Comments from euro zone finance ministers, officials

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dareconomics wrote:

The Catalunyans gave us a very interesting election result. The mainstream media is playing it down, but the fact is that Catalonia wants independence more than President Arturo Mas thought when he called early elections.

The Catalunyan President, a position similar to that of an American governor, attempted to negotiate better terms for tax sharing with the central government in Madrid. Rather than even entertaining a change, Prime Minister Rajoy completely rebuffed his efforts.

Mas then decided on the gambit of holding early elections and making them about a referendum on independence. If his party strengthened, this would have given him the bargaining power to negotiate the retention of more Catalunyan taxes in the region. Currently, it is the largest net contributor to the central government.

Mas’s plan failed. He actually lost support, and rather than having a better bargaining position it has actually worsened. The parties that gained strength are all pro-independence and wish to bypass a referendum and get on with it. Rajoy has no choice but to oppose secession, so negotiating a different revenue split is out of the question.

The situation is set to destabilize in the coming months because the political situation is not resolved, and a worsening economy will just add fuel to the fire.

Nov 26, 2012 11:55am EST  --  Report as abuse
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