Basque Country: Spain’s antidote to secession

Sonya Dowsett –

As Spain and Catalonia head towards a constitutional collision over the region’s claim to independence, lawmakers on both sides of the crisis are pointing to a way out: north, to Basque Country. Among the mountains of Basque Country, which borders France, a once-violent campaign for independence has petered out, with generous fiscal autonomy from Madrid helping to keep agitation for independence in check. “We don’t have that economic resentment,” Aitor Esteban, organiser for the Basque National Party in Spain’s parliament, said. “People don’t feel that need to act upon a grievance about money; that makes a big difference.” The Catalan government is not calling for a Basque-style deal, insisting instead on independence after declaring support for secession in an October 1 referendum banned by Madrid. adidas stan smith femme blanche But the moderate lawmakers in the region’s ruling coalition privately say they could drop independence claims if they were given the tax autonomy that Basque Country enjoys. In Madrid, some socialists have suggested it could serve as a model for a compromise that would defuse Spain’s crisis, although the cost to the central government would be significant. Basque staged protests over Madrid’s violent crackdown on Catalonia’s referendum, but the crisis has failed to rekindle secessionist fervour on the streets of Bilbao, the Basque capital. Catalan flags hang from balconies alongside the Basque flag in a sign of solidarity, but Bilbao is prosperous and peaceful. Where once unionist politicians needed bodyguards and car bombings were a constant fear. Just 17 per cent of Basques want independence and less than half would like to hold a referendum on the issue, according to a poll carried out by the university of Deusto. Basque militant group ETA, which killed more than 850 people in a decades-long campaign to carve out a separate state, effectively ended its armed resistance this year when it surrendered its weapons. air jordan 30 The region now has one of the highest economic outputs per capita and one of the lowest unemployment rates in Spain. Basque’s fiscal autonomy is among the most generous of any region in Europe. If it were to be extended to Catalonia, an economically more powerful region accounting for a fifth of national production, the Spanish state would lose about 16 billion euros, according to a 2014 study by research house CSIC. That would equal about 13 per cent of next year’s budget and affect Spain’s deficit and borrowing costs. For that reason, Spanish Prime Minister Mariano Rajoy has ruled out such generous treatment for Catalonia. Under Basque’s accord with Madrid, the region collects nearly all its own taxes, which are forecast to total 13 billion euros this year. It is due to return 800 million euros to Madrid in what is known as an annual quota to cover the costs of national expenses such as defence or infrastructure. Rajoy has sweetened that arrangement since he regained power at the head of a minority government last year, as the price of securing Basque National Party support for his 2017 budget. It has proved unpopular with other regions who would almost certainly oppose any similar deal for Catalonia. Former Catalan leader Artur Mas tried to hold talks with Rajoy in 2012 about granting Catalonia powers to raise and spend its own taxes, but the prospect of negotiations in the current climate look bleak. Economists say an overhaul of the fiscal relationship between Madrid and the regions is overdue because the current system has led to intense tax competition between regions. Some autonomous communities have become under-financed, resulting in cuts in public services. “The situation is so critical, there might just be the political momentum needed to tackle it,” said Antonio Garcia Pascual of Barclays Capital.