Catalonian elections: Madrid is bad, austerity is worse

If there was one lesson from Sunday's elections in the Spanish region of Catalonia, it was this: Residents of Catalonia may want to be rid of Madrid's central government, but they want to be rid of austerity even more.

Catalonia's ruling, pro-austerity party suffered a stinging rebuke in regional elections Sunday, as voter discontent with its economic policies appears to have tripped up its push toward Catalonian independence. And while a historic voter turnout – 70 percent, the highest in decades – gave a 64 percent majority of the regional parliament's seats to parties in favor of an independence referendum, it also exposed a Catalonia fractured along left versus right lines, and denied any party the kind of majority political mandate needed to drive Spain’s richest region on a path toward independence.

The governing center-right CiU party, led by Catalonian President Artur Mas and a driving force behind the region's independence push, won only 50 seats in the 135-member parliament – a defeat considering the party not only fell far short of the absolute majority it was seeking, but in fact lost 12 seats from 2010. 

Many of CiU’s voters threw their support to the election’s biggest victor, ERC – Catalonia’s traditional left, pro-independence but anti-austerity party, which more than doubled its number of seats to 21. The regional representations of Spain’s biggest formations, the Socialists and Popular parties, won 20 and 19 seats respectively, although the Socialists Party of Catalonia shed eight seats in parliament. Smaller parties won the remaining seats.

What next for referendum?  

CiU admitted its go-it-alone project failed and called for ERC’s support to call for a referendum. “One thing is to have the right to decide, and another is” an independent state, Mr. Mas said following the elections. “With these results, we will have to continue working.”

ERC, though, had already said their price for support will be high: Mas would have to reverse many of his austerity policies, and he will have to commit himself to a multiparty path to independence, any of which would be hard to do in this juncture.

Exit polls suggested that while the majority of Catalonians appear to support independence, an even bigger majority rejects Mas’s economic and social policies, which have severely punished the region's prized health and educational systems.

Voters appeared to back the Spanish central government’s thesis that Mas moved up elections two months ago as a political ploy to use the passionate nationalism issue to divert attention off the unpopular austerity measures of Catalonia’s government – which are in addition to the central government’s own policies.

Indeed, most analysts in Spain and in Europe gave very little chances of any formal secession process prospering, one that would start with holding a referendum. In Spain, many Basques have also long sought an independent state, but regional leaders have stopped short of challenging the central government as Mas has.

“We don’t see risk of secession,” says Wolfango Piccoli, European practice director of the Eurasia Group, a global political risk consultancy based in New York. “It’s more an issue of noise. Catalonia and others are using the crisis to increase their leverage vis-à-vis the central government and upping the ante. It’s going to be noisier in 2013, but Catalonia is not leaving Spain anytime soon.”

Fractured independence aspirations

Mas tried to rally Catalonians around the independence issues after around 1 million of the region’s 7 million people marched in September demanding a path toward creating a “new European state.”

The majority of Catalonians feel they are getting a bad deal from the region’s fiscal association with Spain, paying more than what it gets back to support poorer Spanish regions in the south. That has been debatable for years, but when negotiations with Spanish Prime Minister Mariano Rajoy over the fiscal balance collapsed, Mas challenged the central government by setting a path toward a referendum to let Catalonians decide, one that would be destabilizing as it’s not contemplated in Spanish or European legislation.

Most Spaniards agree that the constitution needs reforms to adapt to a much different reality from its postdictatorship framework from 1978, which would translate into making Spain more of a federation, as opposed to a group of regions with varying degrees of power in relation to the central government, each pushing different visions of nationhood. 

Catalonia’s economy is the size of Portugal’s, but like other Spanish regions, it over-indebted itself during times of bounty, and credit markets all but shut it out. Spain’s central government already bailed out Catalonia, crippled by a public deficit and a contracting economy. Regional austerity cuts have been more severe than in most other regions.

Mas’s declared goal was to capture an “exceptional majority,” meaning enough votes in the regional parliament to govern by itself in order to implement its road map to hold a binding referendum on the question of independence by 2016.

But the government of Mr. Rajoy and the country’s main parties had promised to block any referendum, which would have inevitably added constitutional instability to the mix of the political and economic crisis that is already shaking Spanish pillars.

If the central government were to budge on Catalonia, others would follow, making Spain ungovernable. Any reforms, most Spaniards agree, have to be the result of a national consensus, one that will be elusive amid the economic crisis.

Spain’s recession is expected to continue through 2012 and 2013, and unemployment – already topping 25 percent – is expected to increase. Europe is expected to lend around €42.5 billion ($55 billion) to bailout its banking sector.

Additionally, the government is still expected to request a bailout like the one Greece, Portugal, and Ireland already have, although the timing is uncertain due to government concerns over imposing even more unpopular austerity.

But as far as what the Catalonian elections suggest, it appears that Spain can relax for the time being about potentially destabilizing secessionist movements. At the same time, though, the results also show growing antipathy toward austerity and crisis management, regardless of nationality.