The key figures who have unblocked the funding model

BarcelonaAfter more than a decade with an outdated funding model, this week the Minister of Finance, María Jesús Montero, presented the foundations of a new system that includes an extra contribution from the State of more than 20 billion euros, which gives more resources to the autonomous communities (An additional 4.7 billion euros in Cataloniaand eliminates the advance payment system. However, this is only the first step on a long road that is now beginning and could extend until 2027. This is not only because the process must begin in Congress (it must first pass through the Council of Ministers), but also because in the case of Catalonia there are other issues that must be addressed in parallel as they are part of the PSOE-PSOE negotiations. The negotiations will therefore continue, and they will do so with the same key players who have been instrumental in breaking the deadlock. Who are they? The Director General of Esquerra Republicana, Lluís Salvadó; the Secretary of Economy, Juli Fernández; and the Regional Minister, Alícia Romero, representing the Catalan Government, which has also been coordinated by the Minister of the Presidency, Albert Dalmau, and the Secretary of the Treasury of the Spanish Government, Jesús Gascón. They have all had the technical support of Martí Carnicer (PSC) and Marta Espasa (ERC), as well as former councilor Natàlia Mas (ERC).

"We've been negotiating for nine months, but we have nine more to go," admit sources involved in the negotiations, who acknowledge that nothing ends with the presentation of the financing model. On the contrary, everything begins. While these individuals have been working for months with a macroexcel The political landscape, which has been transformed in every way, has been highly sensitive, with contact at the highest levels, including with the president, Salvador Illa; the leader of Esquerra Republicana, Oriol Junqueras; and also the Minister of Finance, María Jesús Montero. In fact, according to sources consulted, the dialogue between Illa and Junqueras was frequent and worked "well," and it also improved the relationship between the minister and the Republican leader. "[ERC] has seen that she was an ally for the autonomous communities," Spanish government sources point out, lamenting Esquerra's initial reservations about her.

"The atmosphere has been good," confirms a source familiar with the talks, who admits that it was more of a "team effort" than a negotiation. Each side had its own objectives, and everyone worked to ensure the final model respected them. In other words, they knew where they wanted to go and combined the elements of the financing system in different ways to achieve it. For Esquerra, it was key to secure resources for Catalonia and respect the order of priority. For the ministry, it was necessary to respect thestatus quo current (that no autonomous community would lose out) and that socialist strongholds like Andalusia would also benefit from the system. Likewise, the PSC government has worked hand in hand with the Republicans – to increase resources and to guarantee ordinality – and has often acted as a linchpin to bring the positions of the separatists and the PSOE closer together. The Minister of the Presidency has played a key role here, coordinating the negotiations not only on funding but also on other issues such as commuter rail. "What the PSC wants is a budget," a source quips, since Esquerra Republicana is making funding a condition for negotiations.

The funding law, in March

The first station after the presentation of the financing model is the Fiscal and Financial Policy Council meeting to be held next WednesdayThere, Montero will have to present the foundations of the model to the regional finance ministers, most of whom are from the PP (People's Party), where they are expected to rebel against the new system, something they already did this Friday. But this is not the important point. What is relevant, and what begins now, is translating the architecture of the model agreed upon between the PSOE (Spanish Socialist Workers' Party) and Esquerra Republicana (Republican Left of Catalonia) into a legal text, which is what must be approved in Congress. Specifically, they must agree on three proposals: a reform of the LOFCA (Organic Law on the Financing of Autonomous Communities), the law that regulates the financing system of the autonomous communities under the common regime (the last one from 2009), and the law on the financing of Catalonia (the last one from 2010). Montero wants to have it finalized by March, before leaving the Spanish government to be the candidate in the Andalusian elections that the president, Juanma Moreno Bonilla (PP), must call. This means that the minister will take all the legal reforms to the Fiscal and Financial Policy Council (where the State holds a majority and, therefore, they will pass despite the opposition from the People's Party) before spring, then to the Council of Ministers, and finally to Congress. Some sources point out that if it happens in March, it would coincide with a possible return of former president Carles Puigdemont to Catalonia, which could also influence Junts' position.

For the Republican negotiators, the period now beginning is key, as they believe they can correct the "mistake" they admit to having made in 2009, after agreeing to the additional 3.8 billion euros that corresponded to Catalonia: "We weren't sufficiently involved in the process," they acknowledge halfway through. Furthermore, they will work with the Generalitat (Catalan government) on the financing of non-homogeneous responsibilities, which must become structural and be added to the resources provided by the general system. The Government now receives around €4 billion to finance these responsibilities, aiming to increase these resources by expanding its share of VAT revenue. This will have to be addressed in bilateral meetings between the Catalan Government and the Spanish State, and the list of areas to be included is unclear: at least funding for the Mossos d'Esquadra (Catalan police), prisons, and the administration of justice.

The crises of the negotiation

The negotiations have been structured around different components: the financing model for all the autonomous communities, the delegation of personal income tax collection, and the regulatory powers that the communities should have. These have been addressed in parallel: depending on the day, one topic or another was tackled. In fact, although the first component to be released was the financing system for the autonomous communities, this was not the originally planned timeline. In June, this issue stalled due to the debate on defense spending: until they knew how much money had to be committed to military spending (ultimately 2.1% of GDP), they could not move forward with the financing model negotiations because they couldn't determine how much additional money the State could contribute to the system. This situation was further complicated by the outbreak of the Cerdán case: "There's a moment of crisis," sources admit. This difficult moment in the negotiations is being resolved as the legal waters begin to calm down and Pedro Sánchez commits to completing the legislature despite the alleged corruption scandals. During this period, after some back and forth, the ministry puts forward the additional €20.975 billion contributed by the State.

In fact, the financing model could have been finalized earlier, but the calling of elections in Extremadura slowed down the timeline: given that the system doesn't particularly favor this region, the negotiators preferred to wait, finalize the details more calmly, and avoid harming the PSOE's electoral prospects.

Conversely, what initially seemed like it could move faster—the delegation of personal income tax collection to the Generalitat (Catalan government), where Esquerra Republicana (ERC) had placed more emphasis—has been stalled for months. "It's a major obstacle," says the ministry, even though the Republicans want a vote now. in Congress in February. For the Socialists – and part of ERC – the Republicans led by Marta Rovira were wrong about their expectations: they believe that talking about a solidarity-based economic agreement – which is how they sold the agreement – has not helped to explain the agreement now, since the negotiators believe it is the only possible agreement.