Tuesday, July 14, 2009

Café Para Todos, But Who Got The Cream?

Arriving slightly behind schedule, only by a year or so, it looks as if Spain finally has a new model for financing the activities of the regional autonomous governments. Although it might seem a dry and boring issue, and only the masochistic really want to read all of the details, this could well be the most significant Spanish political event of the whole year. The origin of the new scheme lies with the reform of Cataluña's autonomy statute a couple of years back. As part of that deal it was agreed that Cataluña would get an improved financing deal, meaning inevitably that the scheme for the whole country had to be revised. Not a bad idea in principle as the old scheme was not keeping up with the realities of the country and its devolved system of government.

The reason why it has taken so long to reach an agreement has been the difficulty involved in giving the Catalans a better deal whilst at least maintaining the appearance of not discriminating against anyone else. Maybe this would not have been so difficult in the times of economic bonanza, because the solution lies in making sure that every region gets more money. However, with the current crisis biting hard the financial balancing act has become seriously complicated and the new scheme really only comes fully into effect after 4 years when the hope is that public finances will be in a healthier condition. The percentage of tax revenues that will go to the autonomias has now risen to around 50%, up from 30% in the previous deal and 15% in the times when Felipe Gonzalez was in power. It's the way things have to go if the regions are going to have an ever greater share of responsibility for provision of services.

Nobody seems to have ended up with less money than before, the detail of the new scheme depends on the weight given to different factors such as population, age distribution, the size of the region and so on. The process has been criticised for not being transparent, but transparency is the last thing the government wants in such a sensitive matter. The more complicated the system the better, as it makes it harder for anyone to pick holes in it. It's a highly political fix and everyone knows it. The funding will not discriminate along party lines, the new divide is between the politically powerful regions and the rest. The criteria used to benefit Cataluña also work in favour of Valencia and Madrid, which has made it much harder for the PP to maintain a common line of opposition to the new scheme. Andalucia has been compensated as well. The "less important" regions are left with some extra scraps.

This time around the government does not seem to have played the Catalan nationalist parties against each other, as it did in the case of the autonomy statute. Instead, Esquerra Republicana have been allowed to take the credit for raising the final amount of money that the region gets while their rivals in Convergencia i Unió have been left on the sidelines. CiU have adopted a contradictory approach, accusing Zapatero of plunging the state into more debt whilst at the same time claiming that Cataluña should have received much more money. Things in the PP are not so different as the national party tries to organise frontal opposition to the plan whilst at the same time acknowledging that the regions under its control will stampede anyone who gets in the way of their extra funds.

This often tedious and drawn out wrangling does more than decide the destiny of much of the state's income, it also potentially changes the whole political outlook for the government. Odd though it may seem, the government has recently been getting more support for its measures from the Partido Popular than it has from any other party. The hope now will be that other parties, particularly Esquerra Republicana, will show themselves more willing to vote on the government side. The one thing that could still spoil the celebration is the even more long awaited verdict of the Constitutional Court on the Catalan autonomy "Estatut". It's rumoured that we could get this verdict before August so that the judges get their holidays, and the rumours also suggest that the verdict will be a generous one. Maybe Zapatero will enjoy his summer break after all.

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