Via Wolf Street

As separatist region is rocked by violence, businesses sound alarm.

By Nick Corbishley, for WOLF STREET:

Two of Catalonia’s biggest business associations, Foment de Treball and Pimec, have called for calm and dialogue after ten days of non-stop political and civil unrest in the separatist region of Spain At a gathering of almost 450 Catalan businessmen and executives on Wednesday, the two associations called for a political solution to what they described as “the grave conflict we are living through in Catalonia,” a region that is riven down the middle by the question of independence.

A key passage in the event’s joint manifesto hinted at why the crisis shows no sign of abating: “It is the responsibility of politicians, and not the justice system,” to find an “effective and decisive” solution to this conflict. Unfortunately, political dialogue and negotiation have been sorely lacking in relations between Barcelona and Madrid for a number of years. And there’s little sign of that changing.

As general elections approach, Spain’s main political parties, with the notable exception of the left-wing Podemos, are hardening their stance toward the Catalan separatists. For its part, the separatist government in Barcelona is doubling down on its calls for independence. If the elections on November 10 deliver enough votes for the triumvirate of Spain’s right-wing parties (the People’s Party, Cuidadanos and the far-right Vox, whose support appears to be growing) to form a coalition, they will crack down even harder on Catalan nationalism, which is likely to fuel even stronger pro-independence sentiment in the region.

A little more than two years have passed since more than two million people in Catalonia voted in a banned referendum to leave Spain. On that day, the separatists were given a harsh lesson in the raw power of state violence. Now, tensions are flaring once again, after Spain’s Supreme Court’s decision to sentence nine pro-independence politicians to up to 13 years in jail on charges of sedition and misuse of public funds sparked protests across the region. This time, the violence is coming from both sides:

On Monday, Oct. 14, the day the sentences were announced, thousands of protesters surrounded Barcelona airport, preventing many travelers from catching their flights and leading to over 100 flight cancellations. The police used tear gas and rubber bullets (whose use has been banned in Catalonia since 2013) to try to disperse the crowds.

READ ALSO  Google asks U.S. judge to move states' antitrust lawsuit to California

On Tuesday and Wednesday, Oct 15 and 16, pockets of protesters, mostly young, engaged in pitched street battles with riot units of local and national police forces in the Eixample district of Barcelona. Scores of dumpsters were burned and other forms of vandalism committed. There were also clashes between neo-fascists and pro-independence supporters.

Here is a short video I took from our balcony. Multiple fires are burning on Passeig Sant Joan, a busy thoroughfare in the Eixample, as protesters are hurling bar-chairs and bar-tables, stones, and bricks at passing police riot vans.

On Friday, Oct 18, a general strike was called, the main highway between Spain and France was blocked as well as many others, and hundreds of thousands of marching pro-independence supporters converged on Barcelona from the surrounding regions. More than half a million people gathered for a peaceful demonstration on Passeig de Gracia. Close by, on Via Laietana, riot units of Spain’s national police clashed with protesters, resulting in dozens of injuries. One police officer was hit in the head by a brick hurled from a balcony and is still in critical condition.

In my neighborhood (Eixample Dreta), rioters tried to burn the last remaining dumpster (out of six) on our block, but a handful of thirty- and forty-something local residents, all pro-independence, put their bodies between the rioters and the dumpster. A tense exchange ensued as the rioters tried, in vain, to convince the local residents to let them torch the dumpster, while above them residents on their balconies either egged them on or tried to dissuade them. It wasn’t long before the neighbors themselves were shouting at each other.

Then violence dissipated. But roads and train lines continue to be blocked and spontaneous protests continue to sprout up across the region on an almost hourly basis, all made possible by encrypted social networks such as Telegram.

Saturday afternoon, Oct 26, another mass demo was held by pro-independence organizations that, again, went off without incident despite being attended by almost half a million people. But in the evening violence did flare up once again in a few places, as pockets of protesters, clashed with riot police units.resulting in dozens of injuries. These are the scenes that played out in the media cycle this morning in the rest of Spain.

READ ALSO  SE: Inflation is Already There in U.S., Saxo Bank CIO Jakobsen Says

Today, Sunday, Barcelona hosted yet another mass demonstration, this time by Spanish unionists, many of whom were bused in from other parts of Spain, including Valencia, Madrid and Zaragosa. Even so, the march was much smaller than the pro-independence one a day earlier. Given that attendees include government ministers and the leaders of the right-wing Popular Party and Cuidadanos party, security is incredibly tight right now. As of writing (2.30 p.m. on Sunday) a tense calm reins in the city. But with some of the more radical factions of the separatist movement holding counter demonstrations just streets away, there is a risk that  violence could break out between the two opposing sides.

As each day goes by, the risk of damage to Catalonia’s economy rises. One sector that’s already being affected is the tourism industry, which generates more money than any other regional sector in Spain. The governments of the UK, France and the U.S. — three countries that account for roughly 40% of all foreign visitors to Catalonia in an average month — have already warned their citizens about the risks of visiting the region.

The sector was only just beginning to recover from the fallout of the last crisis. In 2018, the number of overnight stays at hotels in Catalonia fell for the first time since 2008. Now, it faces a brand new crisis.

As a whole, Catalonia’s economy has, until now, weathered the political storms better than many had thought. This is a region that has seen more than 5,000 of its biggest brand names move their headquarters to other parts of Spain in the last two years, albeit only on paper. At the height of the last crisis, its two main banks, Caixabank and Banco Sabadell, suffered a deposit run that ran into the tens of billions of euros, much of it fomented by the central government in Madrid.

READ ALSO  Looking ahead in Hainan: duty-free shopping

Yet the economy is still growing, albeit more slowly than before. Between 2014 and 2017, Catalonia’s GDP grew at an average annual rate of 3.2%, two decimal points higher than Madrid’s. In contrast, last year Catalonia’s economy grew by 2.6%, while Madrid’s, hands down the biggest beneficiary of the mass exodus of Catalan companies and bank deposits, grew by 3.7%. This year, Catalonia’s GDP is on target to grow by just 1.9%, one decimal point less than Spain’s economy as a whole.

For now, the ratings agencies see little cause for concern in this latest flash point. As long as the unrest does not become chronic, the threat to the economy is minimal, they say. But for it not to become chronic, a negotiated solution, or at least some form of dialogue between the two sides, is needed. And the chances of that happening grow slimmer by the day. As for the European Parliament, it refused to even discuss the matter when it was tabled for debate by the Green Party this past week.

On the ground, businesses and the associations that represent them are sounding the alarm. They fear that the longer this conflict drags on, the more entrenched and radicalized both sides will become. Eventually, investors, particularly from overseas, will begin to get cold feet. As action begets reaction and repression fuels further polarization and radicalization, it’s only a matter of time before local businesses begin to feel the effects, if they aren’t already. By Nick Corbishley, for WOLF STREET.

“An unforeseen crisis.” Other headwinds intensify too. Read…  Just Weeks After the Collapse of Thomas Cook, Spain Launches First Bailout of its Huge Tourism Industry

Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate “beer money.” I appreciate it immensely. Click on the beer mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.