The Economy of Catalonia

e the only possible scenario in an independent Catalonia. The pros and
cons of all of the possible outcomes must be carefully weighed up, for
citizens have a right to be aware of them when deciding. Both in the
future, should a referendum finally be held, and now, when they are
choosing one option or the other, failure to analyse all the eventualities is
quite simply a sign of immaturity, as ignoring reality always is.
It is true that this issue can have a decisive influence on a possible referendum
and in possible negotiations between Catalonia and Spain. In
other words, it could be argued that the fact that Catalonia knows it cannot
remain outside the EU and the Eurozone makes it a hostage in any
negotiation with Spain; and that, therefore, the only way to ensure that
Catalonia can negotiate with any chance of success is either to deny the
fact (we will not be left out of the EU) or to minimise its importance.
This, to a large extent, is what is actually happening. But in practice denying
reality is always ultimately counterproductive and weakens negotiating
positions.
And above all, it is a mistake, because it is not Catalonia or Spain who
will have the final say on whether an independent Catalonia stays in the
EU (and in the euro, for if we stay in the EU, we will stay in the euro): it
is the EU. And on this topic I think we can hypothesise, despite the inherent
risks, that the EU’s strategy (which will determine its pronouncements
at every stage in the process) will be geared to attaining two goals
(or priorities). The first is to try to prevent Catalonia from becoming independent
and the second, if independence becomes inevitable, is to
ensure that the costs are as low as possible.
It is not unrealistic to think that the EU’s prime objective, for many reasons,
is to try to stop Catalonia from becoming independent, because it
would undoubtedly create a significant degree of instability, because it
might trigger a domino effect, and because Catalan independence, first
and foremost, would significantly undermine Spain’s solvency and that
could drive the euro into a serious crisis. However, if this is indeed the
EU’s prime objective, then it would be reasonable, at this stage in the
process, for it to work in two directions. On the one hand, it could issue
serious warnings that an independent Catalonia would find itself outside
the EU (the stick) but on the other hand it could try to apply pressure on
the Spanish government to propose an agreement that would deflate the
independence movement in Catalonia (the carrot). That is, it could try
two preliminary remarks... 43