Peter Jones: What now for Catalonia - and us?

THE ELECTION results early yesterday could have huge implications for Spain, Britain and Europe, writes Peter Jones

People wave their 'estelades' during the 'Junts pel Si' (Together for the Yes) coalition closing rally in Barcelona. Picture: Getty Images

Political earthquakes shaking the established order to its core just keep on coming. Now Catalonia is rattling the foundations with an election result that will have profound implications not just for the 7.5 million Catalans, but for Spain, Europe and for us in Scotland. Indeed, the impact on Scotland could turn out to be greater than anything achieved by current commentariat darling Jeremy Corbyn.

In case you missed it, over the weekend Catalonia’s pro-independence parties won 72 of the 135 seats in the autonomous Catalan parliament, an absolute majority. Catalan nationalists have been in that position before, but the difference this time is that the manifestos explicitly set out a process for achieving political separation – either by a referendum or, and this is the really interesting twist, by a unilateral declaration of independence (UDI).

Their demand is that the central Spanish government should agree to a Catalan indyref, which it has resolutely and absolutely refused to do on the grounds that it would breach the Spanish constitution. This proclaims the indissolubility of the Spanish state, forbidding the breakaway of any region.

The immediate reaction of the Spanish prime minister, Mariano Rajoy, was to point out that, despite the nationalist parliamentary majority, the pro-indy parties got just under 48 per cent of the vote and therefore there was no popular majority and no mandate for a referendum. Under any normal democratic rules, of course there damn well is, was the understandable response.

The parallels with Scotland and Britain are eerily close. In 2011, the SNP won a minority of the popular vote (45 per cent in the constituency elections) but a majority – 69 out of 129 – of parliamentary seats. The big difference is, of course, that Prime Minister David Cameron agreed to the indyref which the SNP then lost, falling short with 45 per cent of the vote.

The Catalan nationalist leader and president of the Catalan government, Artur Mas, saw Mr Rajoy coming, hence the fall-back pledge to go for UDI. But before it comes to that, there is the Spanish general election due in December.

After democracy replaced dictatorship in the 1970s, Spanish political power has generally alternated between the centre-right People’s Party (PP), which currently holds power, and the centre-right Spanish Socialist Workers’ Party (PSOE). But since 2014, there has been a wild card – Podemos (We Can).

Like Syriza in Greece, it is primarily leftist, anti-austerity and mildly Eurosceptic. If you think austerity in Scotland is tough, it is nothing compared to what the Spanish have endured. Earlier this year, Podemos was periodically leading in the opinion polls. But, after Syriza’s failure to break out of the austerity straitjacket and also because the Spanish economy is recovering and unemployment is falling, it has dropped back while Mr Rajoy’s PP has regained its place at the head of the pack. Where Podemos may be important, however, is that it accepts the right of Catalans to hold an indyref. This could well be significant in breaking the constitutional red line against regional indyrefs so far held by both PP and PSOE, especially should there be a governing left coalition after December.

Meanwhile, in Barcelona, Mr Mas will be stepping on any pressure pedals he can. Before the election, he started to create a regional tax agency, making it pretty clear that this was the first of a number of institutional reforms aimed at equipping Catalonia with the state structures it would need under independence.

Mr Rajoy stopped the move by protesting to Spain’s constitutional court that this broke constitutional law. He also upped the ante by rushing through legislation which threatens any civil servant in any part of Spain working on moves towards independence with heavy fines and suspension from their job.

He has been adding these political and legal logs to the jam because recent opinion polls suggest the outcome of an indyref would be close and nationalists have ground to be optimistic.

The economic facts also make it clear that while Mr Rajoy may look to our eyes to be obstinately sticking his finger in a hole in a dam that is bound to eventually burst, he has good reason to do so. Political separation would adversely damage the Spanish economy to an infinitely greater extent than would have been the case for Britain had Scotland voted Yes.

Catalonia has 16 per cent of Spain’s population and produces 19 per cent of Spanish GDP, with Catalan per capita GDP being around a fifth higher than the average Spaniard’s output in the rest of Spain.

This results in Catalonia contributing about €16 billion (£11.8bn) a year more in tax revenues to Madrid (to support poorer parts of Spain) than it gets back, one cause of the rise in nationalist discontent, particularly since the regional Catalan government has an annual deficit of about €4bn.

Here is Mr Mas’s lever: if he doesn’t get the referendum, the UDI route will include repudiation of Catalonia’s share, about a third, of Spanish public debt. So it is evident that, while it is arguable that Catalans might be better off independent, it is certain that the consequences for the rest of Spain would be dire, rising to disastrous under UDI, and even further to catastrophic if the Basques (also rich compared to the rest of Spain) followed the Catalan example.

All this is being anxiously watched in Brussels where Eurocrats fear, at best, instability, at worst, renewed pressure on the euro under the potential collapse of the Spanish economy into deep recession and the need for Spain to be bailed out.

The EU and the European Commission cannot avoid getting dragged in. The smart betting is on some sort of deal to rebalance the fiscal relationship between Madrid and Barcelona. But if that doesn’t fix the political problem, and I doubt that it will, we will get some answers to questions such as whether a part of an EU state becoming a new state gets EU membership and under what conditions.

Those answers, if the looming British in/out EU referendum causes a Scottish indyref2, could profoundly affect that debate and its outcome. Scottish eyes will be watching EU, Spanish, and Catalan dance moves very closely.