Peter Jones: Money and jobs will be root of the referendum

GAINS for Spain’s regional nationalists indicate that our Yes or No campaigns may be won on who can make the better economic case, writes Peter Jones.

Nationalism seems to be stridently on the march in Europe. Nationalists in Spain’s Basque country won a thumping majority in Basque regional parliamentary elections at the weekend. This is expected to lead to demands for a referendum on Basque independence, a call which is expected to be joined by Catalonia when it votes in regional elections next month.

Following so soon after the recent agreement in Edinburgh on staging Scotland’s independence referendum in 2014, and when you add in Flemish nationalists’ success in recent Belgian municipal elections, it seems that the end of the union nation state as currently conceived, hosting different nationalities, is nigh.

Are we seeing a wave of nationalism such as occurred in Europe in the 19th century? That began with the Serbian revolution that created Serbia, central Europe’s first nation state in 1817, and culminated in the collapse of the Ottoman Empire at one end of the continent, and Irish independence at the other end in 1922.

Historical parallels are dangerously deceptive. Much of 19th century nationalism was a reaction against oppression and it can hardly be argued that the Scots, Catalans, Basques, and Flemish are brutally oppressed in the way their 19th century forebears were.

Moreover, the kind of nationalism we are seeing now heads in the opposite direction from the other contemporary European historical development – that of greater European integration and the surrender of national sovereignty over banking and fiscal autonomy to supra-national authorities.

Talk of this turned into action last week when it was agreed that the European Central Bank should become the banking supervisor of all banks in the 17-country eurozone, something that will be a major step towards an integrated Europe.

The common factor to both these apparently paradoxical trends is the modern equivalent of the famines that also drove 19th century European nationalism – people facing and fearing an acute shortage of money and jobs (which is driving regional nationalisms) caused by the financial crisis (which is pushing European integration).

Key to understanding this is another set of elections that also took place in Spain at the weekend, in Galicia. There, in marked contrast to what happened in the Basque country, the centre-right party of Mariano Rajoy, Spain’s prime minister, increased its existing majority in the regional 
parliament.

Nationalist parties lost votes and seats, as did the centre-left Spanish socialist party, the gainer being a more left-wing Socialist Workers’ party. It’s pretty clear, then, that Galicians are not much interested in independence and breaking up Spain.

The Basques, however, clearly are. Mr Rajoy’s party, in minority power before the election, was pushed into fourth place and the socialist party lost ground. But the nationalists, in the shape of the moderate Basque National Party and a more radical Nationalist coalition were the big winners, now holding between them a majority in the Basque parliament.

Galicia shows all the cultural characteristics that look necessary for vibrant political nationalism. It has its own language in daily use by more than half the population and a history of autonomy until the 19th century. So why didn’t it vote the way the Basques did?

The answer appears to be money. Both the Basque country and Catalonia are rich parts of Spain, and in terms of taxes, are net contributors to the Spanish state. In the current economic climate, when the Spanish state is cutting welfare and pension spending, nationalists argue that independence would stop this transfer of precious money to the rest of Spain and make the Basques and Catalans more prosperous.

Galicia receives more money from the Spanish state than it contributes in taxes. Going for independence, therefore, does not make economic sense to the average Galician.

Similar economic motivations are apparent in Flanders and Scotland. Flanders is the relatively rich half of Belgium and Flemish nationalists argue it is time stop sending their taxes to poorer Wallonia, which wastes it. The SNP says Scotland would be richer under independence than the rest of Britain would be because most of North Sea Oil would come under Scottish control.

This analysis points to paradoxes in both the Scottish nationalist and Unionist cases, which each side needs to resolve before the 2014 referendum. The SNP argue that only with independence can the Scottish preference for redistributionist politics – free health service, university education, prescriptions, etc – be maintained.

So why are the SNP opposed to the geographical redistribution of wealth within Britain, especially as in the 1990s, when oil prices were low, it was the rest of Britain that redistributed money to Scotland?

Equally, if the Unionists (the Liberal Democrats excepted) favour maintaining political union in these islands as the best way to ensure steady economic growth for all, why do they oppose British integration with the rest of Europe?

There are answers to these questions, I know. But there is a more important question that the Unionists have to address. Much has been made of the potential offer they are likely to make of more powers for the Scottish Parliament. But if the current resurgent nationalism is really about money and jobs, and how people can get more of both, then the unionists also have to show how a more powerful parliament within the UK can do that.

This, I think, will be an increasingly important part of the referendum debate. Flawed though the SNP arguments about the economic case for independence may be, the nationalists have at least got a positive case. The unionists’ case, however, is based only on negatives and that, as was seen at the last Scottish parliamentary elections, is not a winning position.