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Give up. Expensive

Banki.ru: themes of the day 31.10.2017 at 21:00

Banking and financial news on the website Banki.ru

The Parliament of Catalonia has canceled its meeting scheduled for 31 October, and thus recognized the decision of the Spanish authorities on its dissolution and holding early elections on 21 December 2017. Why Catalonia wants independence and how that independence could be worth?

Rejected

Catalan politicians in their separatist campaign chose not to see what was clear long before the referendum and that was very clearly expressed after the international community recognizes the independence of Catalonia. On 27 October, the US state Department said that Catalonia is an integral part of Spain, and that Washington would support the measures of the Spanish government, aimed at preserving the unity of the country. Prior to this, in the same vein unequivocally expressed European countries — separately, and the EU as a whole. Even the UK leaving the EU, said that it did not recognize the independence of Catalonia. A negative reaction followed from the European Parliament and the European Commission, whose President Jean-Claude Juncker said that "I would not like that the EU consisted of 95 States." About the respect for the territorial integrity of Spain said the foreign Ministry of Russia. Publicly a willingness to recognize the independence of Catalonia expressed only... Abkhazia.

Another striking reaction to the referendum in Catalonia proved to be a record in Twitter, Wagner Ribeiro, agent of the highest-paid footballer in the world, the Brazilian Neymar, in this offseason with the scandal moved from Barcelona to Paris PSG: "Catalonia will turn to Monaco after the separation. And football club "Barcelona" will die."

Catalonia in the event of a real Declaration of independence risked to be isolated. A cold shower of reality slightly cooled the ardor of the separatists and urged them to take a break. To achieve independence under the current conditions — means inevitably to bring newfound Republic to the edge of the economic abyss. And in fairness, it should be recognized that not all Catalans are in favor of independence. In the last referendum voted for independence 90,18% of the population of Catalonia, but the turnout was only 43,03%. At the same time, Catalonia is well known: those who are against independence from Spain, in a referendum, just do not go, while supporters of the separation of such votes do not pass.

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the User of Catalonia, headed by the main initiator of the referendum, the now former head of Generalitat (government) by Carles Buchtemann, went to Brussels — including to avoid prosecution. However, this is not the worst outcome. When in 1940 the independence of Catalonia declared the then head of government, Luis Companys, it lasted only one day. And the Companys was executed by order of Spanish dictator Franco.

Why is everything so bad with the centuries-old attempts of Catalonia, one of the oldest democracies in Europe to achieve independence? First, perhaps, is to answer the question: why the Catalans believed that all will be well.

"Stop feeding Madrid?"

Catalonia — the richest region of Spain, which became a donor for the Spanish budget: taxes, leaking from Barcelona to Madrid, from one year to exceed the funding back — an average of 10 billion euros. Turns out, becoming independent, we will be richer reasoning in Catalonia.

the Economic benefits — the trump card, trying to use most of the separatist regions. To speak of national or religious identity has become unfashionable. To withdraw from the States want primarily the most wealthy regions. For example, in Italy it is ten areas of 20 the entire industrialized North of the country, in Belgium on independence said rich Flanders, even in Spain the same second power of the separatist movement in the region — the Basque Country — are also among the most economically developed.

the Figures that show supporters of an independent Catalonia, are really impressive. Catalonia is home to 16% of the population of Spain, which provide 19% of Spanish GDP. By such indicators as GDP per capita, Catalonia Spain leaves the rest far behind. At the end of last year, GDP per capita in Spain amounted to 24 000 euros, and in particular Catalonia — 29 966 euros, slightly down from the average for the EU — 31 600 euros. In recent years Catalonia shows some of the highest economic growth rates in the European Union: 3.5% in 2015 and 2016 and approximately 3% by the end of 2017 (the average for the Euro area around 2%). The share of Catalonia in the Spanish exports of 26%. In some sectors it is even higher: for example, exports of the chemical industry, the share of Catalonia reaches 47,3%, in export — 28.9 per cent.

Catalonia really feeds the rest of Spain: the data of Madrid and Barcelona differ, but show the scale of the problem. For example, in 2011, the Catalan government stated that it paid to the state budget of Spain at 11.1 billion euros more than they received from it. Data of Madrid's more modest but still impressive: 8.5 billion euros of a difference. In 2014 Catalonia "overpaid" 9.9 billion euros.

the share of debt of Catalonia in the total Spanish debt is only 7.2%. And unemployment, which is an extremely serious problem for the entire country, in Catalonia below: of 15.7% and 19.6% (data in 2016).

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Economy of Catalonia is better diversified than the Spanish in General, a greater proportion of innovative and sustainable enterprises, higher productivity. With regard to external trade, over the last 20 years, Catalonia has dramatically reduced dependence on the Spanish market: in 1999 and 57.3% of Catalan exports went to the rest of Spain, in 2016 — only 37.4%.

the Last 20 years, the region is experiencing a boom in foreign direct investment, Financial Times even called Catalonia best region for investment in southern Europe in 2016/2017 year.

This list can be extended: the government of Catalonia prepared well, releasing a lot of economic data to prove the advantage of the region before Spain. It would seem that prosperity is inevitable?

Not really. In the Patriotic heat of the Catalans prefer not to see the fact that all this wealth only exists in a world where the Catalonia is an integral part of Spain. When you secede from Spain, all this well-being becomes Golden coach that turns into a pumpkin.

Catalonia: rich or independent?

Coming from Spain, Catalonia automatically out of the EU, Euro zone, WTO, UN and all other organizations of which Spain is. And to get there again, but in the form of an independent state, it will be extremely difficult.

"is Almost impossible to gain independence and build the state without the consent of other States, especially large and powerful, to recognize and support you," says the Professor of international law at the University of the city of Cleveland Milena Erased. And consent, as we have seen, will not. And it's not so much the reluctance to go to the conflict with Spain, but in the unwillingness to provoke similar processes in their country. Separatist movements exist in every other country in the world: where the leaders are only political clowns, but somewhere really spoil the blood of the Central government.

who hoped Catalonia in their hope for international recognition? In the UK, quite desperate from Northern Ireland and Scotland weary? Italy, with its "Northern League", which muddies the water in half of the regions of the country? On France, Corsican terrorists and their French Catalonia, which, unlike Spanish, there is no Autonomous status? Turkey with the Kurds, Canada Quebec, Cyprus, Russia? No one wants to give the green light to the centrifugal processes in their country.

On the way to Somaliland?

so, what would happen to Catalonia if it refused to carry the 155-th article of the Spanish Constitution and declared independence unilaterally? As we have said, it automatically would come out of the EU, Euro zone, WTO, UN.

the European Union, the common economic space free of duties and customs barriers, allowing the free movement of goods and Finance. In the most optimistic scenario of Catalan exporters will have to pay a toll, losing in competition, and profit.

the Euro is not only a subject of constant attacks, but also all the benefits of a common currency for the seller and the buyer, as well as her high status in the world. When you exit from the Eurozone in Catalonia there are two options: to issue its own currency or adopt the experience of Montenegro, which is not part of the Eurozone where the Euro is the official currency.

This situation means that the country does not have the right to issue currency, and only satisfied with the one that comes from abroad (e.g. from tourists).

the WTO provides trade liberalization, protects against the protectionism of other countries increases a country's attractiveness to foreign investors and facilitates local investors access to international markets.

UN Membership is not just full protection of international law, recognition of existing borders, but also the opportunity to participate in the global trading system, access to IMF loans and world Bank.

is There life outside of the UN? No doubt. In addition to the 193 member countries of the organization there are still ten States recognized by one or more States (sometimes also partially recognized), including, for example, the Transnistrian Moldovan Republic. Transnistria economically better-developed neighboring Moldova, which can only partly be explained by the fact that in the Soviet era, the main industry of the MSSR were located in Transnistria. The unrecognized state has an active trade with Europe, however, uses for this Moldova, and to the EU market for Transnistrian goods are shipped, marked Made in Moldova. Northern Cyprus, by the way, also the whole foreign trade leads via Turkey. But from Spain, the Catalans such a gesture wouldn't wait.

And there are States not recognised by anyone but themselves. For example, Somaliland in Somalia. Although there is a stable government and economy better than Somalia, but because of the recognition on the territory of the country can't work with international banks and humanitarian assistance by the UN (in which Somaliland still needs) residents are unable to: formally, it can be directed only through Somalia.

That's about that company and will be Catalonia if achieve is fighting for.

the Price of independence

Immediately after the referendum Finance Corporation Caixa Foundation, which owns the largest Bank in Catalonia (and the third in Spain), CaixaBank, announced the transfer of the headquarters from Barcelona to Palma de Mallorca — at least for a period of uncertainty. At the same time about the move said the Bank is number two in Catalunya, Banco de Sabadell, who decided to move to Alicante. All to 27 Oct from Catalonia have moved 1 681 company, according to local authorities registrars. If you don't count weekends and holidays, another company left the Catalunya every 15 minutes.

And that's already generous tax river that Barcelona liked to reproach Madrid, just could not seem so wide.

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In the first days after the referendum, shares in Spanish banks have fallen markedly. If it was a question of Catalan banks with headquarters in Barcelona, the decline reached 7% on the day.

the Currency question too, does not involve easy solutions. The transition to its own currency will cause a sharp outflow of funds from the banking system due to fears of devaluation. To patch holes, the Central Bank of Catalonia would be forced to run the printing press, which in turn will drive inflation. However, try to go to the Montenegrin scenario and keep its currency, the Euro still would not stop capital flight, because outside the Eurozone, the Euro ceases to be under the protection of the ECB.

take a Look at the economic statistics of Catalonia from a different angle. Yes, the share of state debt the state debt of Catalonia in Spain only 7.2%, but the "weight" of the Catalan debt much more. The ratio of debt to GDP in the region is 35%, but if you think that Catalonia will have to bear the burden of the national debt at 35%, you are wrong.

When you divorce everything is divided, including debts. Holding Barcelona to float freely, Madrid would distinguish her at the same time part of the national debt. The EU has already stated that they expect that the share of public debt will be proportional to GDP, Catalonia would inherit 19% of Spanish government debt. Thus, the level of public debt would approach 100% of the Catalan GDP. While the EU has strict requirement for a candidate country to join the Eurozone: government debt must not exceed 60% of GDP. It turns out that Blanca, the machine would lose the possibility in the coming years to apply for re-entry into the Eurozone.

the Share of Spain as a mainstream Catalan exports decline, but still remains extremely high — 37,4%. It is obvious that Spain would have done anything to reduce mutual trade to a minimum. Federico Santi, an analyst from the Eurasia Group expects that the products from Catalonia in case of the Declaration of independence would have been declared a boycott in the rest of Spain.

overall, the share of the 28 EU countries accounted for 65.8% of exports of Catalonia. The new Republic would have to forget about the free market and to learn what tariffs, customs duties and other trade barriers. At some time would have to forget about foreign investment.

the Minister of Economics of Spain Luis de Guindos has promised that the economy of Catalonia will drop 20-30% and unemployment doubled. "How many jobs, how much investment, how many business transactions will be lost during the processing of independence? No one yet knows," says a Professor at the University of Zaragoza Alan Cuenca. Still, some risk experts to evaluate. The most negative scenario suggests that retail sales will fall to 50%, and sales in b2b segment — 20%. This can lead to a drop in GDP in the range of 1.7—2.2 percent. On a more optimistic estimates, the decrease may be limited to only 1%.

Blackmail as the way to happiness

Once peaceful and triumphant reunion with all international institutions is postponed indefinitely, it's time to move to plan "B" (which can be, actually was a plan "A"). "I predict a long negotiation and compromise, which is that Catalonia remains part of Spain, but expanded autonomy," says Milena Erased from the University of Cleveland.

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By the way, Spain and so much has allowed Catalonia. The Spanish Autonomous community Catalonia is not all historical Catalonia. The historic Costa Blanca is Valencia, and the Balearic Islands in Spain, Northern Catalonia in France and Alghero on the North-West of the Italian island of Sardinia. And the most notorious of the separatists dream to reclaim all of these areas. However, neither Italy nor France does not entrust the Catalans neither special status nor autonomy, nor even a name: land North of Catalonia, officially called the French Department of Eastern Pyrenees. As things stand, and with the French part of the Basque Country in France: it's just a Pyrenees Atlantiques, not Autonomous community in Spain. But the good should not remain unpunished.

many Years of threats about secession from Spain, Catalonia has already received from Madrid the preferences that other Spanish regions, and which make her life very comfortable. For example, the right to keep 90% of the profit of sea ports and resort business, to conduct its own immigration policy.

How much Spain will give way now? "I do not exclude the expansion of autonomy and now, even though it is already one of the regions with the greatest powers and possibilities, not only in Spain but in the world," — said the Minister of foreign Affairs of Spain Alfonso dantis. And if so, then be part of another state is not so bad, at least you don't have to spend money on the maintenance of the army and other state institutions, for example on the Supreme court.

So now in Catalonia at the time "surrendering" to Madrid, there comes a time of active preparation for new elections to select a team that would allow to manipulate and Spain to with each new statement of independence once the economic benefits. The Catalans this learned.

Milena BAKHVALOVA, Banki.ru

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