Financing and 2027 scenarios

MadridThese past few days I've been thinking a lot about some conversations I had a while back with Joan Tardà, Gabriel Rufián's predecessor as ERC spokesperson in Congress. Tardà is a sentimental man, but also a very reasonable one, who, whenever he encountered difficulties in open negotiations with the government, would seek explanations. And if we happened to run into each other in the corridors, he'd express his displeasure to me, saying, "Brunet, you know Spain, why are they doing this to us?" It was a rhetorical question; he was aware of the underlying problems, of the constant misgivings whenever an improvement to Catalonia's self-government was negotiated, especially if it involved matters related to money, to funding.

Tardà would whisper, and add, "We must achieve it, we can't give up." And he'd complete his reasoning by saying, "We have to do it, and we have to do it with the Spanish left; we have no alternative. If we can't achieve it with the Socialists, who will we be able to move forward with?" I told him it was necessary to seize the opportunities that would likely arise, that politics wasn't always a matter of principles, but of timing, of specific circumstances. This was demonstrated by the fact that the major advances in regional development had come hand in hand with the investiture debates of Felipe González or José María Aznar.

I remembered all this because the agreement between the Spanish government and ERC on regional financingAnd the difficulties its parliamentary approval as a state bill will face. Especially in the first half of the year, marked by elections in three autonomous communities currently governed by the PP: Aragon, Castile and León, and Andalusia. I also mentioned it because of the contrasts within the current legislature. We believe that the same coalition government that spied on pro-independence parties during the height of the independence movement is now in power in Madrid. A government that later granted pardons to the main leaders of that movement and drafted an amnesty law that has still not been fully implemented.

In short, they're now returning to that "making a virtue of necessity" strategy that Pedro Sánchez used to get his party to accept and promote the aforementioned law that implied pardoning the pro-independence leaders. Now, the Spanish government needs breathing room again, and this has been the opportune situation that ERC has seized.

A taboo subject unblocked

However, it's worth going further. The agreement is positive. It unblocks a taboo subject that has persisted throughout the legislature. The Spanish government hadn't dared to address it for fear of opening multiple fronts of confrontation with the PP and Vox, whose electoral prospects have been growing over the last two years. But the significance of this first step goes beyond that. Sánchez hasn't ordered the First Vice President, María Jesús Montero, to bring the issue of regional financing out of the freezer now, thinking only of a short-term solution, but also of its potential future impact beyond the remainder of his term. Sources within the Socialist leadership explain that they have applied elements of analysis of the country's electoral prospects to this problem. The PSOE and PSC share the view that after the next general elections there are three possible scenarios. One, that the PP and Vox achieve a sufficient majority to govern. Second, that a formula similar to the current one can be revived, with agreements from the bloc they consider representative of plurinational Spain. And third, that the PSOE and PP reach a kind of more or less explicit pact to allow the other to govern, even with a precarious majority, with agreements on fundamental issues and concessions for whoever remains in the opposition. In other words, a Grand Coalition without governing together.

Obviously, of the three possibilities, the one the government and the PSOE will try to achieve is the second, another term for the "plurinational majority." The unblocking of the financing issue has that purpose. It is an attempt to lay the foundation for a cooperation scheme that goes beyond this legislature. And the first chapter is being written with the partner that has done the most to shore up the precarious stability of the current central administration. The Socialists finished the year depressed by the results obtained in ExtremaduraAnd they have used the Christmas break to try to finalize a strategy that will allow them to reach the 2027 deadline with a chance—that's always theoretical—of remaining in power. Their motto is that defeatism is over—at least for now—and it's time to get to work.

The complicity of Moncloa and Palau

It is clear that the preparation and dissemination of the financing agreement involved complicity between the Moncloa Palace (the Spanish Prime Minister's residence) and the Palau de la Generalitat (the Catalan government headquarters). This is evident in the content of the pact and the chosen venues, with Salvador Illa prominently featured. The objective: to strengthen the relationship with ERC (the Republican Left of Catalonia), to provide Junqueras with a significant platform for political prominence, and to construct a project that could also position María Jesús Montero favorably. This is intended to be facilitated—we'll see if it succeeds—with a couple of figures. Catalonia would receive an additional 4.686 billion euros under the agreement, while Andalusia would obtain another 4.846 billion. With these figures in hand, it becomes more difficult for Montero to face a tough Andalusian election campaign in which she would be accused of having sold out to save Pedro Sánchez's chances and help him remain in power until the end of the legislature, without being forced to call early general elections.

Together they have already said no, that the system doesn't convince them and that they won't support the Congress. But time will tell. Politics is particularly fluid right now. The Spanish government's proposal is nowhere near a model similar to the Basque Country's special tax arrangement, and yet it contains some very positive new elements. because it includes the principle of ordinality and greater control over the main taxes. Junts is keen for the clock to tick, for Puigdemont to be able to return to Spain this spring without risk of arrest, and to be able to face their immediate future with the reorganization agreements that best suit them to confront the electoral challenge that Aliança Catalana represents. In short, the Junts members will also have to get their act together.