x Abu Dhabi, UAETuesday 23 January 2018

Sovereignty at stake as states in the EU scramble for funds

With financial crisis ending the era of European affluence, there is no longer enough money to buy off the regions, and in any case this only served to increase regional sentiment.

For decades, the issue of regions seeking independence from the member states of the European Union has bubbled along at the fringes of political debate. Typically it involves independence-seeking parties waving exotic flags and wearing "national dress" that was most probably invented in the 19th century.

The EU was strong enough to accommodate the secessionists, usually by buying them off with copious development grants. Never in the history of the European Union has any region broken away. That was what happened beyond the borders of the EU, in Central Europe and the Balkans, where regional tensions led to war, as in the former Yugoslavia.

That cosy distinction has now gone. With financial crisis ending the era of European affluence, there is no longer enough money to buy off the regions, and in any case this only served to increase regional sentiment. In Spain, the Basque region rebranded itself thanks to the iconic Guggenheim Museum in the industrial city of Bilbao. Soon every region in Spain was building copycat arts centres and international airports, which are mostly half-finished, mothballed or poorly used, leaving behind a mountain of debt.

Now secession is rising up the list of problems assailing the EU. The trail has been blazed by Scotland, which has just negotiated a deal with the British government to hold a referendum on independence in two years.

This is the culmination of the rising power of the Scottish National Party, which is slowly easing out the unionist parties - the Conservatives, Labour and Liberal Democrats - that believe that Scotland should remain part of the United Kingdom. This development is largely the work of Alex Salmond, Scotland's first minister, a skilled political operator who has run rings around the unionist - and mainly English - elite in Westminster.

The Scottish example is now being followed by the Catalan region of Spain, where one and a half million people took part in a separatist march in Barcelona last month. Artur Mas, the president of the Catalan regional government, has seized the initiative and called an early election to gain a popular mandate for holding an independence referendum.

Unlike the Scottish case, the government in Madrid resolutely opposes any such poll, insisting it would be illegal and threatening to use all powers at its disposal to prevent it. Mr Mas is going to take his case to Brussels to demand the right to hold a vote on independence.

The European authorities, recently awarded the Nobel Peace Prize, will find it hard to stand up and say that the Catalans should not be allowed to hold a democratic vote. But they are clearly unwilling to encourage separatism and the break-up of a member state.

The Scottish and Catalan cases have become fused in the minds of many observers, but in fact the backgrounds are quite different. Catalonia is one of the wealthiest of Spain's regions, and its people resent that so much of their taxes go to supporting less favoured parts of the country. They want, first and foremost, the right to collect their own taxes, as the Basque region already does.

Scotland, on the northern fringes of Europe, is less favoured, and has a long history of emigration. The boom years in Europe encouraged it to believe it could join other small northern nations such as Ireland, Iceland and Norway in a so-called "arc of prosperity". Since the financial crash, Ireland and Iceland have been bankrupted by reckless borrowing in the boom years. Norway is hardly a reference point, given its vast oil and gas wealth, although Scotland, if it gained independence, would have a share of Britain's dwindling North Sea reserves.

The Scottish independence bandwagon has rolled on despite the chillier outlook for a small nation - population five million - in a continent in financial crisis.

In the past, the Scottish first minister could promise a secure future for the Scots inside the European Union and using the euro, the common European currency. With the euro-zone countries in endless crisis, that is no longer a vote winner. Mr Salmond now says Scotland will use the British pound, meaning that monetary policy will continue to be set in London. At the same time, the idea of an independent Scotland gaining automatic entry into the EU has been shot down.

There is no legal precedent here, but the indications are that Scotland would have to reapply for membership, a long and uncertain process. The Spanish government, looking for a stick to beat the Catalans with, has announced that Scotland would need to "join the queue" of applicants for EU membership and would need unanimous approval of all member states. Spain would thus wield a veto and could leave Scotland (and by implication Catalonia) out in the cold.

What unites European secessionists is that their nationalism is not based on an angry ideology of "blood and soil", although there are historical grievances. Rather it is guided by economic interest. Barcelona does not complain of a Castilian jackboot on its throat. The Scots are not demanding the expulsion of the English. Rather, they feel they deserve to run their own affairs, and could do it better than London or Madrid.

If they achieve independence, the consequences for Spain and Britain are enormous in terms of loss of economic, political and military weight in the world. But at the moment, the betting is that the rise in secessionist sentiment will not, at present, lead to full independence.

European elites would hope that the question of independence will be buried for a generation. The opposite is more likely: regions will keep demanding more and more control over taxes and spending, limiting the power of the centre to impose fiscal discipline. Sovereign states would be hollowed out by the endless demands of the regions.

This is the time when the EU needs above all to learn to live within its means. The regionalisation of Europe is yet another obstacle in the way of the continent finding a new basis for prosperity.



On Twitter: @aphilps