Risk of Spain Civil War 2017 High as Catalonia Threatens to Break Away
The European Union isn’t faring well lately. In June 2016, there was Brexit. That kicked off a wave of populism and disunity sweeping every corner of the bloc. And terrorism is on the upswing as the huddled masses continuously get shuttled in. Now comes the biggest X-factor of them all: the potential for Spain Civil War 2017.
While Catalonians’ zest for independence has always burned bright, it reached an apex over the past two years when current leader Carles Puigdemont replaced Catalan president Artur Mas in January 2016. Upon entering office, Puigdemont became the first Catalan president to omit the oath of loyalty to the king and Spanish constitution. Nothing that visible is done by accident.
A few short months later (September 2016), Puigdemont held true to his virtue signaling by declaring that a binding referendum on independence would take place in late September 2017—with or without the consent of the Spanish institutions. Naturally, Spanish president Mariano Rajoy was up in arms, as was the brain trust in Brussels.
It was the exact type of disunity the EU couldn’t allow—right in the heart of the EU. Not to mention that Catalonia’s civil disobedience and independence would give critical momentum to other right-of-center groups tired of centralized control in Brussels.
The European Union can handle a pseudo socio-economic breakup in Brexit, where the sitting government remains ideologically aligned, but the creation of a breakaway republic within its borders is something entirely different.
Catalonia Independence or Civil War?
That’s the real question. And for good reason. We mentioned how bad the optics would be for Brussels. But what about the financial implications for the fourth-biggest economy in the EU?
Catalonia accounts for around 21.7% of Spain’s total gross domestic product (GDP), 25.6% of its total net exports, and 17.6% of its population (7.52 million people). The region is host to major Spanish corporate headquarters like Caixabank SA and Banco de Sabadell SA. Both companies have moved out to avoid being in legal limbo should Catalonia break away. Others are following suit.
Catalonian independence would be a legal and financial disaster for Spain, just like it would for any country losing 20%-plus of its economy. Spain had just begun digging itself out of a massive debt crisis in 2008, caused by overspending in the construction industry. Growth is among the highest in the eurozone and real GDP has almost reached pre-2009 levels.
Spain Economic Data
| 2012 | 2013 | 2014 | 2015 | 2016 | |
|---|---|---|---|---|---|
| Population (million) | 46.8 | 46.6 | 46.5 | 46.4 | 46.3 |
| GDP per capita (EUR) | 22,233 | 22,013 | 22,323 | 23,177 | 24,045 |
| GDP (EUR bn) | 1,040 | 1,026 | 1,037 | 1,076 | 1,114 |
| Economic Growth (GDP, annual variation in %) | -2.9 | -1.7 | 1.4 | 3.2 | 3.2 |
| Domestic Demand (annual variation in %) | -5.1 | -3.2 | 1.9 | 3.4 | 2.9 |
| Consumption (annual variation in %) | -3.6 | -3.2 | 1.6 | 2.8 | 3.2 |
| Investment (annual variation in %) | -8.6 | -3.4 | 3.8 | 6.0 | 3.1 |
| Exports (G&S, annual variation in %) | 1.1 | 4.3 | 4.2 | 4.9 | 4.4 |
(Source: “Spain Economic Outlook,” Focus Economics, September 26, 2017.)
The problem now is that both sides are digging in. Brussels cannot allow Catalonia to break away and weaken the union. But Catalonia’s lust for independence dates back 300 years, and its people claim language and cultural distinction. Independence backers see now as their more opportune time to seize power, backed by a claimed 80.8% referendum ballot support. The two sides are on a collision course they can’t avoid.
Will Spain civil war 2017 transpire? It’s will be hard to diffuse this time bomb. We know the Spanish government (with EU backing) will do whatever it takes to prevent such action, while Catalonian leadership sees the best opportunity they’ve had in several generations to separate.
We’ll be surprised if the outcome doesn’t lead to more cracked skulls and terrible optics for Brussels.