What if Catalonia isn’t in the EU to start with? The alternative scenarios of Together For Yes

Barcelona“Since it’s our children’s livelihood that’s at stake, we must consider every scenario”. Those were the words uttered on Monday by economist Germà Bel --who heads the Junts pel Sí (Together For Yes) list in the Tarragona constituency-- during the Q&A that followed the presentation of the economic viability programme for independence featured in the candidacy’s platform. What did he mean? He was referring to the possibility that a hypothetical independent Catalonia may find itself out of the EU at the start of the process.

The No camp is using this issue to cast doubts about the viability of independence and Together For Yes --the coalition formed by CDC and ERC-- are making the most of it to outline the available alternatives that would allow Catalonia to keep having economic, political and institutional relations with Europe. This is a key question, since it will determine critically important matters such as the negotiation of the Spanish debt with Madrid.

What will happen with trade?

“If Catalonia is an EU member state, there is no issue. Otherwise, you can sign trade agreements”, Bel remarked. Another economist, Oriol Amat (the coalition’s number 8 candidate for Barcelona) noted that “if the worst comes to the worst, we could reach bilateral agreements”. At one point during his speech, Amat was particularly optimistic: “we won’t spend a split second out of the EU”. Based on what? “If independence is inevitable, Europe will force everyone to negotiate”. Bel, Amat and also Catalan president Artur Mas (number four on the Barcelona list) emphasised that 60 per cent of Catalonia’s exports are bought outside Spain.

Amat also pointed out that 70 per cent of Spanish goods sold abroad travel through Catalonia, hinting that the Spanish government itself would have a vested interest to keep Catalonia in Europe’s institutions. Mas added: “I could tell you that Spain would do poorly without us, but I won’t. I am one of those who are convinced that Spain will do well without Catalonia and perhaps some of us have more faith in the Spanish economy than some Spaniards. Spain would not become an unviable country”. Amat argued that “in fact” nothing would change after independence. “While formalities are taken care of, it’ll be business as usual”, said the Barcelona candidate for Together For Yes.

What about the debt?

This will be a key issue, should Spain and Catalonia ever sit down to negotiate independence. Bel sought to bring a new variable into the Yes campaign: the possibility that an independent Catalonia might hypothetically become a “successor state” rather than a “continuing” one. The Tarragona candidate claimed that “it will be up to those in charge to decide” because “the treaties make no provision for this”. “Once a decision has been made, Spain and Catalonia --now recognised as a new country-- will be told whether they are EU member states, institutionally speaking. So we will have to claim our rights and acknowledge our duties”, he added.

What does this scenario entail, from a practical point of view? If the relevant authorities did not regard Catalonia as a “continuing” but a “successor” state, then Catalonia wouldn’t need to acknowledge the portion of the Spanish debt that it would be due otherwise. Bel said that “that is how international law works and those are the specific regulations in a secession scenario”.

What will happen to Catalonia’s finances?

A report written by Catalonia’s Advisory Council for the National Transition, CATN (1) --of which the Together For Yes Tarragona candidate is a member-- estimated the Catalan government’s monthly cash flow needs at about €4-5bn, if Catalonia were to face a unilateral declaration of independence without any international support. Amat insisted that “this scenario presupposes no talks, but if independence becomes inevitable, the EU will intervene”. This negative gap in Catalonia’s finances would only occur if Madrid stopped funding Catalonia altogether, but the Catalan government continued to send all tax revenues to Spain.

What about banks?

One of the points that the No camp makes is that all banks based in Catalonia would cease to have access to the European Central Bank’s finance mechanisms. Bel mentioned that there are 128 such banks and “some from outside the EU (Swiss and American) are getting credit from the ECB. In order to apply for this, the bank’s country of origin must have a branch or a subsidiary in an EU member state”, the Tarragona cadidate argued.

“Spain cannot seek to harm Banco de Santander or BBVA”, claimed Bel. According to Mas, the key issue is for talks between Spain and an independent Catalonia not to “hurt the economy”. “How could a country that is already in the EU be expelled from it?”, asked the president. Still, Together For Yes are looking at alternative scenarios, just in case.

_______

(1) N.T. in Catalan CATN stands for Advisory Council for the National Transition, a committee of experts who advise the Catalan government on matters to do with the ongoing independence process in Catalonia.