The Catalonian question

Inspired by the Scottish independence vote, Catalonians are protesting for their right to hold a referendum. Will they get one? And what will it mean for the rest of us? Simon Wilson reports.

Is Catalonia a nation?

It's less clearly a nation than Scotland, which entered into a political union with England yet has always retained a separate legal system and a distinct national identity. In the UK, no one would dispute that Scotland has always remained a 'nation', but that is emphatically not the case in Spain.

Angry arguments rage over Catalonia's legal right even to call itself a nation. Modern-day Catalonia has its roots in the medieval kingdom of Aragon, but was gradually absorbed into the unitary Spanish state that emerged from the 15th century onwards.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The 19th century saw a resurgence in a separate Catalan identity and the Catalan language, and the 20th century saw some of that identity crystallise into political movements, especially as a result of Franco's repression of the region.

And now?

The region's sense of a distinctive national identity has surged in recent years, and Catalan nationalist parties (not all ofwhom favour independence) dominate the region's politics.

That's partly been a result of Spain's economic crisis:Catalonia, a region of seven million people, is a relatively wealthy part of Spain where some see economic advantages in splitting. But it's also been driven by frustration with the Spanish state's failure to engage with Catalonia's desirefor greater autonomy.

In 2006, Madrid and Barcelonaagreed a new Statute of Autonomy (roughly akin toScottish devo max) governing the region's status.

But the main conservative Popular Party (then in opposition; now back in government) appealed to the Constitutional Court, where conservative judges finally ruled against the Statute in 2010 leading to a succession of million-strong protest marchesin Barcelona.

Do the Catalans want independence?

Support for full independence is at about 43%, according to a recent poll, with the same percentage opposed and the rest don't knows'. What most Catalans do want is to be allowed to vote on it, and they held another demonstration in Barcelona last week to press for just that.

Inspired by the Scottish example, the region's government has called a non-binding referendum for 9 November, which Madrid insists would be illegal.

Would Catalans be better off alone?

The separatists think so and they may have a point. Catalonia is already richer than the rest of Spain, which is one of the reasons Madrid is so desperate to keep the region. Catalonia accounts for 16% of the Spanish population but almost 20% of the economic output and 26% of exports.

Its capital, Barcelona, is a major European commercial hub, home to many of Spain's biggest firms. Supporters of independence say a breakaway state would thrive once it no longer had to subsidise poorer regions in Spain.

Opponents of separation focus on the risks. They say that Catalonia would suffer an immediate flight of businesses, especially in the financial sector, whichis unprepared to take the risk ofbeing outside the EU single marketand the euro.

How would independence affect Europe?

Catalan independence might boost other separatist movements across Europe. These could include Flanders, Padania (northern Italy), South Tyrol and Bavaria. Alarmists fear we could see a Balkanisation of Europe' that would distract political leaders from other serious challenges, such as the increasing threat from Russia.

On the other hand, the resulting instability might trigger serious reform of the EU. A crucial issue would be whether Catalonia was allowed into the EU. Catalonia has some heavily indebted banks without EU support, these banks might struggle and create a fresh banking crisis.

Why is Madrid so opposed?

The Spanish government is terrified that splitting up Spain wouldn't end with the Catalans. Separatists in the Basque Country are already demanding that they should follow Catalonia in voting to split.

Moreover, the question of what constitutes 'Catalonia' is not universally agreed. The ultimate aim of some Catalan nationalists is to recreate the greater Catalonia of medieval times, which would include the Valencia region (on Spain's east coast, south of Catalonia) and the Balearic Islands.

In Spain, where memories of the civil war cast a long shadow and questions of national/regional identities are much more fiercely contested, there is a deep dread in some quarters of what Catalan independence could lead to.

According to Spanish justice minister Alberto Ruiz-Gallardn, it would quite simply "put an end to Spain".

The Pujol tax-evasion scandal

The cause of Catalan independence took a knock this summer from a tax-evasion scandal involving Jordi Pujol, who was Catalan president for 23 years and the dominant figure of the movement for greater autonomy.

Pujol admitted in July that he had kept million of euros undeclared outside Spain for decades.

The fallout may not wreck the pro-independence movement: many hardcore supporters are not part of Pujol's CiU party. But it will do some damage, reckons Tobias Buck in the Financial Times.

It has weakened Artur Mas, Pujol's successor; it gives Madrid ammunition; and it weakens a core argument in favour of independence that a Catalan state would mark a break with Spain's "corruption-prone and discredited political elite".