Geography and the Catalan conflict

Eu­rope’s core eco­nomic areas

Core and pe­riph­ery dy­nam­ics are dif­fer­ent. In the core, higher pro­duc­tiv­ity fos­ters higher salaries. When things go well, in­vest­ment in the core aims pri­mar­ily at en­hanc­ing pro­duc­tiv­ity (say, R&D), whereas the pe­riph­ery fo­cuses on cap­tur­ing ad­di­tional rents (e.g. tourist prop­erty). Then, when a re­ces­sion hits, pe­riph­ery work­ers may be­come too ex­pen­sive and lose their jobs, whereas higher pro­duc­tiv­ity often pro­tects the in­come of those at the core.

Ex­cep­tions exist: the Asian “Tigers” (South Korea, Tai­wan, Sin­ga­pore) or the Eu­ro­pean ones (Ire­land, the Baltic Re­publics) at­tracted high-value-added in­dus­tries by lib­er­al­is­ing and re­mov­ing priv­i­leges with­out los­ing (ac­tu­ally strength­en­ing) their wel­fare states. Yet, this re­quires op­pos­ing pre­cisely those who enjoy ex­ist­ing priv­i­leges and have the power to de­fend them. Thus, missed op­por­tu­ni­ties abound. In 1990, the Irish, Greek and Por­tuguese had sim­i­lar av­er­age in­comes; today, Ire­land’s in­come per capita more than dou­bles Por­tu­gal’s or Greece’s. Cat­alo­nia faces a sim­i­lar cross­roads. Spain’s EU in­te­gra­tion greatly en­hanced its in­come and wel­fare, but also made its econ­omy more pe­riph­eral. Mean­while Cat­alo­nia, his­tor­i­cally Spain’s in­dus­trial pow­er­house and still a major man­u­fac­tur­ing hub, found it­self at the cen­tre of a fast-grow­ing re­gion (the “Genoa-Va­len­cia Axis”) ex­pand­ing the Man­ches­ter-Milan Axis as its nat­ural ac­cess to the Mediter­ranean. Be­tween 2009 and 2017, Cat­alo­nia’s total fac­tor pro­duc­tiv­ity grew at over twice the rate of the rest of Spain, while Cata­lan goods sales to the rest of Spain, which 20 years ago rep­re­sented two thirds of ex­ports, now amount to a third of them. Spain’s pop­u­la­tion is con­cen­trated on the Mediter­ranean coast, while the rest of the coun­try de­pop­u­lates, with one ex­cep­tion: Madrid, which thrives through (often manda­tory) ser­vices it sells to the rest of Spain as its seat of gov­ern­ment and major com­pa­nies’ head­quar­ters. Left to its own de­vices, how­ever, Barcelona might grow enough as the cen­tre of the “Genoa-Va­len­cia Axis” to even­tu­ally be­come Iberia’s busi­ness cap­i­tal.

This chal­lenges Spain’s power bal­ance. Be­fore EU in­te­gra­tion, Spain was Cat­alo­nia’s main mar­ket, and its gov­ern­ment en­forced the tar­iffs and man­aged the de­val­u­a­tions that pro­tected it from for­eign com­peti­tors. Yet this mu­tual de­pen­dency is gone. Thus, per­haps pre­dictably, not long after join­ing the euro zone, Spain’s es­tab­lish­ment started lim­it­ing Cat­alo­nia’s prospects through gov­ern­ment in­ter­ven­tion: lim­it­ing Cata­lan fi­nan­cial au­ton­omy, spend­ing on un­nec­es­sary in­fra­struc­ture else­where while those in Cat­alo­nia fall apart, en­tic­ing and sub­si­dis­ing com­pa­nies to move from Cat­alo­nia to Madrid, even ac­tively block­ing EU-fi­nanced in­vest­ments in Cat­alo­nia… As it be­came ob­vi­ous the State was un­will­ing to ne­go­ti­ate re­vert­ing these poli­cies, be­tween 2007 and 2014 sup­port for Cata­lan in­de­pen­dence soared from 15% to over 50%, par­tic­u­larly among the ed­u­cated mid­dle classes. In­deed, their demon­strated ca­pac­ity for metic­u­lously or­gan­ised, scrupu­lously peace­ful mo­bil­i­sa­tion be­fits this back­ground, while their mas­sive num­bers and will­ing­ness to with­stand vi­o­lent re­pres­sion bear wit­ness to their deep con­cern – for there is much at stake.