Unity in Division: The Need for Greater Autonomy in Catalonia

The Catalonian Regional Parliament held a referendum that tasked voters with deciding whether or not Catalonia was to become an independent state in the form of a republic in 2017. As the votes came pouring in, an overwhelming separatist victory became apparent—over 90 percent were in favor of secession. Soon thereafter, the Spanish National Guard stormed government buildings and offices throughout Catalonia, arresting many of the leaders of the Catalan separatist movement. Two years later, the Kingdom of Spain convicted and imprisoned nine Catalan independence leaders on charges of sedition, prompting massive protests all across Catalonia. The issue of Catalan separatism has infiltrated the life of nearly every Spaniard, and if no changes are made, there is no resolution in sight.

Catalonia is a financial powerhouse in an otherwise stagnant Spanish economy. Though the Catalan state accounts for a mere 6.3 percent of Spain’s territory and only 16 percent of its population, it comprises nearly 20 percent of Spain’s GDP. This wealth, however, has been the cause of numerous conflicts between Catalonia and the Spanish state. By EU mandate, Spain places heavy taxes on its citizens and businesses, such as the 21 percent value added tax and the 25 percent corporate tax. Each region is taxed at a rate proportionate to its wealth, and this revenue is redistributed throughout Spain. As a result, Catalonia is one of the most heavily taxed regions of Spain—every year, it sends about 10 billion euros more to Madrid than it gets back (about five percent of its economic output). The Catalan people feel cheated out of their hard-earned money—to them, it feels as if Catalonia is being taken advantage of by the Spanish government; they contribute more to the administration than almost any other region, but receive virtually nothing in return. It is primarily for this reason that Catalonian separatist movements have skyrocketed in popularity in recent years, and it is this mistreatment that independence movements hope to combat.

A sovereign Catalonia would be able to make decisions that benefit itself above all else. No longer would Catalan wealth be siphoned out by an abusive government; instead, it would stay in Catalonia, enriching the region and furthering its prosperity. However, there are just as many potential repercussions to a Catalan declaration of independence as there are potential benefits. As we saw after the 2017 referendum and subsequent declaration of independence, it is likely that the Spanish government would immediately come in, break apart the newly-formed Catalonian government, and try its leaders. Regardless of the extent to which these actions are just, they are required by law: Spanish law prohibits Catalonia from declaring independence, regardless of the referendum’s apparent support.

Even if Catalonia were to successfully declare independence, the immediate and long-term economic repercussions would be devastating. Nearly all of Catalonia's closest trade partners reside in the EU, and they have been vocal about their support for Spain in its struggle with Catalonia (mainly because they face similar separatist movements within their own borders). An independent Catalonia would be left without significant trade partners for years to come, leaving what is now a flourishing economy in shambles. Not to mention, the Catalonian regional administration is renowned for its fraud, corruption, and inefficiency—namely among those politicians who advocate for independence the most. Without the aid of Madrid, Catalonia would struggle immensely to administer itself and retain stability altogether. Absolute secession from the Spanish Kingdom is thus not a viable path for Catalonia to pursue; the only hope Spain and Catalonia have of reaching an agreement in which Catalonia does not secede is if Spain grants Catalonia substantially increased autonomy. To understand how such a plan might be implemented, we must look to another region of Spain: the Basque Country.

The Basque Country is known best for its wine, folk dances, and soccer teams. Its Basque name, “Euskal Herria,” does not conjure images of wealth and prosperity in the minds of most, but these are exactly the qualities the Basque Country exemplifies. Found in the northeastern corner of Spain, the Basque Country is an even wealthier region than Catalonia is. This is, in large part, thanks to the Basque Country’s unique tax system. The Basque Economic Agreement is a structure that has existed for over 150 years, and it enables the highly autonomous Basque Country to be deemed exempt from Spanish tax laws. Instead, a set of loose tax codes determined by the local administration are put in place. Due to these low taxes, the Basque Country is a virtual tax-haven wherein resident businesses retain access to the Spanish market.

Additionally, the Basque Country receives a disproportionately large share of government investment. This government redistribution of taxpayer money, referred to as “cupos,” is usually directed toward poorer regions of the nation, such as Andalucia. However, the Basque Country receives more cupos than any other region of Spain, despite already being the second-richest. The Spanish government is well-aware of the Basque Country’s success and importance to the Spanish economy, and it invests accordingly, which only serves to increase Basque productivity. And because of the sheer quantity of wealth produced by this system, there is actually a net gain in revenue received by the central Spanish government. This system has been such a massive success that many members of the EU oppose it out of fear that it will draw business away from their own economies.

This is the issue with the Catalan economic structure: the Spanish government practically punishes Catalonia for its economic success, when it should be rewarding it. In order to promote stability and unity in Spain, we must ensure that the relationship between Spain and Catalonia is beneficial to both parties. The best way to accomplish this is to afford greater autonomy to Catalonia—with greater self-governance, Catalonia might establish a tax system similar to that of the Basque Country. This would decrease the economic burden placed on Catalonia by Madrid, while still allowing Catalonia to enjoy the benefits of being part of the Spanish Kingdom. Spain, on the other hand, would likely benefit from this just as much as Catalonia would; by lowering taxes on Catalonia and increasing the cupos it receives annually, the increase in economic productivity would be so immense that Spain would receive back every penny it spends on Catalonia—and then some.

The potential implementation of this system has garnered substantial support from both sides, mainly facing opposition from radical separatists and constitutionalists. Opponents of Catalan independence argue that the Basque Economic Agreement only exists due to historical precedent—regions like the Basque Country and Navarre have functioned under these systems for centuries. They claim that if historical precedent is to be their standard for excluding regions from established systems of governance, Catalonia has no right to such a liberty. In fact, it would be unconstitutional to grant it as much; the Spanish constitution promises equality, not just for all people, but for all regions as well. With increased autonomy comes less opportunity for wealth redistribution, which would deny poorer regions of Spain access to much-needed funds. But this is the very reason why Catalonia deserves autonomy—to tax a region at exorbitant rates, especially when doing so directly harms the region, is an infringement on its own right to equality. Catalonia lacks the historical precedent to establish such a system without opposition, but autonomy is just as vital to its future as it is to that of any other region. If significant changes are not made, protests will continue to rage, and division will only grow. If we take no action in the face of this growing crisis, soon, there will be no Spain left to hold together.

The Catalan independence movement has existed ever since Catalonia and Spain became one, but it has never been nearly as prominent an issue as it is now. The struggle for Catalan independence and consequent protests have pushed business out of Catalonia, only worsening the conflict, which shows no sign of letting up soon. However, if the Basque system were implemented in Catalonia, much of the financial and political disagreement between Catalonia and Spain would fade away. Spain needs Catalonia, and there is no foreseeable future in which an independent Catalonia would be able to thrive. Thus, there is no other option: increase autonomy and bring Catalonia the peace it has been crying out for for so long.