MADRID/BARCELONA Nov 22 Industrious Catalans
widely believe their world-class companies and export-strong
economy - almost the size of Portugal's - would be better off
without the rest of Spain.
As the region prepares for regional elections that may set
it on course for secession, that contention is being tested by a
raft of reports into the financial fallout of a split of
Europe's fifth biggest economy.
It would take years to happen and businesses themselves are
reluctant to discuss the possibility publicly, but privately
senior managers say they are deeply concerned at the risk
Catalonia could be forced out of the EU, even were it only for a
Other problems relate to the scale of Spain's - and the
region's - existing debt problems as well as how much more it
may cost banks and companies to find funding outside the euro
"Economists are taking part in a war of statistics," said
Pere Puig Bastard, economist at Spain's ESADE business and law
school. "From an economic standpoint, it's impossible to
establish the impact of how long we would live in legal limbo
and it's a bad time to be hitting investments."
A growing number of the northern region's 7.5 million people
want to break away from Spain as a recession fosters frustration
over a tax structure by which Catalonia pays an estimated 16
billion more to Madrid than it receives in return.
Sunday's regional election is expected to re-elect the
conservative Convergence and Union party, whose leader Artur Mas
pledges to hold a referendum on independence.
Ramon Tremosa, a CiU member of the EU parliament, says the
region's export prowess would allow it to catch up with some of
Europe's wealthiest areas and deal better with a crisis of debt
and recession from which Spain is struggling to emerge.
"A new Catalan state would force Madrid's bureaucrats to get
back to work. After five years of crisis, Spain has no exit
strategy and no idea how to get out," Tremosa said.
MORE INDEBTED THAN THOU
The pro-independence lobby says if Catalonia, which accounts
for a fifth of national output, were freed from the tax burden
of belonging to Spain it could invest in its own infrastructure
and boost production.
But it would first have to deal with its own effective
insolvency - broke after overspending in a decade-long building
boom, Mas had to reach out to the central government for 5
billion euros in aid earlier this year.
Like Scotland, set to hold a referendum in 2014 on leaving
the United Kingdom, it will also have to take on its own share
of a national debt that should top 85 billion euros this year.
The region faces debt redemptions of about 6 billion euros
next year, and will probably have to get financial help from the
central government again.
All of those problems, if they are still unresolved by the
time a referendum is held, will look a lot less daunting if
there is a guarantee of a smooth, unbroken shift into full EU
membership after independence.
But under European Union rules, a breakaway republic would
have to go through a potentially lengthy process of applying for
membership in the bloc after seceding, and the concern of
ordinary Catalans and businesses is palpable.
Polls show that between 46 percent and 57 percent of
Catalans want independence from Spain. But the surveys also show
that support for independence falls by as much as 10 percentage
points if independence implies exiting the European Union.
"Were Catalonia not a part of the European Union, that is
not desirable," said a source from a large Catalan company who
asked not to be named due to the sensitivity of the matter.
"This is a major condition that might act as a restriction to
The pro-independence movement says that if Catalonia held a
referendum and a huge majority of Catalans voted for their own
country, the European Union would have to respect the right to
self determination. Officials say both they and the Scots are
lobbying hard on these issues in Brussels.
Catalonia is home to some of Spain's largest companies,
including engineering group Abertis, airline Vueling
, publisher Grupo Planeta and banks CaixaBank
Almost a third of Spain's exports come from the region,
which has drawn in more than 3,000 multinational investors
including Volkswagen, Renault, Dow
Chemical and Sony.
As a member of the EU, union citizens enjoy virtually
passport-free travel, companies can trade freely covered by
cross-border regulation and industries enjoy single regulatory
rules translated across the 27 member states.
The change in status could also disrupt the region's role as
Spain's logistic gateway to the rest of Europe. In 2007, just
under half of Catalan exports went to the rest of Spain while
more than 80 percent of the remaining exports were sent to EU
countries, according to Spanish trade analysis group C-intereg.
"(Export companies) would be hugely penalized. Businesses
now based in Catalonia would have a big incentive to move just
inside the Spanish border and thus access the common market,"
Swiss bank UBS warned in a report.
While Catalonia could adopt the euro - like, say, Kosovo -
without being officially inside the monetary union, question
marks would still hang over the ability of the Catalan state and
companies to raise funds from outside the euro zone.
None of that means companies are guaranteed to up and leave,
the Catalans say, but it means there are issues to address.
"What Catalonia's big companies are concerned about is not
independence. It's the process, the transition that worries
them," said Jordi Pujol, who was the president of Catalonia from
1980 to 2003 and is one of the founders of the CiU party.