by Ambrose Evans-Pritchard
While the EU watches in disbelief, a remote threat has mushroomed suddenly into an existential crisis. It is even more intractable than Brexit, and certainly more dangerous.
The volcanic events unfolding by the day in Catalonia threaten the EU project within its core. They pose a direct threat to the integrity of monetary union.
Former French premier Manuel Valls — son of a celebrated Catalan painter — warns that today’s banned vote for independence vote will lead to Catalan secession, and it will be “the end of Europe” as a meaningful mission. Those old enough to remember the Spanish Civil War can only shudder at TV footage of crowds across Spain cheering units of Guardia Civil as they leave for Catalonia, egged on with chants of “go get them”.
As matters stand, 14 senior Catalan officials have been arrested. There have been dawn raids on the Catalan Generalitat, including the presidency, the economics ministry, and foreign affairs office. Officials preparing for the vote have been interrogated. The Guardia Civil has been deployed to seize ballots sheets and to prevent the referendum from taking place, if necessary by coercive means. The Catalan security forces — Mossos de Esquadra — have told the Spanish authorities that they will not carry out orders to shut down voting sites if this leads to civil disorder. Their higher duty is Catalan cohesion, or “convivencia ciutadana”. It is defiance, a little like the British army’s Curragh Mutiny in March 1914. The government of Prime Minister Mariano Rajoy insists that the Guardia Civil is being sent to preserve the constitutional order and inviolable integrity of Spain. Catalonia’s leaders call it fatally-misguided repression that risks spinning out of control. “We will never forget what has happened. We will never forget this aggression, this prohibition of opinion,” said Carles Puigdemont, the Catalan leader. The contrast with the Scottish referendum in 2014 is self-evident. Markets have yet react to this showdown even though the Spanish finance minister, Luis de Guindos, has openly warned that Catalonia will suffer a “brutal pauperisation” if it presses ahead. He said the region would suffer a collapse in GDP of 25 per cent to 30 per cent, a doubling of unemployment, and a devaluation of up to 50 per cent once it had been thrown out of the euro.
This is a threat, not a prediction. Such a collapse would occur only if Spain chose to bring it about by making life hell for the Catalan state: by closing its economic borders, by using its veto in Brussels to ensure that Catalonia cannot rejoin the EU or remain in monetary union, and by blocking Catalan accession to global bodies such as the International Monetary Fund.