Catalonia Reborn: Why Catalonia's crisis is Europe's crisis

WHETHER an independent Catalonia emerges from the crisis precipitated by the October 2017 referendum, or whether it is subsumed back into the Spanish state pro tem, either outcome will have a transformational effect on the European Union.

If the concurrent and acrimonious Brexit negotiations between the UK and Europe are added in, we can say that the autumn of 2017 marked a turning point for the post-war history of the European “project”.

READ MORE: Portuguese MEP: Spain must release politically manipulated Catalan prisoners

All through the Catalan crisis, the President of the European Commission, Jean-Claude Juncker, was quick to defend Mariano Rajoy’s intransigence and unwillingness to negotiate. “I do not want a situation where, tomorrow, the European Union is made up of 95 different states,” said Juncker, a former Prime Minister of tiny Luxembourg (population one-third of Barcelona’s).

Angela Merkel was just as supportive of Rajoy. After a meeting between the Spanish and German government leaders, Merkel’s spokesperson Steffen Seibert reported: ‘‘In her conversation with Mariano Rajoy, the Chancellor ratified her support for the unity of Spain.’

Just to underscore where matters stood, an EU Commission statement bluntly told the Catalans that they would have to leave the EU and re-apply to join, if they went ahead with UDI.

Alex Salmond caught the public mood in both Catalonia and Scotland when he said: “I think the EU are in the dock on this. My regret is their unwillingness to condemn outright the violence that we saw from the Spanish state on the people of Catalonia who were merely trying to exercise their right to vote.”

The hostile position to Catalan self-determination taken by Juncker, Merkel and Donald Tusk, the President of the European Council, cannot be explained in terms of EU consistency. Ostensibly, they opposed Catalonia’s declaration of independence because they did not want to see Spain (an EU member state) disintegrate. Yet in the early 1990s, EU members were to the fore in encouraging the breakup of Yugoslavia.

Nor is the record any better when it comes to EU institutions staying out of the affairs of individual members. The manner in which the bailout programmes for Greece, Ireland, Portugal, Cyprus and Spain itself were imposed during the euro crisis is a glaring example of heavy-handed, anti-democratic intervention by the Commission, the European Central Bank and the German Bundesbank.

In Greece and Italy, democratically elected European governments were actually forced to resign under pressure from the EU and replaced by non-elected administrations run by technocrats.

All of which leads to the conclusion that the EU’s tacit decision to back Rajoy’s crackdown in Catalonia – a decision supported by Germany, France and the UK – was sui generis and premeditated.

In Germany’s case, there is a worry about the economic uncertainties resulting from the Catalan crisis – around 1,000 German companies have invested in Catalonia, including Volkswagen-SEAT and the chemical giants Bayer and BASF.

And the German political establishment felt sufficiently worried about a rise in support for the autonomist Bavarian Party for the Federal Constitutional Court to rule in January 2017: ‘‘…there is no room under the constitution for individual states to attempt to secede. This violates the constitutional order.’’

But these worries hardly explain the vehemence with which Germany and the main EU institutions have supported Rajoy, or their readiness to ignore human rights violations that most people thought modern Europe had long since turned its face against.

The best explanation is that the Catalan people are expendable in EU eyes as the Union struggles to hold itself together politically in the face of a surge in anti-EU populist parties, the continuing structural failures of the common currency, and the British Brexit.

The EU is essentially a mechanism for protecting the property and trading interests of large, multi-national companies and of the international banks that service them. This mechanism is now under severe strain, not just politically but economically.

European capitalism is foundering in the face of competition from American and Chinese rivals. None of the world’s biggest and most successful technology companies are European. US investment banks have recovered from the 2008 financial crisis and now direct global investment, while their European counterparts remain in trouble.

Holding the EU together is a sine qua non for protecting European capitalism from greater foreign competition. For this to succeed, Merkel and Macron have calculated that they need the Spanish state on their side politically.

The problem is that by backing the Spanish PP crackdown in Catalonia, the EU has succeeded only in alienating the most pro-European community in the Spanish state. Worse, by watching from afar as Guardia Civil truncheons battered the heads of European citizens trying to vote, the European Commission has triggered a massive crisis of legitimacy for the organisation.

Besides, the Commission’s fanciful declaration that it would summarily expel a Catalan Republic from the Union is patently against the economic interests of the Union. All the main surface transport links between the rest of Spain and France go through Catalonia. How could the EU single market and common customs union operate between Spain and France if Catalonia is ejected from the Union? Most of Spain’s exports and imports run through Catalonia.

The “nuclear” option of exiling Catalonia from the European economic family would be disastrous for the remaining Spanish economy in terms of tariff barriers. Besides, over 6000 multinationals have facilities located in Catalonia, most of which are French, German, British and Italian. It is hardly in the interests of these firms for Catalonia to be isolated by the EU. Catalonia is also home to some 300,000 citizens from other EU nations, who benefit from free-movement rights.

The big EU states have calculated that Rajoy can see off the Catalans while the Commission deals with the Brits. This will buy time for Europe to stabilise and reboot capital investment, in a bid to take on the American and Chinese.

But the truth is that the present EU system is no more fit for purpose than the Spanish 1978 regime. Over-centralisation, harsh pro-austerity policies designed ultimately to protect insolvent German banks, high youth unemployment, and an immigration crisis caused by Western destabilisation in the Middle and Near East, have combined to de-legitimise the post-war European project. From this perspective, Catalan self-determination is potentially part of the solution to Europe’s democratic deficit.

Suppose a free Catalonia successfully retains its EU membership. That does not mean business as usual. Catalonia is unlikely to accept the present domination of the EU by Germany or the imposition of the austerity policies that have been imposed by the European Commission and European Central Bank. The path would be open for an alliance between Catalonia, left-wing Portugal and perhaps Greece – and possibly Scotland, if it achieves independence in the wake of Catalonia – to reject the imposition of austerity policies and demand a more expansionist EU budget.

Even if this met resistance from Merkel’s Germany and Macron’s France, a new, progressive axis would have emerged inside the EU – one that is bound to shift the internal debate towards decentralisation, anti-austerity and action against the multinationals.

Far-fetched? We have been here before, albeit briefly. In the late 1980s and early 1990s there was a popular movement inside the EU to create just such a “Europe of the Regions” in an attempt to address the same democratic deficit and mobilise popular support for the EU project at a time of sharp economic crisis.

In 1994, a Committee of the Regions was created as a new EU body to give political substance to the new concept. The fly in the ointment was the introduction of the euro as a common currency, at the start of the 21st century. This led to a re-centralisation of economic policy led by Germany, as the euro was essentially the old Deutsche Mark with a new name.

The emergency policies to “save the euro” imposed by Germany had disastrous effects in Portugal, Ireland, Italy, Greece and Spain. On the other hand, given the present balance of forces, the prognosis for a rejuvenated, progressive European Union composed of new states such as Catalonia must be largely negative. However, there are signs of a movement on the left which aims to reform the present EU, and if that is not possible then to create some progressive alternative.

The negative reaction of the EU institutions to the Catalan crisis has exposed all the political fault lines of the Union. Faith in the democratic bona fides of the EU has been shaken not only in Catalonia, but across Europe. All of which suggests that, as the Catalan crisis unfolds, the EU will find it difficult to remain insulated from the political fallout.