‘Catalonia wants its money back’
On Tuesday, Spain's debt-struck Catalonia region announced it had decided to request “participation in the liquidity fund,” the 18-billion-euro body set up by Madrid to finance troubled regions.
The Catalonian government is asking for 5 billion euro ($6.3-billion) from the fund. If Catalonia does receive financial aid from Madrid, it will become the second of Spain's 17 autonomous regions to formally request aid.
However, Catalonia, which accounts for a fifth of Spain's economic output, but is now 42 billion euro in debt, has added one clause: it will accept help if no “political conditions” are stipulated, because “the money is Catalan money," said Francesco Homs, spokesman for the regional government.
Journalist and writer Miguel-Ancho Murado says such a condition is reasonable, because of the way Spain’s tax system works.
RT: Catalonia has run out of money and is asking for aid from Madrid. It's always been a prosperous, autonomous region, stressing it can do without Madrid. Things must be pretty bad for Barcelona to admit it needs help from the central government?
MM: We have to consider how Spain’s tax system works. It goes this way: the central government collects all the taxes, 95 per cent of them, and then distributes that to different regions following this “solidarity criteria,” as they call it – the richer get less money and the poorer regions get more money. So Catalonia, which actually as you said is one of the richest regions in Spain, gets back a very small amount of the money it gives to the central estate. That is why they have this huge debt. So, what they say is that their debt is not really their debt; it is the debt of the Spanish estate, the debt that the Spanish estate has decided they should have. So, what they want, as they put it, is not money from the people’s pocket, but they want just more money from their own pocket.
RT: So what went wrong in Catalonia?
MM: The economy of Spain is now at standstill, in a recession, and Catalonia being the engine of the Spanish economy is in the same situation. That is why I think the Spanish central government is interested in solving the Catalonian problem as soon as possible, because they will not like the idea of Catalonia being talked about in the international market as a bankrupt region.
RT: Spain is setting up a fund to help its struggling regions, where six of the 18 billion euros it has are coming out of the country's national lottery. Does this suggest Spain is struggling to find the cash?
MM: It is struggling. And the idea that we have to resort to lottery… Well, it is sort of a metaphor of the situation in which we find ourselves. But it is not just the economic crisis, but the economic policies – Spain is now performing a very hard agenda of austerity cuts and that is actually biting all sectors of the Spanish economy, and the problem is that it is not working, is not bringing down the deficit, which is the main target, and then, as I say, is damaging aspects of Spain’s economy.
RT: The bailout for Spain is next: Yes or No?
MM: Yes, sure.