Will Spain Splinter?

After months of secessionist agitation in Catalonia, Spain’s government has called for fresh regional elections to be held on December 21. With Catalonia deeply divided, and with most of the ruling coalition’s political leadership in jail or in exile, this promises to be the most politically charged vote in Spain’s recent constitutional memory. One hopes that cool heads will prevail on all sides.

To restore normalcy for the time being, Catalans would do well to punish secessionist parties for their irresponsible and poisonous brand of irredentist politics. But even if the elections go Madrid’s way, they will not be enough. Catalonia’s secessionist politics are fundamentally driven by a misshapen and unwise fiscal constitution and by the European Union’s feckless politics. All of that needs fixing, starting with Spain’s fiscal constitution. That will require serious and thoughtful reform, not ordinary politics.

The Upheaval

To review recent events, in late October a majority of Catalonia’s half-empty parliament approved a resolution constituting Catalonia as an independent republic. The mood inside its legislative chamber was somber. Outside, a more cheerful multitude congregated to celebrate the creation of the new republic.

Except that there was no new republic. The Generalitat, Catalonia’s autonomous regional government–from its early resolutions to the October 1 referendum and subsequent declaration of independence—has acted unconstitutionally, according to the Spanish Constitutional Court. As the court’s opinions have repeatedly made clear, the Generalitat’s secessionist measures flagrantly violate Spain’s Constitution and Catalonia’s own charter of autonomy, which requires a two-thirds majority vote to reform the charter, let alone to wholly set it aside. (For a more in-depth discussion of the constitutional issues, see Javier Fernández-Lasquetty’s Law and Liberty post from October.)

As the Catalan parliament purported to announce Catalonia’s secession, Spain’s Senate stepped in on October 27 and approved an unprecedented temporary takeover of the Generalitat under Article 155 of the Constitution. The Catalan parliament was swiftly dissolved, the Generalitat’s ministers removed, and this month’s regional elections scheduled. The President of the Generalitat, Carles Puigdemont, fled to Belgium, where he has hired a lawyer experienced in defending Basque separatist terrorists against criminal extradition. Other secessionist leaders are in jail pending trial for rebellion, sedition, or misappropriation of funds.

No one outside of Catalonia save Julian Assange and Yoko Ono has recognized Catalonia’s legitimacy as a nation-state. Europe’s chief Eurocrat, Jean-Claude Juncker, has rebuked Catalonia’s acts, as have all other European leaders, ending any hope of an independent Catalonia’s access to the EU’s internal market and banking system.

So far, Catalonia’s process of secession (the “procés,” as Catalans call it) has done little but disrupt the economy and social fabric of Catalonia. Thousands of companies and banks have fled, friendships and family relationships have been broken. Why have Catalonia’s politicians embarked on this folly?

The decided view of the Spanish government (and many citizens) is that the secessionists have become a tyrannical faction intent on committing treason to the constitutional order. There is much truth to this. Before they were the supposed prisoners of the Spanish state, Catalonia’s politicians had become captive to the secessionist factions they’ve been inflaming for years to enhance their own offices and powers. Once they unleashed the procés in full, there was no taking it back. Ochlocracy (mob rule) has been in effect in Catalonia for over a year, with serious consequences for the rule of law.

The secessionist forces also miscalculated. They believed that if they gathered an impressive enough mob around voting booths, the images of massive rallies and voters being violently oppressed by police would change the hearts and minds of democracy-loving Catalans and Europeans.

That expectation was perhaps not unreasonable. (And there were indeed bloody incidents, though these were not widespread. Europe’s politicians tend to sanctimoniously extol the virtues of democracy while ignoring its dangers. And Eurocrats have long sought to “protect and promote” minority identities and languages, including Catalonia’s, on the theory that anything that is bad for the nation-state must be good for Europe. But as populism and nationalism of the right-wing variety have reared their heads elsewhere, Europe’s politicians have decidedly stuck theirs in the sand hoping that the nationalist storm will soon pass. And while the spectacle of the would-be Revolution of October 1 has further polarized Catalans, it does not seem to have led to an outpouring of support for independence.

Arguably, however, the procés has not failed. An independent Catalonia was always unattainable in the short-term. That was not the point. The real point was to create a Schmittian state of exception (dressed up in the garb of a made-up democratic “right to self-determination”) that would delegitimize Spain’s institutions and forcibly lead to the formation of a new constitutional order.

On that score we might call the procés a success, if a modest one. It has delegitimized the institutions of the Spanish state in the eyes of a large cross-section of the region’s population. It has also made clear that the peace pact enshrined in the Spanish Constitution of 1978 is broken, and needs to be replaced by something sturdier. That may well happen: In exchange for broad political support for the activation of Article 155, Spanish Prime Minister Mariano Rajoy has promised to support constitutional reforms. What character such reforms will take remains to be seen.

The Road to 1978

Understanding why those reforms are necessary requires going back further in Spain’s history. In the early 20th century, the country was suffering from what the philosopher José Ortega y Gassett called an inexorable “invertebration.” Under pressure from centrifugal factions and sectional divides, Spain was coming apart. Centrifugal tendencies in the economically vibrant and culturally important Catalan region were particularly intense. Indeed, in 1934, the President of the Generalitat in Barcelona briefly declared Catalonia an independent state. The leaders of the Second Spanish Republic in Madrid quickly declared martial law and quashed the movement.

General Franco, Spain’s enduring military dictator after the bloody 1936-1939 Spanish Civil War, succeeded in keeping sectionalism at bay for almost four decades, maintaining a strong unitary state through repression and fear. Catalan secessionism, though, managed to survive four decades of centralizing dictatorship. Upon Franco’s death in 1975, many secessionists returned from exile, and regional political parties, especially Catalan nationalists, played an important role in negotiating and draft a new, democratic constitution.

The resulting Constitution of 1978, with studied ambiguity, guaranteed autonomy, solidarity, and devolution for “nationalities” and regions—while declaring the people of Spain sovereign and affirming that “the Constitution is based on the indissoluble unity of the Spanish nation, the common and indivisible country of all Spaniards.” The implicit political bargain was clear. The Constitution would guarantee regional nationalists enough things to do and money to spend, and in return, the “nationalities” they represented would remain part of Spain.

This bargain, approved by over 90 percent of Catalan voters, was nonetheless intensely controversial. An aborted military coup in Madrid in 1981, motivated in part by the traditionalists’ and Franco supporters’ fears of “dismemberment of the fatherland,” demonstrated the risks of privileging specific “nationalities” in a fragile democracy. Moreover, the non-Catalan regional politicians wanted to assert themselves, too.

At that point Spain established a harmonized decentralization process, known by the very Spanish sobriquet, “Café para todos” (Coffee for all), putting all the autonomous regions under a common process of decentralization, even if they were not recognized “nationalities.” All autonomies could create and vote on a charter which, when approved by the Spanish legislature, would have the status of organic law, above ordinary legislation.

Spain’s Failed Fiscal Pact

Through this process, Spain has become an extremely decentralized country. Today, its 17 autonomies, including Catalonia, exercise almost every governmental function of importance to the citizenry, and they spend over a third of all public money, more than the 50 state governments in the United States. They also borrow heavily.

With great powers, however, have not come great fiscal responsibilities. With the exception of the Basque Country and Navarre (which operate through a requisitions system), the autonomies raise little own-source revenue. Instead, Madrid guarantees their expenditures through a perverse system of monopolistic taxation, revenue-sharing, and regional “solidarity” achieved through redistribution formulas. As a result, Spain’s autonomies suffer from chronic overspending, unsustainable borrowing, and parasitical administrations, imposing severe macroeconomic costs on the nation as a whole.

For understandable reasons, Catalonia has long objected to this common pool arrangement. It has one of the highest GDP’s per capita in Spain, and as a result, it is a net loser from the predictable overgrazing of the commons that results from revenue-sharing and territorial “solidarity.” According to Spain’s recent official accounting, Catalonia transfers almost €10 billion (net) to the rest of Spain, equal to 5 percent of its GDP. Only Madrid does worse in absolute and relative terms. And there are only four donor regions out of 17, an arrangement that cannot be politically stable.

With that in mind, one can begin to understand why Catalan politicians have breached the 1978 Constitution’s peace pact. The Constitution was supposed to guarantee parties representing “nationalities” (that is, Catalans and Basques) things to do and money to spend. And yet, many Catalans feel that Spain has not lived up to its side of the bargain (they rob us!). Catalans believe their region should enjoy special status, but the current constitutional order treats it as just another autonomy, to be pillaged in the interest of regional solidarity.

The modern secessionist impulse in Catalonia stems largely from that frustration. Its first major expression was in 2012, after Prime Minister Rajoy rejected the Generalitat’s request for a fiscal pact along the lines of the Basque Country’s requisitions system. Since then, Catalan politicians have focused like a laser on secession, ignoring other possible alternatives.

Reform, Upon Reflection and Choice?

As the regional elections loom, Catalonia’s political parties have an opportunity to revive the fiscal pact as a middle ground. By endorsing a fiscal pact, Catalans who oppose independence could steal much of the secessionists’ thunder.

Then, too, regardless of what happens in Catalonia, Spain would do well to reform its dysfunctional system of autonomies. Taking a Hamiltonian turn, Spain could simply abolish all autonomies except “nationalities.” Alternatively, Spain could cease providing autonomies with funds and allow autonomies to raise their own revenues. At a minimum, Spaniards ought to consider eliminating their disastrous system of territorial solidarity, which systematically misallocates investments.

These reforms, to be sure, would require reorienting the entire constitutional order away from political parties and toward citizens. History and human nature suggest many obstacles to such a transformation. As Hamilton explained in The Federalist, politicians tend to “resist all changes which may hazard a diminution of the power, emolument and consequence of the offices they hold.” But the current crisis, one optimistically hopes, could present a rare opportunity for “reflection and choice,” and an escape from the “accident and force” that have historically driven Spain’s constitutional reform efforts. Here’s hoping that Catalans, together with their fellow Spaniards, don’t throw away their chance.