Catalonia plea for bailout likely to fuel independence drive #freecatalonia #ue #news #politics

dilluns, 3 de setembre de 2012

Catalonia's plea for a financial rescue from Madrid could end up
strengthening the proud region's drive for more independence from
Spain. The government of the northeastern region, unable to meet its
debt repayments alone, asked Madrid on Tuesday for 5 billion euros
($6.3 billion) from a 18-billion-euro fund for troubled regions.

But Catalonia, which has its own distinct language and is responsible
for one-fifth of Spanish economic output, stressed that it would not
submit to any conditions. "It is a bit contradictory that a government
request a bailout from a state that in some ways it wants to separate
from," said philosopher Josep Ramoneda, former director of Barcelona's
Contemporary Culture Centre (CCCB). The Catalan government's request
for aid puts it in a position of "manifest weakness" before the
central government because "nobody gives anything without conditions,"
he added.

Spain's central government has already ordered the 17 regional
governments to slash their combined public deficit to 1.5 per cent of
economic output this year from 3.9 per cent in 2011. To meet this
target Catalonia and the other regions have had to make steep spending
cuts to social services like education and health care, sparking noisy
street protests.

But Catalonia has long argued that it pays more into Spain's communal
tax pot than it receives.

It says the bailout is simply a case of getting its money back and
this is why it rejects any conditions attached to the aid. "This money
is ours and we are not going to say thank you because they loan us
money that belongs to the Catalan people," Catalan government
spokesman Francesc Homs said this week.

The Catalan government, headed by the conservative nationalist CiU
party, argues that under Spain's fiscal system, which redistributes
tax revenues from rich regions to poor ones, it receives 17 billion
euros less each year than it pays in taxes. With an annual gross
domestic product of around 200 billion euros, Catalonia has a public
debt of over 40 billion euros, much of it built up since the collapse
of a property bubble in 2008 caused tax revenues to plunge.

Catalonia's austerity measures allowed it to save 1.85 billion euros
last year but it is facing debt repayments in the second half of 2012
of 5.75 billion euros, which it can't meet on its own. Last month, it
was forced to suspend the payment of subsidies to hospitals, old age
homes and other social services because of a lack of liquidity. Homs
warned on Wednesday that if Catalonia does not receive the financial
aid it requested from the central government by the end of September,
the region will have "major problems" making payments.

Ramoneda said the "extreme economic situation" would reinforce Catalan
demands to have its own treasury or become an independent state. "The
interpretation that will be made is that all of this is the result of
Catalonia not receiving adequate funding and that things would go much
better if it went its own way," he said.

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