The Economy of Catalonia

In these circumstances, the analysis must be based on three determining
factors:
a) The process would affect a State – Spain - which is a member of
the European Union (hereinafter, EU) and the Eurozone. We
have little doubt that Spain, after the breakup, will be considered
for all intents and purposes to be the same State and would
thus retain all the rights and obligations of the predecessor state
(HM Government 2013a). However, the population loss would
entail, for example, the recalculation of the number of MPs of
each member State. The seceding State, Catalonia, would be
regarded as a new State which, in order to join the EU, would
have to first go through a formal process of negotiation with the
EU institutions (HM Government 2013a). Particularly relevant
is Article 49 of the Treaty on European Union (TEU), which
requires that the admission of a new State be ratified by every
member State.
b) The process would affect a State - Spain - with a public debt approaching
100% and a foreign debt also close to 100% of GDP
before the split, with difficulties in refinancing them both and,
therefore, subject to informal intervention by the so-called «troika»
(EU, ECB and IMF). The new State would be born with a
slightly higher ratio of government debt to GDP.
c) The process would affect a country – Catalonia -, with a significant
industrial base formed in large measure by multinational
companies, most from EU member countries, with a strong presence
of systemic banks. Whether or not these banks are based in
Catalonia is only marginally relevant.
These three elements allow us to affirm that the EU institutions would
closely supervise the process. Firstly, they would do so to try and safeguard
the interests of member countries and, secondly, because neither
Spain nor Catalonia could prevent it, as both depend on EU support to
finance their respective deficits and to refinance debt.
Specifically, this supervision would have three objectives:
a) To avoid or at least limit the interference the process might have
in trade and financial flows between establishments based in Catalonia
and abroad. In particular, the supervision would aim to
94 The Economy of Catalonia