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Catalan crisis still reversible?

Catalan crisis still reversible?
People wave Spanish, Catalan (known as Senyera) and European Union flags during a demonstration in favour of a unified Spain a day before the banned Oct 1 independence referendum, in Barcelona, Spain, Sept 30, 2017. - REUTERS
COME Saturday, all eyes will be on Spain as the national government is expected to strip Catalonia – one of the country's richest region – of its autonomous powers.

This will be the first time in 40 years since democracy was returned to Spain that Article 155 of the 1978 Constitution will be invoked, which allows the national government to take control of a region if the latter breaks the law.
While the move might be deemed drastic, particularly as Spain holds dear their democracy, the national government believes it's the only way to preserve not just national but economic security and stability in the country.

Speaking to Astro AWANI's Market Talk, Spanish ambassador to Malaysia and Brunei, Carlos Domínguez Díaz, said the worst consequence to the move taken by the Catalan government and its president Carles Puigdemont, in their push for independence, is that it has caused the Catalan population to be divided.
"The Spanish Prime Minister (Mariano Rajoy) had on numerous occasions offered dialogues to Catalonia, as to any other region in Spain, with a high degree of decentralisation and a lot of self-government, all through the times that the regional governments have been asking for it.

"The problem is the condition that the Catalan government has been asking – to have a referendum for the region's independence. This is something that the Spanish government cannot allow because it goes against our Constitution.

"Even if the national government wanted to, it could not grant it (independence) because it would be illegal. In exchange, what the national government is proposing now is for the regional government to take a step back, present their proposals or plans in national parliament and see what goes from there," said Díaz.

READ: Spain plans new elections in Catalonia to end independence bid

He said Spain has had a hard-earned democracy after 40 years before the 1978 Constitution, therefore democracy is "very dear to all of the Spanish people."

"We cannot abandon democracy, we cannot abandon the rule of law just for some concrete political goals irrespective of what the law says.

"These populist movements are not concerned with the law, only certain political objectives. They consider democracy is just voting about anything. If the law that protects sovereignty, human rights or a country's constitution is an obstacle to reach that political objective, they leave the law aside and claim what they're fighting for is the 'real democracy'."

A HIDDEN AGENDA?

Díaz said 20th century Europe has seen similar movements before where, in the name of democracy, human rights have been abandoned, people be penalised and chastised for political reasons.

But in the case of Catalonia, he noted it was difficult to pinpoint the region's true reason for wanting independence.

READ: Catalonia baulks at formal independence declaration to allow talks

"The political parties supporting Puigdemont claim they want independence, but they may cloud and 'dress' it with secondary objectives. We don't know what these secondary objectives are.

"What we know, Catalonia has never been an independent state yet is now one of the most prosperous regions and is enjoying more self-government than any other time in the history of Spain.

"In terms of economy or fiscal balance, the national government has supported Catalonia in the years of the European economic crisis, taking up to 70 billion euros in debt that are now held by the national government, avoiding for the Catalan government to pay high interest rates on those debts. Catalonia is the region receiving most funding and infrastructure. Even language and education, all these are delegated to the region's government. They even have their own police force.

"So, it's hard to find a reason for their actions, yet the national government is still open to talks. But it must be within the framework of the Constitution," stressed Díaz.

SPAIN'S BIGGEST CONTRIBUTOR

Catalonia reportedly has the highest gross domestic product (GDP) out of all the regions in Spain – about 266 billion euros – almost one-fifth of the country's economic output.

Catalan residents represent about 16 percent of the country's population. These residents reportedly contribute 20 percent of Spain's taxes but receive 14 percent back for public expenses.

When put to him that the Catalan separatists are calling for a fairer and more socially responsible funding system, Díaz said the region is already receiving what it needs.

READ: Spain's King condemns Catalan leaders as thousands take to streets

"Unlike Malaysia, Spain is not a federal state but a unitary state. In this sense, all taxes are collected by the Spanish Tax Agency (AEAT). Madrid contributes to Spain's GDP about the same as Catalonia. And what the national government collects in terms of taxes, is transferred to the different regions according to their needs.

"For example, if a region has a large population of children, they'd need more money for education purposes," he said, adding that the regions themselves would decide on how much they need.

"The regions together with the national government make an agreement. The last one was done just before 2010. And Catalonia agreed with that system, that determines how much they should get according to certain criteria," said Díaz.

POST-REFERENDUM EFFECTS

Earlier this week, Spain announced it has lowered its economic forecast for 2018 from 2.6 percent to 2.3 percent as the costs of the Catalan crisis begin to escalate.

As it is, not only some companies have begun shifting out of Catalonia following the Oct 1 referendum, but tourist activity in the region has also fallen by 15 percent, compared to the same period last year.

READ: Violence erupts as Catalans vote on split from Spain

Tourism in Catalonia reportedly accounts for some 12 percent of the region's GDP, with other main contributors being industry and trade. Last year, Catalonia welcomed about 18 million visitors. Those employed in the Catalan tourism sector comprised more than 400,000 people.

"The Spanish Deputy Prime Minister, Soraya Sáenz de Santamaría, had recently said there are already worrying signs. For example, tourism bookings and reservations for Barcelona. Barcelona is a very important tourist city. So, it's worrying that some of these bookings have been cancelled. This is not good for Barcelona," said Díaz.

"In terms of long-term effects on investor confidence, I hope there won't be any. We are still at a stage where this (crisis) can be reversible. But it all depends if the regional government will give up their course of action. We need to gain back the trust of investors, companies and tourists," he added.

MALAYSIA-SPAIN RELATIONSHIP

Meanwhile, the Malaysia-Spain relationship recently reached the 50-year milestone.

Díaz said biggest change in the relationship has undoubtedly been in the economic arena, with the current trade growth being between 1.2 and 1.4 billion euros.

He said the number of Spanish companies coming to Malaysia is also increasing.

"More importantly, the Spanish companies are investing in Malaysia, not only selling. Now you have the Bahru steel mill in Johor (a JV with Spanish stainless steel manufacturing group Acerinox); you have a Johnson Suisse sanitary equipment and factory in Selangor; you have Indra Technology Solutions, a company working with systems for Prasarana, and you have the regional headquarters for Dunlopillo. All these are Spanish companies.

"There's also a huge project in Pengerang (Johor) for Petronas which is also being built in a large package by a Spanish company, TR (Tecnicas Reunidas Malaysia Sdn Bhd). Then we have the collaboration with Malaysian companies for aircraft engineering with Airbus, in which Spain is a part of the consortium."

READ: Sepang Aircraft Engineering now fully owned by Airbus

The two countries share social ties as well, particularly with Astro where Malaysian kids are being sent to Barcelona to develop football skills in collaboration with FC Barcelona.

Astro Kem Bola, a programme under Astro's corporate responsibility arm, Astro Kasih, is now in its sixth year and has recorded participation of more than 12,000 boys and girls aged between 10 and 12.

"I had the pleasure of attending the opening of the programme, where with the help of FC Barcelona, the children are sent there to play football. What we're trying to do to help make these programmes easier is to promote the Spanish language. We have very good collaborations with certain universities. We even have an association of Spanish language teachers and students in University of Malaya in place," Díaz added.

*Catch the full interview on Astro AWANI's Market Talk on Oct 23, 2017 at 11pm on Channel 501.