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Spanish report Spanish report
by Euro Reporter
2012-10-02 10:48:40
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Spain ready for bailout but Germany hesitates

Spain is ready to request a euro zone bailout for its public finances as early as next weekend but Germany has signalled that it should hold off, European officials said on Monday. The latest twist in the euro zone's three-year-old sovereign debt crisis comes as financial markets and some other European partners are pressuring Madrid to seek a rescue program that would trigger European Central Bank buying of its bonds. "The Spanish were a bit hesitant but now they are ready to request aid," a senior European source said. Three other senior euro zone sources confirmed the shift in the Spanish position, all speaking on condition of anonymity because they were not authorized to discuss the matter.

German Finance Minister Wolfgang Schaeuble has said Spain is taking all the right steps to overcome its fiscal problems and does not need a bailout, arguing that investors will recognize and reward Spanish reforms in due course. Privately, several European diplomats and a senior German source said Chancellor Angela Merkel preferred to avoid putting more individual bailouts for distressed euro zone countries to her increasingly reluctant parliament. "It doesn't make sense to send looming decisions on Greece, Cyprus and possibly also Spain to the Bundestag one by one," the senior German source said. "Bundling these together makes sense, due to the substance and also politically."

Participants said there were tense exchanges at a euro zone ministerial meeting in Cyprus in mid-September when Schaeuble told his peers Berlin could not take another bailout for Spain to parliament so soon after lawmakers approved up to 100 billion Euros ($129 billion) to help Spanish banks in July. Asked about the reports that Germany was urging Spain to wait, a German government spokesman told Reuters: "Every country decides for itself. Germany isn't pushing in one direction or the other." A spokeswoman for Spain's Prime Minister Mariano Rajoy said she was not aware of any veto from Germany for an aid request. "What we are focused on is to get the decisions of the June summit on the banking union implemented. That would send a strong message of confidence to the markets," she said, referring to an EU decision to centralize oversight of the biggest banks to avoid a repeat of a crisis that has some of its roots in the banking system.


Spain economic crisis fuels Catalan separatist sentiment

Three weeks after a massive Catalan separatist march in Barcelona — the biggest since the 1970s — the independence flags still flutter from balconies across Spain's second largest city. Spain's crushing recession has had this divisive consequence: soaring popular sentiment in Catalonia that the affluent region would be better off as a separate nation. On Thursday, regional lawmakers voted to hold a referendum for Catalonia's seven million citizens to decide whether they want to break away from Spain. The Spanish government says that the referendum would be unconstitutional. And it's unclear if the "Yes" vote would win — even in these restless times. But it looks more likely than ever that Catalonia may ask to go its own way. "I have a big Catalan flag on the balcony. I put it up a week before the demonstration on Sept. 11 and it is still hanging there," said Gemma Mondon, 46, a mother of two. "I think we would be better off if we can manage our money. I think we would do much better."

Catalonia, a north-eastern region that is historically one of Spain's wealthiest and most industrialized, has always harboured a strong nationalist streak. Separatism is especially entrenched in the rural towns and villages outside its more cosmopolitan capital Barcelona, where people switch between speaking Spanish and Catalan with ease and at times without even noticing. In the peaceful transition from the Franco dictatorship to prosperous democracy, Catalans were content just to recover the freedom to openly speak, teach and publish in their own Catalan language, a right denied under Franco for over 30 years. But now, generations-old grievances for more self-government and recognition of their culture are rising to the surface as the economic downturn bites. Many Catalans feel their quest for a sense for nationhood has been frustrated by the intransigence of the central government in Madrid. The most recent of these clashes came in 2010 when Spain's Constitutional Court weakened the Statute of Autonomy for Catalonia, a sweeping package of laws that devolved more power to the region and would have recognized Catalonia as a nation, albeit one within Spain. Spain's slump, which has led to a spike in unemployment and harsh austerity cuts, has proven to be the tipping point for many Catalans who used to be against or ambivalent about seeking their own state.

Mondon, who works for a family run real estate management firm, said that just over a year ago she voted "No" in a nonbinding referendum organized by pro-independence groups. Now, she says she has changed her mind. "I always felt Spanish and Catalan and I never had the urge to be independent. A year ago I just wanted to be left alone to speak my language and raise my children in a Catalan school," said Mondon. "My attitude was 'don't bother me,' but now that has changed." Catalonia will go to the polls on Nov. 25, with regional president Artur Mas' centre-right nationalist party Convergencia i Unio expected to increase its hold of the regional parliament. Mas has said he will hold a referendum on Catalonia's self-determination, whether the Spanish government permits it or not. The date has yet to be set. "If the Spanish government authorizes (the referendum), more the better," said Mas. "If the Spanish government turns its back on us and doesn't authorize a referendum or another type of vote, well, we will do it anyway."

Spanish Prime Minister Mariano Rajoy insists the country's constitution doesn't allow a region to secede on its own, and experts say it would be virtually impossible for Catalan separatists to get it changed. Spain's Basque region, the other part of the country with a strong separatist movement, tried to get such a move approved in Parliament in 2005 but failed. "It's not a scenario planned by the constitution," said Francisco Perez-Latre, a communications professor at the University of Navarra who has closely monitored the Catalan independence movement for years. The new political uncertainty about the economically important region and major tourism destination is unsettling for investors already worried about Rajoy's ability to keep his country's shaky economy afloat, and within the euro currency club. There are also doubts about how well-equipped Catalonia would be to go it alone.


Spain protest over austerity measure turns violent

Tens of thousands of Spaniards and Portuguese rallied in the streets of their countries' capitals Saturday to protest enduring deep economic pain from austerity measure, and the demonstration in Madrid turned violent after Spaniards enraged over a long-lasting recession and sky-high unemployment clashed with riot police for the third time in less than a week near Parliament. The latest violence came after thousands of Spaniards who had marched close to the Parliament building in downtown Madrid protested peacefully for hours. Police with batons later moved in just before midnight to clear out those who remained late because no permission had been obtained from authorities to hold the demonstration. Some protesters responded by throwing bottles and rocks. An Associated Press photographer saw police severely beat one protester who was taken away in an ambulance. Spain's state TV said early Sunday that two people were hurt and 12 detained near the barricades erected in downtown Madrid to shield the Parliament building. Television images showed police charging protesters and hitting them with their batons, but the violence did not appear as severe as a protest on Tuesday when 38 people were arrested and 64 injured.

Earlier, the boisterous crowds let off ear-splitting whistles and yelled "Fire them, fire them!" - referring to the conservative government of Prime Minister Mariano Rajoy, and venting their anger against tax hikes, government spending cuts and the highest unemployment rate among the 17 nations that use the euro currency. On Friday, Rajoy's administration presented a 2013 draft budget that will cut overall spending by euro40 billion ($51.7 billion), freezing the salaries of public workers, cutting spending for unemployment benefits and even reducing spending for Spain's royal family next year by 4 percent. Pablo Rodriguez, a 24-year-old student doing a master's in agricultural development in Denmark, said the austerity measures and bad economy mean most of his friends in Spain are unemployed or doing work they didn't train for. He plans to work abroad after graduating and doubts he will put his education to use in Spain until he is at least 35 or 40, if ever. "I would love to work here, but there is nothing for me here," Rodriguez said. "By the time the economy improves it will be too late. I will be settled somewhere else with a family. One of the disasters in Spain is they spent so much to educate me and so many others and they will lose us."

Madrid authorities put the number of protesters at 4,500 - though demonstrators said the crowd was larger. In neighbouring Portugal, tens of thousands took to the streets of Lisbon Saturday afternoon to peacefully protest against even deeper austerity cutbacks than Spain has imposed. Retired banker Antonio Trinidade said the budget cuts Portugal is locked into in return for the nation's euro78 billion ($101 billion) bailout are making the country's economy the worst he has seen in his lifetime. His pension has been cut, and he said countless young Portuguese are increasingly heading abroad because they can't make a living at home. "The government and the troika controlling what we do because of the bailout just want to cut more and more and rob from us," Trinidade said, referring to the troika of creditors -the European Commission, the European Central Bank and the International Monetary Fund. "The young don't have any future, and the country is on the edge of an abyss. I'm getting toward the end of my life, but these people in their 20s or 30s don't have jobs, or a future."

In Spain, Rajoy has an absolute majority and has pushed through waves of austerity measures over the last nine months - trying to prevent Spain from being forced into the same kind of bailouts taken by Portugal, Ireland and Greece. But the country has an unemployment rate of nearly 25 percent, and the jobless rate is more than 50 percent for those under age 25. Investors worried about Spain's economic viability have forced up the interest rate they are willing to pay to buy Spanish bonds. The country's banks hurting from a property boom that went bust are set to get help soon from a euro100 billion ($129 billion) financial lifeline from the eurozone, and Rajoy is pondering whether to ask for help from the ECB to buy Spanish bonds.

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Emanuel Paparella2012-10-02 14:10:48
It is quite intriguing to observe contrasting centrifugal and centripetal forces at work in the EU as we speak. On one hand there is constant talk of strengthening the solidarity of the European Union, on the other hand there is talk of separatism in several member states: the Catalonians and the Basque in Spain, the Corsican in France, the Flemish in Belgium, the Umberto Bossi’s Padan people (whomever they are) in Northern Italy, just to mention a few such movements.
How is one to understand this paradoxical schizophrenic phenomenon?

Could it be that the real issue is not political or economical but cultural? That is to say, the same mistake of Italian national unification might have been repeated in an attempt to create a confederation of states in Europe? That is to say, the cart has been put before the horse. As one of the architects of Italian Unification best put it: now that we have made Italy we need to make the Italians. Pari passu, now that we have made Europe we need to make the Europeans.

What makes the situation so sad is that at its origins in the early fifties the EU did in fact have visionary founding fathers who fully understood the cultural identity of the polity they were about to create and in fact articulated such an identity. That vision never made it into the European constitution, the so called Lisbon treaty.

As anybody who has a relative with Alzheimer will confirm, to lose one’s memory is to lose one’s self. So, the separatist movements may be a symptomatic of a union that urgently needs to recover its lost memory. Europa nosce te ipsum.

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