for
it. It is not mine. You cannot transfer it to me.
This is directly linked to the fiscal deficit and Catalan
resources paying for infrastructure in other parts of Spain. Could you
explain to a foreign audience what this fiscal deficit is and detail the
figures?
What are called fiscal balances are economic instruments used to
study the difference between what each region contributes to the State
and what each region receives from the State. That is to say, the
difference between the taxes paid to the central government by the
region and the services received by the region from this same central
government. There are some regions which, for historical reasons or
other reasons, have an unfavourable economic situation and, on
principle, they are prioritised by the State, which transfers to them a
series of payments. There are regions that have fiscal surplus, meaning
they receive more money than they are providing. In the case of
Catalonia, we don’t have any surplus; we only have a fiscal deficit,
meaning that Catalonia contributes much more than it receives. What do I
mean by much more? The IMF has already established a few years ago that
fiscal deficits exceeding 4% of the GDP of a territory amounted to
colonial relations. Catalonia’s fiscal deficits are around 9% of its
GDP, and talking about the Balearic Islands, their fiscal deficits
exceed 14% and even 17% of the GDP. This means three times more than the
limit set by the IMF. And all this has consequences.
In principle we are not against the fact there has to be fiscal
redistribution between regions and different levels of wealth within the
same society. It is OK, such a system has worked well. What happens is
that, in the Spanish case, the system has been perverted. It has been
perverted for several reasons. First of all, because there are no
limits. The IMF set this limit and Spain, on the contrary, hasn’t used
it. Secondly, because there are also no limits as to time. For how many
years will you have to transfer revenue to other territories? 30 years?
40 years? A lifetime? Always? For ever? There must be a limit here. And
finally because the order principle has not been respected. What is the
order principle? The order principle states that the richest region has
to be the one which brings the most to the Spanish State and, once the
solidarity levelling has taken place, it must remain the richest region.
This hasn’t applied in Spain because the two richest regions do not
contribute and the third and fourth richest ones, once they have
contributed and the solidarity levelling has occurred, become ninth and
eleventh. With such a thing, what you’re doing is financing the richest
Autonomous Communities. What does this mean? That you are providing
funding to regions that offer public services of better quality than the
ones we have here. It corrupts the whole system and therefore it is not
viable as well as being immoral.
Catalonia is the Autonomous Community with the highest
debt. Does it mean that the Catalan Government is poorly funded due to
the fiscal deficit and therefore accumulates debts? Or does it mean that
things could be done better in Catalonia?
It is obvious that things could be done better; they could be done
better here and better done in Sweden. But here there is one question to
be taken into consideration: without Catalonia’s fiscal deficit, the
Catalan Government would have a budget passing from €29 billion to €46
billion. If only a third of this fiscal deficit was funding the Catalan
town halls, it would mean that a municipality of 10,000 people with a
budget of €10 million a year would have a budget of €22 or €23 million
per year. With this, we could do a lot! There must also be control
mechanisms to prevent the perversion of the system, but this fiscal
deficit is everything. And furthermore, it doesn’t only mean that the
Catalan economy is missing €16 billion per year. The problem is that
these €16 billion are a money multiplier, meaning that we are not only
losing the €16 billion but the whole economy generated by the €16
billion. The value of this is incalculable. We must point out that, in
the whole of Europe, Catalonia is the region that has the largest
accumulated fiscal deficit. From 1986 till now, it is about to reach
€300 billion. This is equivalent to 6 Marshall Plans! The Marshall Plan
was 6 times smaller than Catalonia’s fiscal deficit over the past 30
years.
On the basis of past or present currencies?
Present currencies! Comparable currencies.
So, an independent Catalonia would be richer? Especially
considering membership in the European Union, the Eurozone and the
entire debate which is currently going on?
Yes. An independent Catalonia, first of all, would be richer. The
thing is that I do not like such an idea. Why? Not that I wouldn’t like
it being richer, I do not like the concept because we are in a global
economic crisis and we have to think about changing certain values. And
now it is not about growing for the sake of growing, not about consuming
for the sake of consuming. That is to say we also have to change part
of the model of what wealth means and how wealth is generated. But it is
true that Catalonia would plainly have many more opportunities. And
above all, business opportunities. We are not fully aware of the
business opportunities generated by a state out of becoming a state, or
by a metropolitan region like Barcelona’s out of becoming the capital of
a state. Just in the real-estate sector, which is now in crisis,
Catalonia would need 400,000 square meters just to accommodate embassies
and ambassadorial residences. This would not be for us to pay, but for
the countries that come to settle here. And this is one example, but I
could tell you dozens more.
But what if we are left outside of Europe? There are people who
insist that Catalonia, depending on the course the independence process
follows, could remain outside the EU. What would happen to taxes, free
circulation of people, goods, services, capital, with the Euro ... Would
we be impoverished?
No. In this sense they are playing with us. “Catalonia outside
Europe, Catalonia within Europe”. In Europe, the taxes, free circulation
of goods, capital, and products, etc. do not only depend on the
European Union. They depend on numerous treaties, for example the
European Economic Area, the European Union Customs Union, Schengen, etc.
The Schengen Area is not a founding treaty of the EU, we shouldn’t
forget this. In this sense, the way to transfer multilateral treaties to
the successor state, in this case Catalonia, would be as simple as
making a notification of succession to the members which agreed to the
treaty. It is as simple as saying to them, “Gentlemen, from now on, the
responsibility Spain had over the Catalan territory when those treaties
were enforced, I will assume it myself”. Regarding the founding treaties
of international organizations such as the Council of Europe, the
United Nations, etc, here we should ask for membership.
What about the EU? Well, several things will happen with the EU.
Firstly, we must ask ourselves whether the EU is an international
organization, because from my point of view it is not an international
organization like the UN actually is. The EU is an organization for
integration, a growing confederation of states from the start. So you do
not have to apply a legislation dating back to 1978 and that, in
addition, neither France, nor Spain, nor Italy, nor Germany have signed
or ratified. The only existing regulations on the succession of treaties
of international organisations is the 1978 Vienna Convention, which was
not ratified by either the European or the United Nations greatest
powers. So we cannot apply something that hasn’t been ratified. We must
seek a political solution. What is the political solution? The political
solution is that Catalonia has to sign the Act of Admission of
Catalonia to the European Union and negotiate its economic
participation, negotiate its participation in the Council of Ministers,
in the European Parliament, etc. But while this is being negotiated, all
the EU treaties, all the EU legislation will remain in force for the
Catalans, in respect to the Catalan population and to the Catalan and
foreign companies operating in Catalonia. Therefore there will be
continuity in this regard as well as well as a legal security.
Have you detected in business and economic circles a fear that
Catalonia might be left outside the EU and the Euro? What would be the
consequences for custom duties and foreign investment?
No. Firstly, it is impossible. And secondly, regarding custom duties,
if people knew that outside not only the EU but also outside the
European Economic Area, the European Union Customs Union, the average
custom duty is 1.4% or 1.5%...We’re not talking about custom duties of
20% or 30%, which would be impossible. We’re talking about tariffs of 1
point something! It’s nothing! But it won’t be this way anyway because,
in the end, who will charge these custom fees? These tariffs will be
charged by us, because 70% of the products exchanged between France and
Spain transit through Catalonia. However, things don’t work like this.
The world doesn’t work like this anymore. We want to create a state, but
we must understand that today’s international community is not formed
of states like it was in the 19th century. The state is no
longer a closed nation-state; there is a much higher interdependence.
And this will obviously be respected.
What I would like once and for all is for Spain to face the challenge
of Catalonia’s independence because it is being said and discussed that
Catalonia could remain outside the EU, outside Schengen, the Euro zone,
but why won’t anyone tell us what will happen to Spain? Because this is
a fundamental question. If the independence of Catalonia is a case of
secession with the extinction of the legal identity of the Spanish
State, the Spanish territories that have not seceded will also have to
ask for admission to the EU and the United Nations. Unless you believe
that, in essence, the non-seceded territories are Spain; then, Spain may
keep its legal identity. But this is not yet clear. Moreover, I have
already publicly defended the opposite version. I have already argued
publicly that we are not facing the secession of Catalonia but facing
the dissolution of Spain. Therefore the remaining territories [within
Spain] will have to go through the same process they are planning for
us. However, in the end, none of this will happen. Why? Because it is an
issue that must be resolved politically.
If Spain is dissolved, what we were talking about earlier on regarding the Spanish Kingdom’s bonds…
Then they would all have to be distributed! But only in the event of a dissolution, not with a secession.
