The feasibility of a new state in Europe

From the great popular demonstration of Catalan society in September 2012, but specially after the Catalan Way in September, when more than 1.6 million people joined hands to demand independence, there have been not a few Spanish politicians predicting all kinds of disasters in the event that Catalonia becomes an independent country.

Fortunately, there are many economists and academics who refute this point of view and, through studies and articles, have set out the economic and political reality of an independent Catalonia. There are articles that attempt to spread these positive arguments to as many people as possible, with the goal of removing unfounded fears. Fear should never be the guiding force of a nation.

 

Firstly, let us analyse the threat that Catalonia would be banned from Europe. The concept of being “banned from Europe” does not really make much sense because Europe is a continent and Catalonia, for obvious geographical reasons, cannot be banned from it. However, if we speak about the political Europe, it is made up of a multitude of treaties, conventions and institutions, each with its own individual rules.

In this sense, the most important thing in the case of Catalan independence is that companies established in Catalonia should continue to have access to the free movement of goods, services, capital and people between European countries. For this purpose it is not necessary to become a member of the European Union. This objective would be achieved just as much if Catalonia were to be a member of the European Economic Area (EEA). The EEA is a European common market formed by the UE member states plus Norway, Iceland and Liechtenstein. While a unanimous vote of all state members is required to become a full EU member, Catalonia only needs a majority vote to join the EEE (19 of the 28 member countries). Therefore, Spain could not unilaterally block the accession of Catalonia to the EEA.

However, why would European countries support Catalonia’s admission to the EEA? There are a lot of reasons. The most important one is that Catalonia is the main route connecting Spain with the rest of Europe. Furthermore, today there are more than 5,300 companies based in Catalonia. These multinationals are not here to supply the Catalan market, but to supply the EEA market (which includes Spain). The imposition of customs duties on Catalan exports would severely damage the interests of these multinationals. And these interests are enormous: Seat-Volkswagen (Germany), Renault-Nissan Alliance (France), BASF (Germany), Solvay (Belgium), Carrefour (France) and thousands of other foreign companies that have made strategic investments in Catalonia.

The second argument used by Spanish politicians against the independence of Catalonia is that a Catalan state could not have the Euro as its legal currency. This is both ridiculous and unrealistic because, as a country, you can use the Euro without having to belong to the Eurozone (such as Montenegro or Andorra). At the same time, the EU needs Catalonia into the Eurozone because its two main Catalan banks (CaixaBank and Banc Sabadell) are qualified as ‘systemic’ for the European financial market. In other words, if these two banks fail it could destabilise the whole Eurozone. Therefore, the European Central Bank will be the first one interested in having the Catalan banks under control.

In short, if Catalonia becomes a new state, Europe will not leave Catalonia to its fate. So, this is not the end of the world; it is only the birth of a new state in Europe.

 

DAVID ROS. Economist, coordinator of Economists for Independence, Economy Section of the Catalan National Assembly. 

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