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Catalonia: July Update

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The situation in Catalonia is developing so quickly that I have abandoned all hope of using pithy titles for my articles. From now on, I will be forced to use head turners like “July Update”. November is right around the corner, so I won’t have to abuse this expedient too much, to everyone’s great relief.

Two recent news items provide some interesting material for speculation as to what is going on in Spain’s prickliest province at this time. The first is intimately related to the Catalan drive to a referendum on self-determination; the link to the other news appears far more tenuous, but might not be.

The first development is that Josep Duran i Lleida has resigned his position as the Secretary General and Number 2 of the governing Convergència i Unió party[1], led by Artur Mas. Mr. Mas is not only the head of the Catalan government, the Generalitat, he also leads the Convergència wing of CiU. Mr. Duran i Lleida announced that he would not resign his role as leader of the governing committee for the Unió Democràtica de Catalunya The importance of this development cannot be understated, in my opinion. Both halves of the party are politically and economically centrist and liberal; the main difference lies in their increasingly divergent attitudes towards the question of Catalan independence. This wedge, and the increasingly public disagreements it has provoked between Messrs. Mas and Duran i Lleida, is what has led to the latter’s resignation.

ciu

It was not always thus: only a few years ago, Mr. Mas and Mr. Duran i Lleida were both emphatically federalist Catalans. In other words, both supported negotiations with Madrid to acquire more powers and greater devolution for their Community; both supported the reformed Catalan Charter of 2005 that was negotiated with then Prime Minister Rodrigues Zapatero and subsequently sabotaged by Mr. Rajoy while he was in Opposition; and neither man would have advocated Catalan independence for a second. Mr. Duran i Lleida’s attitude has not changed; but Artur Mas has undergone a radical conversion: he now supports Catalan independence if that is what the Catalans vote for in November.

Let me be clear on this point: Mr. Mas stops short of advocating independence as the only solution for Catalonia. That is the position of the Esquerra Republicana de Catalunya (ERC). Mr. Mas has focused primarily on the existence of the Catalan nation and its right to self-determination, hence his insistence on the non-negotiable nature ond its right to self-determination, hence his insistence on the non-negotiable nature of the referendum. He accepts that the Catalans might vote for independence and he now supports that; but he would, I believe, be perfectly willing to accept an alternative solution – a federal solution – if it was supported by the Catalan people. This is consistent with his declarations earlier this month that he would be open to negotiating the exact timing and form of the referendum with Mr. Rajoy so long as the latter accepted its legitimacy.

Why is this development important and why have I emphasized it? There is a belief in the Partido Popular, widely held I believe, which looks at the “old Mr. Mas” and the “new Mr. Mas” and cynically assumes that the latter is merely a false, political mask that the CiU leader has assumed in order to protect himself electorally from the challenge posed by Esquerra. This is not an outrageous assumption, and I myself have expressed doubt regarding Mr. Mas’ sincerity. This belief has important policy implications: it leads Mr. Rajoy and his advisors to think that Artur Mas is bluffing and that when push comes to show, he will fold. “The Catalans always fold when their profits are at stake” is a popular, if very loosely translated, belief among many Spaniards.

It becomes dangerous when you are playing chicken with states and the other guy doesn’t blink.

Mr. Duran i Lleida’s resignation has come close to convincing me of the sincerity of Mr. Mas’ conversion. The fact that the internal struggle between the Federalists and the Separatists in CiU became public fodder in the run up to the European Elections in June should be proof enough that all was not well in that camp. There have clearly been numerous discussions at the highest level after Esquerra outperformed CiU in the elections; and even more after the abdication of Juan Carlos de Borbón. We can speculate that feelers were sent out from the Casa Real on the instruction of the newly crowned Felipe VI, and that Mr. Duran i Lleida’s resignation is the final and most visible manifestation of CiU determination to reject those feelers in favor of the declared path towards referendum: come what may.

Other interpretations are possible and plausible, but this seems to me to be entirely consistent with both the declarations of the involved parties and subsequent events. I might still be wrong about Artur Mas’ conversion to “catalanism” – I will never put my hand in the fire for anything a professional politician says or does – but I am almost convinced that he has indeed “drunk the juice” and become a true believer. It is easier to believe once one has spent some time in Catalonia.

There has been a ongoing internal struggle to determine CiU’s official stance towards the referendum and the possibility of independence; this came to a head after the European Elections and in response to sub rosa feelers from King Felipe VI and Mariano Rajoy[2]; the more federalist Unió wing has lost the argument. Critically however, the Unió party leadership has accepted their defeat. If it were otherwise, rather than resigning his position, Mr. Duran i Lleida would have announced the dissolution of Convergència i Unió into its constituent parties. Of course, such a move would have been self-defeating as it would have handed power over to the even more pro-independence Esquerra Republicana.

This implies that any negotiation that doesn’t include a referendum is now a vanishingly small possibility; and Mr. Rajoy has backed himself into a corner by obstinately clinging to constitutional obstructionism that he will now not be able to back away from. This strategy might have made sense if Mr. Mas was indeed likely to “blink” in November; in the light of this new interpretation, it is a recipe for disaster. Mr. Rajoy will not now be able to negotiate a back-room deal with the Generalitat, assuming he ever could; that possibility departed definitively with Mr. Duran i Lleida. Nor is King Felipe’s intervention likely to prove fruitful: the Catalan-speaking monarch undoubtedly has considerable pull with some sector of the Catalan business elite – those with substantial holdings and operations in the rest of Spain – but the monarchy[3] is unpopular with the Catalan masses. Nor can the new King very well advocate that the government abandon its thoroughly legalistic, yet ultimately self-destructive interpretation of the Constitution[4].

The second interesting development was the announcement on Wednesday that BBVA had won the bidding for the assets of the moribund Catalunya Banc, in receivership with the Orderly Restructuring Fund (FROB)[5]. The winning bid was 1.18 billion euros; significantly more than what rivals Banco Santander and CaixaBank were prepared to offer, but far, far less than the 13.8 billion euros that the Spanish state had been forced to pay out in aid. The picture that has been circulating around social media expresses the general opinion of the transaction better than any words of mine can convey:

caixa

Like most large business transactions in Spain, this one undoubtedly has a political dimension. It seems significant that BBVA’s bid was described as “significantly more” than that of its rivals. It could be an indication that the Bilbao-based bank saw very large synergies in the acquisition; yet Santander did not, and Santander is a bank known for being able to exact the last penny of synergies out of its acquisitions. An alternate explanation is that the Spanish state urged BBVA to make a substantially higher bid to ensure that a “Spanish bank” would win; any number of sweeteners could have been offered under the table to induce BBVA to acquiesce.

Perhaps this is mere paranoia on my part, a professional deformation and risk when you write about politics long enough. But it is no secret that the Generalitat would have preferred that the Catalan assets remained in the hands of a “Catalan bank”, which Barcelona-based CaixaBank is[6]. This not only enhances the financial and political power of the Catalan parties, who share the same cozy relationship with “their banks” as the other political parties do in the rest of Spain; it would also simplify things should the Catalans need to create a new, national banking system in 2015.  Madrid might have wanted to throw a monkey wrench into both arrangements: BBVA is not as likely to write blank cheques as Caixa Banc and its constituent institutions were (at least not to the Catalan parties).

Regardless of the political motives behind it, the sale remains a bitter pill for the Spanish state to swallow: the roughly 11 billion euros in losses are nearly equivalent to the cuts in made in public health and education funding through the austerity measures imposed in response to the crisis. This is grist for the Podemos mill to grind during the run up to the 2015 municipal elections. It also clearly shows the amount of valueless garbage still floating about the Spanish financial system, that sooner or later will have to be cleared out and accounted for.


Sources and Notes:

[1]“Duran i Lleida deja el cargo de secretario general de CiU,” eldiario.es, 21 July 2014

[2] I refer here to the whole “I invited you”, “no you didn’t”, “yes I did” farce that was played out for public consumption over the last two weeks.

[3] Felipe de Borbón is not himself unpopular; the majority of Catalans simply dislike the institution.

[4] Just as ante-bellum Southerners were keen on protecting the odious “three-fifths” provision in the US Constitution that counted their human chattel as 3/5 of a free man for census purposes, this rigid defense of a document that no longer reflected the reality of the nation led to civil war and the destruction of the Southern plantation civilization.

[5]Iñigo de Barrón, “El Estado pierde unos 11.500 millones al vender Catalunya Banc al BBVA,” El País, 21 July 2014

[6]Of course, all banks in Spain are Spanish banks, regardless of which Autonomous Community they are headquartered in.

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Discussion

3 Responses to “Catalonia: July Update”

  1. Sweeteners are not necessary. Mr Gonzalez biography is self-explanatory. He was set first head of Argentaria by Aznar, and later head of BBVA again by Aznar.
    As well, is not to forget how Mr. Gonzalez was put on head of BBVA after Aznar used information found by Spain intelligence on former heads of BBVA having personal funds in Cayman Islands. Galantly they resigned while, galantly, no prosecution was done against them.

    Of course, nothing has ever been proved, and maybe it is only my paranoia to find a relation on both consecutive facts.

    Posted by Manel Sanchez Ruiz | September 3, 2014, 08:47
  2. I enjoy your “Common sense” entries, particularly those referring to Catalonia. Mind you that “common sense” from your perch in Madrid it ain’t common in that city.

    However, your view of the political thinking and overall motives of both Artur Mas and Duran-Lleida misses the utterly personal point:
    Artur Mas learned at the cost of 12 parliamentary seats back in December 2012 that either he joined the independence movement or he was out. He’ll be out anyway sooner than later, but he has bought a few streets and “plazas” to his name in a foreseeable future. He is in for the running come hell or high water.
    Duran-Lleida is a shameless wheeler and dealer with a long history of complete dedication to his own survival as a high roller “foreign madrileño”. He just resigned his post as secretary of the CiU coalition but continues as top guy of Unió Democràtica and, more important, as speaker of the Catalan minority and chairman of the Foreign Affairs Committee of the Spanish Cortes. Of course there is no comparison with the all-powerful Foreign Affairs Committee of the American Congress, but gives him the opportunity of foreign travel and maintaining his plush
    Residence in Madrid, he values most. I’ll bet he dreams on being one day the Catalan Ambassador of the Catalan Republic in Spain.
    Alas! Unió Democràtica de Catalunya is probably a non-existing entity and if challenged in an election will collect grim results.
    Looking forward to your August update.

    Posted by Xavier Allué | July 25, 2014, 20:02
  3. Mr Duran disappeared during the campaing for european elections claiming he had a backache. It is a popular belief in catalonia that Duran is the biggest problem of CiU and the reason they lost against ERC.

    The catalan TV channel TV3 explains this problematic in its popular political satire program Polonia. In the next short gag, the Convergencia (the C from CiU) headquarters suffers a severe earthquake after a newspaper article from Duran, who is advocating for a third way that contradicts the official and more popular Mas-lead CiU position.

    Posted by Genís Vendrell | July 25, 2014, 11:48

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